INDIAN BUSINESS ENVIRONMENT

UNIT – I
Q. What is business e n vi r o n m e n t ? What are its various components ?
Ans. Meaning of Business Environment :– Business environment refers to
those aspects of the surroundings of business enterprise which have influence on the funtioning of business.
An organisation can survive and grow only when it continuously and quickly adopts to changing environment.

Acc. to Wheeler, “Business Environment is the total of all things external to

business firms and industries which affect their organisation and operations.”

Acc. t o K e i t h Davis, “Business Environment is the aggregate of all conditions,

events and influence that surround and affect the business.”

Components of Business Environment :– Business Environment has two components :-

a) Int er nal E n v i r o n m e n t b) External E n v ir on m e n t

Components of Business Environment

External Environment Internal Environment

a) I nternal E n v i r o n m e n t :– Internal Environment refers to environment
within the organisation. It includes internal factors of the business which can be controlled by business.
It includes objectives of business, managerial policies, management and employees of the
organistion, labour management relationship, brand image and corporate image, working conditions in
the organistion, technological and research and development capabilities etc. Internal environment
includes 5 M's i.e. men, material, money, machinery, management available with business. These
components are usually within the control of business.

Research
Development
Financial Technological
Resources Capabilities

Internal
Human Environment Work
Resources Environment

Objectives Managerial
of Business Policies
 External Environment :– External Environment refers to external
aspects of the surroundings of business enterprise which have influence on
the functioning of business. These factors beyond the control of business.
External environment includes factors outside the firm which can provide
opportunities or pose threats to the firm.
External environment has two types :-

i) Micro Environment ii) Macro Environment

b)
External Environment

Micro Environment Macro Environment