IMPORTANCE OF BUSINESS ENVIRONMENT

BUSINESS ENVIRONMENT

Business environment is the sum total of all external and internal factors that influence a business. You should keep in mind that external factors and internal factors can influence each other and work together to affect a business. For example, a health and safety regulation is an external factor that influences the internal environment of business operations. Additionally, some external factors are beyond your control. These factors are often called external constraints.

In business all the activities are being organized and also carried out by the people to satisfy the needs of the consumers. So, it is an activity carried out by the people for the people which mean people occupy a central place around which all the activities revolve. It means business is people and a human is always a dynamic entity who believes in change and it may be right to say that the only certainty today is change. It poses a huge challenge for today’s and especially tomorrow businessmen and managers to be aware of specific changes so as to keep themselves abreast with the latest happenings in the field of business to maintain their survival and sustainability in the market. Therefore, the study of business environment is of outmost importance for the managers and practitioners. The importance of business environment consists of the following: 

I.       Identifying firm’s Strength and weakness:– Business environment helps to identify the individual strengths and weaknesses.

II.    Determining opportunities and threats: – The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprise for meeting the challenges successfully.

III. Continuously learning: Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.

IV.            Image Building: Environmental understanding helps the business organizations in improving their image by showing their sensitivity to the environment within which they are working.

V.   Meeting competition: It helps the firms to analyze the competitors strategies and formulate their own strategies accordingly.