Factors effecting or Components of Business Environment

In this article we will discuss about Factors effecting or Components of Business Environment.

Business Environment

Business environment means combination of all those external or internal factors which are directly or indirectly effects environment of business organisation. The different organisational factors which effects business environment are Internal and External environment.

  1. Internal factors/Environment: Internal environment/factors consists all those factors which are directly effects business organisation and these factors are consists insides business organisation are

    • Financial factors- Financial factors like financial policies, financial position and capital structure also affects a business performance and its strategies.
    • Policies- It involves policies of the firm should be properly framed taking into consideration the objectives and resources of the firm. It helps to accomplish business objectives.
    • Business objectives-  Objective of the business helps business organisation to influence their business productivity and helps in achieving goals of an organisation.
    • Technology- Use of technology also effect business environment. If the technology is cheap it reduces business growth but if technology is good it increases business growth.

    2.External Factors

    • Customer: Consumer is the king of the market. They are the centers of the business. They are one of the most important factors in the external environment. Customer satisfaction has become more challenging due to globalization.
    • Competition: Competitors can be called the close rivals and in order to survive the competition one has to keep a close look in the market and formulate its policies and strategies as such to face the competition.In market there is different seller with different product and those sellers have competition between them, so there is a market competition between different persons.
    • Suppliers: Suppliers are those persons who provides goods and services and fulfill customers needs it helps business in growth.
    • Market: Market is a place where forces of demand and supply operate, and where buyer and supplier meet together the transactions of goods and services. 


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