What is Business Environment? Definition, Salient Feaures and Components
Summary
TLDRSophie's video tutorial on the business environment offers a comprehensive overview, highlighting its dynamic and multifaceted nature. She explains how it encompasses all factors influencing a business, both controllable and uncontrollable. The tutorial delves into the internal environment, emphasizing the company's value system, vision, mission, organizational structure, and human resources. It also covers the external environment, detailing the micro and macro factors like suppliers, customers, competitors, and the global landscape. Sophie's presentation aims to clarify the concept and encourage viewer interaction through likes, shares, and comments.
Takeaways
- 🏢 The business environment refers to the surroundings in which a business operates, including all factors that can influence or be influenced by the business.
- 🔄 Business environment is dynamic and ever-changing due to various factors that can alter a company's strategies, policies, and operations.
- 🌐 It is multifaceted, meaning small changes can be interpreted differently by various experts, analysts, and observers.
- 🌟 The impact of the business environment is far-reaching, with a single change potentially affecting the survival, growth, profitability, and performance of an enterprise.
- 📍 Relativity is a key feature, as the environment is influenced by local conditions and varies across different geographical locations.
- 🤔 The complexity of the business environment makes it difficult to pinpoint which factor is causing change, due to the multitude of interrelated events and conditions.
- ❓ Uncertainty is inherent in the business environment, as the future is unpredictable and can only be estimated through forecasts.
- 🔗 Interrelatedness is evident as many factors in the business environment are interconnected, leading to potential chain reactions from small changes.
- 🛡️ The internal environment includes factors that a business can control or modify, such as value systems, vision, mission, objectives, organizational structure, corporate culture, human resources, and technical capabilities.
- 🌍 The external environment comprises elements outside the business's control, offering opportunities and posing threats, and is divided into micro and macro environments.
- 🛍️ Micro environment factors include suppliers, customers, intermediaries, competitors, employees, and stakeholders, all of whom have a direct impact on business operations.
- 🌆 Macro environment factors encompass political and legal, economic, socio-cultural, physical, technological, and global environments, which can significantly influence business strategies and performance.
Q & A
What is the definition of business environment according to the video?
-The business environment can be understood as the surrounding in which the business enterprise operates, covering all factors that can affect or be affected by the company's plans, strategies, policies, and operations.
What are the salient features of the business environment mentioned in the video?
-The salient features of the business environment are that it is dynamic, multifaceted, has a far-reaching impact, is relative, complex, uncertain, and consists of interrelatedness among its factors.
How is the business environment categorized in terms of internal and external factors?
-The business environment is divided into two categories: internal environment, which contains factors that directly affect the business and can be controlled by the firm, and external environment, which is subdivided into micro and macro environments.
What are the components of the internal environment of a business?
-The internal environment components include value system, vision, mission and objectives, organizational structure, corporate culture, human resources, and resources and technical capabilities.
Can you explain the concept of the micro environment in the context of the business?
-The micro environment covers factors that fall under the immediate periphery of the business enterprise, such as suppliers, customers, intermediaries, competitors, employees, and stakeholders.
What does the macro environment consist of and how does it affect a business?
-The macro environment consists of factors outside the control of the business that can directly affect its functioning, efficiency, strategies, performance, and profitability. It includes political and legal, economic, socio-cultural, physical, technological, and global factors.
How does the video describe the role of employees in the business environment?
-The video describes employees as the most valuable asset of the company, which determines its success and failure. An eligible and qualified workforce can make a significant difference to the company.
What is the significance of the media in the business environment as per the video?
-Media holds a strong position in the business environment, as every company requires media to promote its products and services. Negative news or publicity can lead to losses for the company.
How does the socio-cultural environment impact a company's operations?
-The socio-cultural environment reflects a company's social and cultural values, which are implemented through corporate social responsibility. It is a way of giving back to society and nature for the resources used.
What are the implications of the technological environment for a business?
-The technological environment implies that a company must continuously work on and adopt new technologies to stay ahead of its competitors. Failure to do so can make survival difficult due to rapid technological changes.
Why is the global environment important for multinational companies?
-The global environment is important for multinational companies because it includes factors such as foreign policies, foreign trade, foreign investment policies, trade practices, and trade rules that can affect their international operations.
Outlines
📚 Introduction to Business Environment
Sophie introduces the concept of the business environment, which encompasses all factors that influence and are influenced by a business enterprise. She explains that it includes both controllable and uncontrollable elements that directly or indirectly impact a company's survival, growth, performance, and profitability. The dynamic, multifaceted, far-reaching, relative, complex, and uncertain nature of the business environment is highlighted, emphasizing its interrelatedness and the need for businesses to adapt to ever-changing conditions.
🏢 Internal and External Business Environment Components
The second paragraph delves into the components of the business environment, distinguishing between the internal and external environments. The internal environment is described as controllable and directly affecting the business, including factors such as value systems, vision, mission, objectives, organizational structure, corporate culture, human resources, and technical capabilities. The external environment, which is not under the business's control, is further divided into micro and macro environments. The micro environment comprises suppliers, customers, intermediaries, competitors, employees, and stakeholders, while the macro environment includes political and legal, economic, socio-cultural, physical, technological, and global factors that can influence a company's operations and strategies.
Mindmap
Keywords
💡Business Environment
💡Salient Features
💡Components
💡Internal Environment
💡External Environment
💡Micro Environment
💡Macro Environment
💡Stakeholders
💡Corporate Culture
💡Human Resources
💡Technological Environment
Highlights
Business environment is the surrounding in which a business operates, influencing its plans, strategies, policies, and operations.
It encompasses all individuals, forms, forces, and factors that impact a business, either directly or indirectly.
The business environment is dynamic and ever-changing due to various influencing factors.
It is multifaceted, meaning small changes can be interpreted differently by various experts and observers.
A single change in the business environment can have a far-reaching impact on a company's survival, growth, profitability, and performance.
Business environment is relative and varies depending on local conditions and geographical locations.
It is complex, with a plethora of factors, events, and conditions that can be challenging to identify and understand.
Uncertainty is a key characteristic of the business environment, as the future is unpredictable and can only be estimated.
Interrelatedness is evident, as factors in the business environment often influence and are influenced by each other.
Internal environment includes factors that a business can control or modify, such as value systems, vision, mission, objectives, and organizational structure.
Corporate culture and human resources are critical components of the internal environment, affecting a company's success.
Resources and technical capabilities are tangible assets that determine a company's competitiveness.
External environment consists of factors beyond a business's control, such as the micro and macro environments.
Micro environment includes suppliers, customers, intermediaries, competitors, employees, and stakeholders.
Macro environment encompasses broader factors like political, legal, economic, socio-cultural, physical, technological, and global environments.
Political and legal environments significantly influence a company, especially with changes in government or legal policies.
Economic conditions are interdependent with a company's performance, affecting its ability to secure production factors.
Socio-cultural values are reflected in a company's corporate social responsibility and its relationship with society and nature.
The physical environment, including geographical location, affects business plans and decisions related to resources, markets, and transportation.
Technological advancements require continuous adaptation for a company to stay competitive in the rapidly changing landscape.
Global environment considerations are crucial for multinational companies operating in multiple countries.
Transcripts
hello everyone I am Sophie and I welcome
you all in my channel key differences in
this video tutorial I am going to
explain you what is business environment
its salient features and components so
friends without further ado let's get
started
[Music]
business environment in simple words the
town business environment can be
understood as the surrounding in which
the business enterprise operates it
covers all the factors which can be
affected by its plans strategies
policies and moves as well as the
factors which can affect the forms plans
policies strategies and operations
basically it is the combination of all
the individuals forms forces and factors
which may or may not be under the
control of the business organization and
has a direct or indirect impact on its
survival
growth performance and profitability so
we can say that each and every element
which can influence and be influenced by
the business enterprise is covered under
the town business environment now we
will discuss the salient features of
business environment dynamic as of a
natural environment business environment
is ever-changing in nature because there
are a number of factors which exist in
the business environment whose influence
can lead to change in the shape
character policies plans and business
strategy of the company multifaceted
business environment is multifaceted
that is a small change in the
environment can be viewed differently by
different experts analysts and observers
far-reaching impact business environment
has a widespread impact meaning that a
single change can affect the survival
growth profitability and performance of
the enterprise relativity business
environment is very much affected by the
local conditions and situations in which
the business is set up and that is why
business environment is different in
different geographical locations complex
business environment is a plethora of
different factors events and conditions
arising from a number of factors so it
is quite difficult sometimes to identify
which factor is causing it to change
uncertain uncertain it is the basic
characteristic of business and so does
the business environment as one can not
exactly what can happen in future only
predictions can be made
interrelatedness there are many factors
in the business environment which are
interrelated and that is why sometimes a
small change in one factor can led to
the change in another factor also now we
will discuss the components of business
environment business environment is
divided into two categories internal
environment and external environment
further the external environment is
subdivided into micro environment and
macro environment what is internal
environment internal environment refers
to the environment that contains those
factors which affects the business
enterprise directly these factors can be
controlled by the firm as well as the
firm can modify it accordingly so as to
be in sync with the overall business
environment basically the internal
environmental factors reflects the
pillars of the business which impart
strength or cause weakness to the
organization now we will discuss
internal environmental factors value
system a company's value system covers
the culture climate policies and norms
in short it is a basic framework of the
organization and every member of the
organization has to work within this
framework which can be modified as per
the requirement vision mission and
objectives a company's vision says about
its future destination mission defines
its business and the reason of its
existence
whereas objective state its ultimate aim
and the ways through which it can
achieve those objectives organizational
structure forms organizational structure
describes the way its activities and
operations are directed such as
organizational hierarchy delegation of
tasks composition of board of directors
etc corporate culture corporate culture
refers to the organization's values
belief and behavior which determines the
way in which organizations employees and
management communicate Human Resources
human resources that is employees and
workers are the most valuable asset of
the company which decides its success
and failure
resources and technical capabilities the
tangible assets which our company owns
comes from the physical resources which
determines its competitiveness secondly
technical capabilities determine its
technical know-how external environment
external environment refers to the
environment which can affect the
business directly or indirectly as it
contains those elements which are not
under the control of business
these factors provide opportunities of
post rate to the business
it contains micro environment micro
environment covers those factors which
fall under the immediate periphery of
the business enterprise macro
environment macro environment covers
those factors which are outside the
control of business and can directly
affect its functioning efficiency
strategies performance and profitability
now we will talk about factors covered
by micro environment suppliers suppliers
are the individuals and firms that
supplies raw material and various
factors of production required for
running the business customers customers
are the individuals that purchase the
product and pays the price for it
customers are regarded as king of
business the primary purpose of the firm
is to satisfy its customers by providing
the best quality product at reasonable
prices intermediaries intermediaries
implies the channel of distribution
opted by the company for the
distribution of its product competitors
competitors are the business rivals they
can be market leaders followers
challengers etc employees as we have
already discussed employees are the
biggest asset of an enterprise which
creates a difference an eligible and
qualified workforce can do miracles to
the company the company's success or
failure depends on them stakeholders
stakeholders include all the interested
parties which can be directly or
indirectly affected by company's actions
it includes debtors creditors
shareholders etc lastly media media owns
the strongest place at present every
company requires media to promote its
products and services further any
negative news
the company or its offerings may let the
company to losses come let's have a look
on macro environmental factors political
and legal environment the political and
legal environment of the country in
which the company operates has a great
influence on it whenever there is any
change in the government or legal rules
and policies economic environment the
economic conditions of the country and
the performance of the company are
interdependent as the form is dependent
on economic for various factors of
production and so if the economy is
doing well it will be reflected in the
performance of the enterprise
socio-cultural environment a company has
certain social and cultural values which
are reflected in its corporate social
responsibility implemented by the
company it is just a way of paying back
to the society and nature for the
resources used physical environment
physical environment refers to the
environment in which the form is set up
the geographical location often affects
and determined most of the business
plans and decisions such as availability
of raw material locational decisions
nearby market transportation facilities
etc technological environment as we all
know that technology is changing rapidly
with time and in the last few years we
have seen a drastic change in the way we
communicate travel and socialized so a
company has to continuously work on the
technology to walk a step ahead of its
competitors or else the survival would
be difficult global environment there
are some companies which operate in
multiple countries and so along with the
national environment they also have to
look after the global environment the
factors that affect the multinational
companies include foreign policies
foreign trade foreign investment
policies trade practices trade rules etc
so friends this brings me to the end of
this lesson
I hope this concept has been cleared
from today's lesson so guys please like
this video share it with your friends
and if you have any queries or feedback
for me then feel free to comment below
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