Chapter-3

Business Environment
 Definition of Business Environment
Page No-89

Business environment means the factors or forces or

institutions that have direct or indirect, positive or negative
influence on the business and over which the business has
little control or sometimes no control on the factors or
institutions. The factors or forces have direct or indirect
influence on the business performance is called business
environment. The scholars’ definitions are as follows:
S.P. Robbins: “The environment as composed of those
institutions or forces that affects the performance of the
organization, but over which the organization has little
control”.
 Definition of Business Environment
Page No-89

W.F. Glueck and R. J. Lawrence: “The environment

includes factors outside the firm which can lead to
opportunities for or threats to the firm”
Bartol and Martin: “An organization’s environment is an
objective reality- a set of concrete conditions that
theoretically could be measured perfectly to give managers
complete information”
Terry and Franklin: “The application of the management
process is affected by environment factors which condition,
constrain and influence managerial decisions and actions”.
 Types of Business Environment
Page No-90
Business
Environment

Internal Environment External Environment

1Owners General Environment Task

2 Board of 1Economic forces Environment
directors 2 Technological forces 1The labor market
2 Competitors
3 Manager 3 Super conductivity 3 Customer/clie
4 Employees 4 Political forces nts
5 Culture 5 Legal forces 4 Suppliers
6Physical work 6 Socio-cultural and 5 Strategic
environment demographic forces partners
7 Religious forces 6 Regulators
8 International forces
 Internal Environment
Page No-91
Internal Environment: The factors, forces or
institutions which are must have inside the organization
and directly influence on the business activities of the
organization is called internal business environment.
Internal environment may be defined as some forces,
which are directly involved with the organization and can
affect the human resource activities.
Ricky W. Griffin: “Internal environment is the conditions
and forces within an organization”.
Components/Elements of Internal
Environment
Page No-91

1. Owners:
2. Board of Directors:
3. Manager:
4. Employees:
5. Culture:
6. Physical work environment:
 External Environment
Page No-92
External Environment: The factors, forces or institutions
which are must have outside the organization and indirectly
influence on the business activities of the organization is
called external business environment. External Environment
consists of those outside forces that represent threat and
opportunity to a firm and thereby affects the achievement of
organizational objectives. So we can say that forces that
exist outside the company constitute the external
environment.
Ricky W. Griffin “External environment is everything outside
an organization that might affect it”.
 Meaning of Global Environment
Page No-96
In the prevailing Globalization era, where the worlds
turn into a village, we have to turn our attention to
the global business environment. This environment
has had a major impact on business. The global
business environment has changed dramatically
since the end of world war second in 1945.
Global business environment can be defined as the
societal and task environment of an organization
which is influenced by the global forces. These global
forces include global labor market, economic,
technological force, and global competition, legal and
political forces etc.
 Impact of Environmental
Elements on Business
Page No-96
1. Capital for the business:
2. Favorable tax structure:
3. Facility to get license:
4. Communication and transportation:
5. Access in the market:
6. Credit and financial facilities:
7. Government policies:
8. Political stability:
9. Technological development:
10. Socio-cultural development:
Environmental Barriers in Bangladesh
Page No-97
1. Legal support has not been established as yet.
2. Area of specialization on business has not been
recognized till now.
3. Loosing public organization suffers from business
crises.
4. Reckless CB process prevails in the organizations.
5. Competitive environment has not yet been
established.
6. Mass people are not conscious about business
practices
7. Business in most of the organization are not fair
8. Accountability practices have not yet been established
and followed.
9. Infrastructural facilities are not sufficient.
10. Research and development (R and D) organizations
are almost absent.
 Means to Overcome the
Environmental Barriers in Bangladesh
Page No-98
1. Govt. organization must come forward to give legal support.
2. Business as a separate area of specialization should be
recognized.
3. Both management and union leaders should try to solve the
business related problem such as recruitment, promotion,
transfer etc.
4. CB process should be fairly dealt with.
5. Instigation from outsiders must not be entertained.
6. Mass people must be conscious about the business
activities.
7. Unfair practice must be stopped immediately
8. Law and justice must prevail in the organizations.
9. Sufficient infrastructure facilities must be created and
existing facilities must be maintained.
10. More research and development activities should be
undertaken and organization should follow the suggestions.