THE

ENVIRONMENT
OF BUSINESS
MODULE 2
REPORT OUTLINE:
INTRODUCTION
TYPES OF BUSINESS ENVIRONMENT
• INTERNAL ENVIRONMENT
• EXTERNAL ENVIRONMENT
CONCLUSION/SUMMARY
INTRODUCTION
Business Environment – consists of factors that a company can
control and those are uncontrollable.
Controllable business factors - are internal to the company.
These include the marketing mix
• Production • Promotion
• Place • Price
Uncontrollable business factors – are external to the company.
These include factors such as;
• Demographic
• Economic • Political
• Socio-cultural • Government
• Climate • Technological
TYPES OF
BUSINESS ENVIRONMENT:
• INTERNAL ENVIRONMENT
- These are forces that are close to the
company and affect its interaction with
its market. Micro-environment is
another term for this environment
WHAT COMPOSED
MICRO-ENVIRONMENT ?
1. Firm/ Company – represents the business enterprise that creates product and sells
or provides services to identified market.

2. Distribution channel – represents the organizations that assist a company to

promote, sell, or distribute products or services to actual and potential customers.
Examples of channels: retailers, wholesalers, direct-to-consumer sales,
distributors, and the Internet.
3. Competitors – are business enterprises that offers the same products or alternative
products that other companies also offer; competitors provide the market with more
choices
WHAT COMPOSED
MICRO-ENVIRONMENT ?
4. Company's Public— are organization or groups that have direct or indirect to a
company; financial institutions like banks, the media, the general public, the
government, and other citizen-organized groups are some if the organizations that
have interest to a company.
5. Suppliers— are firms that provide needed equipment, raw materials, office and
other supplies to a company.
TYPES OF
BUSINESS ENVIRONMENT:
• EXTERNAL ENVIRONMENT
- Also known as the Macro-environment.
The bigger environment therefore it is
uncontrollable or more difficult for a
company to control
WHAT COMPOSED
MACRO-ENVIRONMENT ?
1. Demographic Factor — includes environmental factors such as the consumers’
profile. These factors are essential for a company to consider because variables
under demographic factors constitute the characteristics of the market and these
affect buying behavior.
2. Political or Legal Factor — consist of existing law, ordinances, or government
restrictions that affect or influence the operation if the business.
3. Economic Environment Factor — includes those factor that influence the
spending pattern of buying power of consumers. Example of economic factors
that are essential to marketers are change in income level, change in spending
pattern, and change in income distribution.
WHAT COMPOSED
MACRO-ENVIRONMENT ?
4. Socio-Cultural Environment Factor — includes those that affect the values,
behavior, or belief of society.
5. Technological Environment Factor — deals with those factors that create or
innovate products due to technological advancement or modern machineries,
gadget, or equipment.
6. Natural Environment Factor — affects marketing activities. Some issues in
the natural environment are increased pollution, shortage of raw materials, and
non-biodegradable packaging.
CONCLUSION
A business environment is a combination of internal and external factors and
forces that significantly influence the operations of a business. Several internal
and external factors directly or indirectly influence business operations. While
some of these are within the business’s control, most of these are not; and the
business has to adapt itself to avoid being affected by changes in such factors.
The environment irrespective of its external or internal nature, the business
organization must have a clear understanding of them. We have realized that
they have a great impact on the operations and the decision making of the
company.
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JAYSA MARIE ALLEJOS JOHN ARSEN ASUNCION MYLENE BACHO CRISTINE JHOY ALVEZ