Business Environment
COMPONENTS OF BUSINESS ENVIRONMENT | |After discussing the meaning of business environment, now we will discuss the various components of business environment. The various components of business environment are-
[pic]External environment consists of those factors that affect a business enterprise from outside. External environment includes shareholders, competitors, customers, society, government laws and regulations, policies and technology. External environment is generally classified into micro environment and macro environment. The micro environment consists of factors in the company's immediate environment that affects the performance of the company. These include the suppliers, marketing intermediaries, competitors, customers and the public. On the other hand, macro external environment includes larger factors such as economic, demographic, technological, political, natural and cultural factors. We will explain below micro and macro types of external environment of business. Different players in the micro environment normally do not affect all the companies of a particular industry in a similar way. However, sometimes micro environment of the various firms of an industry remains almost same.
External Micro-Environment
Micro environment includes those players whose decisions and actions have a direct impact on the company. Production and selling of commodities are the two important aspects of modern business. Accordingly, the micro environment of business can be divided. The various constituents of micro environment are as under:
Suppliers:- An important factor in the external micro environment of a firm is the supplier of its inputs such as raw materials and components. Normally, most firms do not depend on a single supplier of inputs. To reduce risk and uncertainty business firms prefer to keep multiple suppliers of inputs.
Customers: The people who buy and use a firm’s product and services are an important part of external micro environment.
[pic]External environment consists of those factors that affect a business enterprise from outside. External environment includes shareholders, competitors, customers, society, government laws and regulations, policies and technology. External environment is generally classified into micro environment and macro environment. The micro environment consists of factors in the company's immediate environment that affects the performance of the company. These include the suppliers, marketing intermediaries, competitors, customers and the public. On the other hand, macro external environment includes larger factors such as economic, demographic, technological, political, natural and cultural factors. We will explain below micro and macro types of external environment of business. Different players in the micro environment normally do not affect all the companies of a particular industry in a similar way. However, sometimes micro environment of the various firms of an industry remains almost same.
External Micro-Environment
Micro environment includes those players whose decisions and actions have a direct impact on the company. Production and selling of commodities are the two important aspects of modern business. Accordingly, the micro environment of business can be divided. The various constituents of micro environment are as under:
Suppliers:- An important factor in the external micro environment of a firm is the supplier of its inputs such as raw materials and components. Normally, most firms do not depend on a single supplier of inputs. To reduce risk and uncertainty business firms prefer to keep multiple suppliers of inputs.
Customers: The people who buy and use a firm’s product and services are an important part of external micro environment.