PU Note

Unit 1: Introduction to Business Environment

The word ‘Business Environment’ has been defined by various authors is as

follows:

“Business Environment encompasses the -climate’ or set of conditions, economic,

social, political or institutional in which business operations are Conducted.”—

Arthur M. Weimer

“Environment contains the external factors that create opportunities and threats to

the business. This includes socio-economic conditions, technology and political

conditions.” – William Gluck and Jauch

‘‘Business environment is the aggregate of all conditions, events and influences

that surround and affect it.”—Keith Davis

“The environment of business consists of all those external things to which it is

exposed and by which it may be influenced directly or indirectly”. —Reinecke

and Schoell.

“The total of all things external to firms and industries that affect the function of

the organization is called business environment.”—Wheeler

“Civilizations require challenges to survive. Thus environment also contains

hostilities and dangers that may be overcome by individuals and organizations.”—

Arnold J. Toynbee

On the basis of the above definitions, it is very clear that the business environment

is a mixture of complex, dynamic and uncontrollable external factors within which

a business is to be operated.

Apart from this, Business Environment can also be defined as a set of conditions –

Social, Legal, Economical, Political or Institutional that are uncontrollable in

nature and affects the functioning of organization.

Features of Business Environment:

Following are the features of business environment:

i. Dynamic: Business environment is dynamic in nature that means, it keeps on

changing as the time pass by.

ii. Unpredictable: The change in business environment is unpredictable. It is a

very difficult to predict the exact nature of future happening and the changes

in economic and social environment.

iii. Differ from place to place: Business environment differs from place to place,

region to region and country to country. Political, economical, etc conditions

in Nepal differ from China and other nations.

iv. Interrelatedness: The different factors of business environment are co-related.

For example: Change in government may lead to change in economic

policies.