1. BUSINESS
ENVIRONMENT
compiled by Vusumuzi Lungelo Khanyile
department of education, University of Johannesburg

2. WHAT IS BUSINESS
ENVIRONMENT ?
• Business
Environment is a
relationship between a business’s
actions and its environment.
Environment is the surroundings of a
business by which business
influenced directly or indirectly.
Where the political, economic, social
and technological factors shopping a
business environment are assessed
by a business so as to devise future
strategy.

3. BUSINESS ENVIRONMENT
ENVIRONMENT REFERS TO ALL FACTORS
WHICH HAS A BEARING ON THE FUNCTIONING
OF A BUSINESS UNIT.
IT MAY BE INTERNAL AND EXTERNAL

4. Environment
•
The environment is the result of changing social and
economic and political forces which creates
challenges, opens up new opportunities and affects
the strength and weaknesses of various business
segment.

5. DEFINATION OF
BUSINESS
•
A business firm is an economic unit which is engaged in the
production or distribution, or both the production and distribution of
goods and services for the purpose of earning profits

6. Characteristics of Business

7. BUSINESS OBJECTIVES

8. Elements of Business
Environment
Business Environment consists of
all those factors that have a
bearing on the business.

9. LEVELS OF ENVIRONMENT
•
INTERNAL ENVIRNONMENT
Promoters’ / shareholders’ values
Mission / objectives
Management structure
Internal power relationship
Physical assets and facilities
Company image / brand equity
Hr, Marketing, technological, financial
capabilities.
Cont…….

10. LEVELS OF ENVIRONMENT
•
MICRO (TASK / OPERATING) ENV
Suppliers
Publics
Marketing intermediaries
Competitors
Customers
financiers
Cont…….

11. LEVELS OF ENVIRONMENT
•
MACRO (GENERAL / REMOTE) ENV
Global environment
Technological / natural environment
Social / cultural environment
Political environment
Demographic environment
Legal environment.

12. Types of Environment
Internal Environment
External Environment
Micro environment
Macro environment
Economic
Non
Economic

13. ECONOMIC ENVIRONMENT
• Recently it is complex.
Determined by government,
capital market, household sector,
global market etc. It consists of
economic conditions, economic
systems, economic policies,
economic growth, interest rates,
currency exchange rates

14. ECONOMIC CONDITIONS
• Determined
by national income,
percapita income, economic
resources, distrn of income and
assets, economic development
etc. business cycles and
economic growth are also
important in the eco.conditions
and in turn environment

15. Social Environment
•
•
The social environment of business includes social factors
like customs, traditions, values, beliefs, poverty, literacy
etc.
For example: During festive seasons there is an
increase in the demand for new clothes, sweets,
fruits, flower, etc.

16. POLITICAL ENVIRONMENT
•
Legislature
•
Executive
•
Judiciary
•
Impact of defence and military policy, Political stability,
President’s rule, emergency, philosophy of political parties,
Foreign policy, like allignment of non allignment policy, loan
from IMF, ADB, ASSEAN agreement etc.

17. Legal Environment
•
This refers to set of laws, regulations, which influence the
business organizations and their operations.
•
Every business organization has to obey, and work within
the framework of the law.
Eg: Factory act 1948.

18. Domestic Business
Environment
•
The domestic factors that affects the firm situated in a
domestic country.

19. Global Business Environment
•The Global Business Environment is that the business carried on globaly.It is
influenced by the World Trade Organisation, principles and agreements.

20. Overview of Business Environment
MACRO ENVIRONMENT
ECONOMIC
Environment
MICRO ENVIRONMENT
BUSINESS
Internal Environment
TECHNOLOGICAL
FACTORS
Values,
Mission & Objectives.
Human Resources,
Co. Image & Brand Equity
DEMOGRAPHIC
FACTORS
MARKETING
INTERMEDIARIES
Non - Economic
Environment
SOCIAL
CULTURAL
FACTORS

22. NATURE OF BUSINESS
ENVIRONMENT
 Risk
and uncertainty
 Profit
Maximisation
 Competition
 Technology
 Change
oriented

23. COMPONENTS OF BUSINESS
ENVIRONMENT

24. Internal Environment
•
The internal factors are generally regarded as controllable
factors because the company has control over these
because the company has central over these factors; it can
alter or modify such factors as its personnel, physical
facilities, organization and functional means, such as
marketing mix to suit the environment.

25. Determinants of internal
environment
•
Mission and vision of the organization
•
Management philosophy and strategy
•
Industrial relations
•
Corporate culture and values
•
Line and staff relations
•
Governance standards and codes
•
Quality central system
•
Team spirit among employees
•
Work culture and socio-economic background of employees
•
Job design and coordination
•
Quality of internal communication
•
Compensation system and career progression of employees
•
Central system of the organization

26. External Environment
• External
environment of business
consist of institutions, organizations
and forces operating outside the
Company. All these individually as
well as collectively exercise their
influence on the latter. Broadly
external environment of business may
be classified into
• (A)
Micro Environment and
• (B)
Macro Environment

27. The most prominent performs in the
micro environment are the following
•
Suppliers of inputs
•
Workers and their unions
•
Customers
•
Market intermediaries
•
Competitors
•
Public

28. Micro Environment

29. Macro Environment

30. DETERMINANTS OF BUSINESS ENVIRONMENT
Economic policies :
Industrial Policy
. Political Conditions
Political Stability
Resources
Natural resources
Trade Policy
Monetary Policy
Fiscal Policy
Corruption rule of law
and
governance including
business
law and regulations
Human resources

31. Bibliography
•
Ashumali Singh. (2009).business environment. Available:
http://www.slideshare.net/singhanshu21/first-chapter
•
Babasab Patil (karrisate). (2012). Introduction to business
environment. Available:
://www.slideshare.net/BabasabPatil/business-environment-pptdom-s-11362732?qid=2c2d8a8e-e4bf-4962-84c703b2356965cc&v=qf1&b=&from_search=6
•
Jithin Clashes Zcs. (2013). Business environment basics.
Available: http://www.slideshare.net/jithinclashes/businessenvironment-basics
•
Pankaj Kumar. (2011). Elements of business management.
Available: http://www.slideshare.net/birubiru/elements-ofbusiness-environment-7051392
•
R.Paul Godwin. (2013). Domestic and global business
environment. Available:
http://www.slideshare.net/paulpaul11/domestic-and-globalbusiness-environment