Business Environment

Lesson

Part 1: what the business environment is, its features, why it matters, and how firms scan it.

In this lesson you will

Explain the meaning and features of business environment
Discuss how understanding the environment helps a firm spot opportunities and threats early
Define environmental scanning and explain why firms monitor their environment continuously

Part 1 at a glance

Diagram

What is business environment?

The firm sits inside its micro environment, which sits inside the macro environment.

Business environment is the sum total of all individuals, institutions and forces, internal and external, that affect the working and performance of a firm.

Concept

Features of business environment

Table of seven features of business environment with their meanings
Feature	What it means
Totality of forces	All forces, taken together, form the environment
Specific and general forces	Some affect one firm (a rival next door); some affect all (a tax change)
Inter-relatedness	A change in one factor sets off changes in others
Dynamic	It keeps changing
Uncertainty	Future changes are hard to predict
Complexity	Many factors act together, so effects are hard to judge
Relativity	Its impact differs by place and firm

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