Business Environment


Each business should always keep in mind that external and internal elements can affect each other and work together in order to influence it. In addition, the business environment is the sum total of individuals, group of individuals and organisations that depend upon the sustainability and overall performance of the business. Various forces that constitute the business environment are market trends and conditions, technological changes, value system, human resources and so on. Just like that, the Benefit and Safety Guidelines are an external factor that affects the internal state of commercial tasks. In addition, some external components are beyond their control capacity. These variables are often referred to as external constraints.

External Factors

External factors exist outside the business and impact externally to business. A business cannot control these factors effectively. Thus, these factors are known as uncontrollable factors. Some of the external factors of business environment are detailed below:

  1. Political factors - The political components are administrative practices and political conditions that can affect the business. The political elements involve incorporate laws, guidelines, duties and other exchanges of obstructions, and war unrest.
  2. Microeconomic factors - Microeconomic elements are the factors that affect the functions of businesses either positively or negatively, for example, estimates, requirements, supplies, partnerships with suppliers and a chain of dispersion, including retail locations that sell items, as well as the number and opposition quality of the business.
  3. Macroeconomic factors - Macroeconomic variables are the factors that affect the economy in general, not just the business. The models include things such as loan costs, unemployment rates, money exchange rates, customer safety, optional customer payment, customer reserve rates, subsidies and depression.
  4. Technological changes – The external functions of business are affected by the technological environment in the market place. Sometimes, technological changes increase risks and pose threats to businesses. On the other hand, it positively contributes to business by providing various opportunities such as innovation in products and services, improvement in the production process, new ways of product’s distribution and many more.  

Internal Factors

Internal factors exist within the workplace and it affects the goals and objectives of the business. These factors are effectively controlled by business and strongly affects the goals and objectives of business. Some of the internal factors of business environment are discussed as follows:

  1. Value system – The value system in business affects the mission, vision and values of business. Further, it affects the plans, policies and practices of an organisation.
  2. Organisational structure – The decisions of a business are strongly affected by its organisational structure. In organisational structure like composition of board of directors influence business decisions. An inadequate organisational structure negatively influences decision making and delays quick decisions in business.
  3. Human Resource – Human resource is considered as a critical element for employee’s wellbeing in any organisation. The human resource of the organisation contributes to strengths and weaknesses and affects directly or indirectly to business. Further, human resource manager who takes their responsibility and does their tasks effectively affects the business positively.