Manish Sharma

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Business Environment

Meaning of Business

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It is an economic activity undertaken in a systematic manner with the intention of making profit which involves risk and it results in the production or exchange of goods or services.

Business Environment

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Business environment includes set of conditions or situation that affect business activities or decision making.

These conditions are broadly classified into internal environment and external environment.

Internal Environment

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• Internal environment consists of factors which are within the control of the organization.

• Business ethics, Objective of the firm, Value system, Management structure, Physical assets, Technological resources, Financial resources, Stakeholders, Human resources etc. are part of the internal environment of business.

External Environment

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External environment include factors which are outside the control of the business organization but it provide opportunities or pose threats.

External environment is further classified into two categories micro environment and macro environment.

Micro Environment

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Micro environment include factors which have a direct impact on the functioning of the organization.

Micro environment consist of general public, competitors, customers, suppliers, trade union, marketing intermediaries (distributors, dealers, retailers) etc.

Macro Environment

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Macro environment provides the business firms a framework within which they have to operate and adapt themselves. It indirectly affect any business firm’s operation and working condition.

Macro environment can be categorized into economic environment and non-economic environment.