Characteristics Of Business Environment

For any successful business at any place on the globe, it is of utmost importance to understand the environment within which the business has to operate. Because the environmental factors influences almost every aspect of business, be it its nature, its location, the prices of products, the distribution system, or the personnel policies. The success and survival of every business depends on its ability to adjust and adapt itself to the environment within which it functions. For example, when there is a change in the government policies, then the business has to make the necessary changes to adapt it to the new policies.
Like a change in the fashion or customers taste may shift the demand in the market for a particular product, e.g., the demand

It is the group of many such forces that is why, its nature is of totality. (2) Specific and General Forces:
The forces present outside the business can be divided into two parts – specific and general.
(i) Specific: These forces affect the firms of an industry separately, e.g., customers, suppliers, competitive firms, investors, etc.
(ii) General: These forces affect all the firms of an industry equally, e.g., social, political, legal and technical situations.
(3) Interrelatedness:
The different factors of business environment are co-related. For example, let us suppose that there is a change in the import-export policy with the coming of a new government.
In this case, the coming of new government to power and change in the import-export policy are political and economic changes respectively. Thus, a change in one factor affects the other

For example, Ayurveda is an opportunity for Indian herbal companies while it is a threat for foreign cosmetic brands.
(8) Far-reaching impact: Any change in an environment has a direct impact on organization in different ways because an organization is critically dependent on the environment in which it exists.
(9) Relativity:
Business environment is related to the local conditions and this is the reason as to why the business environment happens to be different in different countries and different even in the same country at different places.

SIGNIFICANCE:
There is a close and continuous interaction between the business and its environment that helps in strengthening the business firm and using its resources more efficiently. The business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following