Meaning of Business Environment
Business environment consists of all the factors such as consumers, investors, suppliers, employees, management, government, technology, market trends, social trends, expectations, market demands, economic, and climatic changes. These factors impact the business environment to a great extent.
Thus, the Business environment consists of all internal and external forces influencing the business. Let’s learn about the different features of the business environment here.
Features Of Business Environment
#1. The environment is everything in surrounding which impacts the business
The foremost amongst the features of business environment is its holistic nature. Business environment consists of everything present in the surrounding. All the things such s political bodies, cultural bodies, technology, and all legal and global forces make the business environment.
#2. The business environment is complex
Complexity is the significant one amongst the features of business environment. The business environment becomes complex in nature because of the involvement of different environmental features, because of the fast-changing nature of different features, which makes the business environment. Especially the intervention of government makes the business environment more complex.
Frequent change in governmental policies make the business environment even more complex, and it is quite difficult to manage s business, which is providing services in different countries as different countries have different rules to conduct business.
#3. Dynamic nature of the business environment
Business environment consists of various internal as well as external factors like political environment, technology, suppliers, consumers, etc. these factors are dynamic and changes fast. Take the example of technology; technology is change at a rapid speed. The change at dynamic rate is yet another amongst the important features of the business environment.
The technologies which are considered latest today will become obsolete in a few years. Companies are required to update the technology that they frequently use to stay ahead in the business and other example is the fast-changing demands of consumers such as more and more people are now becoming health-conscious, and they don’t want processed food.
Therefore, food companies are required to think about the ideas using which they can sell food to the people.
#4. The uncertainity
No one can predict the business environment. It is uncertain to predict what changes should be expected in the factors of the business environment. For example, there could be raw material which is available easily today, but it can be difficult to get a few years later.
The dynamic nature of the prices of raw material can also impact the revenue generation of business. Therefore, all businesses should be ready to make changes in business practice when an uncertain situation arises. This one amongst the features of business environment is what all the managers try their best to analyse and tackle to the benefit of their organisations.
#5. The business environment is full of opportunities as well as obstacles
The business environment not only pose uncertain situations and scenarios, but it also throws various opportunities and obstacles on your way to conduct business.
It requires a keen and sharp eye to pick opportunities and convert them into business ideas to make a profit and to either avoid or make effective plans to handle obstacles.
For example, Instant noodles were a hit when they were introduced in the market, but nowadays people are becoming aware of the health issues which are caused by the instant noodles, and people want a healthier alternative to instant noodles.
In such a scenario, companies which produce instant noodles started making noodles using whole grain wheat and started selling them as a healthier alternative to earlier instant noodles. Here the companies avoided the obstacle by converting it into a business opportunity.
#6. Long-term impacts
Long term scenario is one of the most critical features of business environment. Most changes in the business environment impact the business for a long period. For example, when there is a change in the political environment the business its impacts not only last for the few months or few years but they will be there until no further changes take place in the environment.
Some impacts of business environment are good, and some are bad for the business and can also force the permanent shut down of the business.
#7. Future business planning is influenced by the business environment
Impact of business environment on future planning is heralded as the most important aspect amongst the features of business environment. Companies are required to plan ahead of time to stay in the market. The business environment highly influences the future plans of the business. It is important to plan properly to make maximum profit.
A well-thought plan can help you to deal with certain changes in the business environment. Planning requires a thorough study of all business environments.
The time to time thorough study of business environments helps the businessman to observe any small changes taking place in the environment that can have deep impacts on the business in the long run.
Therefore, future actions can be planned accordingly.
#8. Business required to be adjusted as per the environment
Business environment does not adjust with the business, but the business is required to adjust to the environment surrounding it. For example, a company has to make changes in the employment policies of the company if a new rule is enforced by the law.
Certain changes in the environment might impact the revenue generation of the business. Earlier you adapt with the changing environment lesser will be the revenue loss.
#9. All factors are inter-connected
All different factors of the business environment are interconnected with one another.
For example, if there is inflation in the price of the raw material as a result the total price of the final product will also be high, which will impact the budget of the consumers as a result of which consumer will either stop using the goods, or they will buy the lesser amount which in turn impact the revenue generation of the companies and the evident impact can be seen in the economy of the country.
Therefore, the change in one factor of the business environment affects the rest all of the factors of the business environment.
#10. The business environment is relative in nature
The business environment differs from country to country and company to company. For example, if there is a loss in the sale of fast food, then the sale of raw vegetables and fruits will increase.
The technology used in every country is different as a result, there will be different business policies in each country.
Thus, it can be said that understanding of the features of business environment and their impact on the business strategy is critical for the business managers as their success as well as the organisations’ survival and profitability greatly depend upon its favourable interaction with the components of business environment.