10 Major Features of Business Environment (701 Words)

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The major features of business environment are as follows:

1. Environment is inseparable part of business:

Environment is an integral part of any business. Business cannot work without environment. Business requires good framework of legal, political, social, cultural and economic factors. Both business and environment have influence over each other.

They share a symbiotic relationship. Success of the business lies in understanding the environmental changes and adapting the business policies accordingly. There is a mutual interdependence between business and its environment. Business enterprises continuously interacts with its environment for taking inputs like raw materials, capital, labour, energy etc. and transform them into goods and services and then send them back to the environment.

2. Environment is Dynamic:

Business environment is dynamic in nature. No environment remains constant or static for a longer period of time. The government may change certain policies; there may be changes in consumer tastes, preferences etc. changes in technology also affect the business. Environmental forces influence business decisions. The surrounding of business enterprise that is constantly changing carries both opportunities and threats with them. The success of business depends upon alertness and adaptability with the changing environment.

3. Business lacks control over environment:

Business environment is a constantly changing process. Business lacks control over external environment. It cannot directly influence the changes in external environment. But it is possible to have influence over internal environment. Internal environment is controllable where as external environment is uncontrollable.

4. Internal and external factors:

The environment of business comprises of internal and external factors. Internal environment includes plans and policies, employees, business objectives etc. The external environment is again subdivided into micro factor and macro factor. Micro factor includes customers, suppliers, competitors, society etc. Macro factor comprise of social, economic, legal, technological and other factors, which are unpredictable and uncontrollable.

5. Environment is complex:

In the Business Environment, there are numerous complex situations in which one must understand in order to maximize the benefits of success. Modern business is more complex, flexible and highly un-predictable. The modern business has grown in size and scope and so is the environment. Any change in the environment can adversely affect the business organisation. Business environment is growing extremely complex due to government interventions and social consciousness.

6. Environment is multifaceted:

Any change in the environment is followed by a chain of positive and negative reactions. A change may be favourable to someone and unfavorable to others. Changes in the environment can be perceived differently by different entrepreneurs. Environmental changes may bring opportunities to some people and obstacles to others.

7. Opportunities and obstacles:

Business environment is flexible. It keeps on changing. Sometimes it may provide opportunities to the business, whereas on the other hand may create new challenges and obstacles in the working of the organisation. Opportunities may prove favourable to the firm and obstacles may create threat and unfavorable to the firm affecting its growth and profitability. Opportunities for growth and expansion is created when the environment is favourable, on the other hand it creates problems and obstacles when it is unfavorable.

8. Regulates the scope of business:

Environment provides a framework within which business organisation has to operate. All the business activities are expected to be conducted within social, political, economic and legal structures. These changing structures should be minutely monitored by the business firm for its survival and growth. The business must learn to adjust itself with the ever-changing business environment.

9. Long lasting impact:

The environment can have both positive and negative impact on the business. Changes in the environmental factors have long lasting effects on the functioning of the business. These changes may create favorable and unfavorable impact on the firm. A systematic analysis and diagnosis gives strategies to anticipate opportunities and threats. This helps to develop preventive measures to cope up with the threats effectively.

10. Uncertainty:

Business environment is largely uncertain, as it is very difficult to predict future happenings, especially when environmental changes take place too frequently. The enterprises must continuously monitor their environment and adopt suitable business practices not only improve their present performance but also continue to succeed in the market for a longer period.


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