ENVIRONMENT FOR

BUSINESS
Module-1 An Overview of
Business Environment

MODULE TOUR
1.1 Business: Meaning, Characteristics, and
objectives
1.2
Divisions
of
Business
and
Characteristics of Modern Business
1.3 Business Environment: Internal and
External Environment
1.4 Overview of Economic and NonEconomic Environment

1.1 BUSINESS: MEANING,

CHARACTERISTICS, AND
OBJECTIVES

BUSINESS

Business refers to the buying or selling of goods or

services or the activity of making money by producing
or buying and selling goods, or providing services.

Business means the whole complex field of commerce

and industry, the basic industries, processing and
manufacturing industries and the network of ancillary
services, distribution, banking, insurance, transport
and so on, which serve and inter-penetrate the world
of business as a whole.

Business activities have a two-fold purposeto

generate profit and to cater to the needs of the society

CHARACTERISTICS OF BUSINESS
Element

of enterprise
Dealings in exchange of goods and services
Profit motive
Element of risk and uncertainty
Economic activities related to the production
and distribution
Element of creation of utilities
Element of continuity of transactions

1.2 DIVISIONS OF BUSINESS

AND CHARACTERISTICS OF
MODERN BUSINESS

DIVISIONS OF BUSINESS
Business

is closely related to industry, commerce and

trade.
Industry refers to that part of business activity which
concerns itself with production, processing or fabrication of
products. The products of an industry may be used either
by the final consumers or by another industrial undertaking
for further production.
Commerce refers to all those activities which help in the
removal of barriers lying between the producers and the
ultimate consumers.
Industry refers to the production of goods and services
whereas commerce relates to the distribution and
exchange of these.
Trade refers to mediation in the process of exchange of
goods.

CHARACTERISTICS OF A MODERN BUSINESS

1.
2.
3.
4.
5.
6.
7.

Large size
Global Reach
Oligopolistic Structure
Technology based
Diverse
Government Control
Emerging Ethical Consciousness

1.3 BUSINESS ENVIRONMENT: INTERNAL

AND EXTERNAL ENVIRONMENT
1.4 OVERVIEW OF ECONOMIC & NONECONOMIC ENVIRONMENT

BUSINESS ENVIRONMENT

Environment refers to the condition concerning the

people and things around you in your life.
Environment could mean something external to an
individual or an organization.
Business environment may refer to all the external
factors which have bearing on the activities of a
business.
The prevalent value system in the society, the laws
enacted by the government, the rules and regulations
that govern the economy, the monetary policies of
the central bank, the fiscal policies of the central and
state governments, the institutional set up of the
economy, the import and exports policy, the
governments attitude and policies towards foreign
capital and enterprise, and so on affect a business

FACTORS AFFECTING BUSINESS

ENVIRONMENT

A) THE INTERNAL ENVIRONMENT

Internal
environment
refers
to
the
framework, the situation and the factors
within the business organization and their
impacts on its working.
Factors affecting the internal environment:

Relationship between internal stakeholders

Physical assets
Human assets
Corporate social responsibility
Organizational value system

B) THE EXTERNAL ENVIRONMENT

A business organization is also influenced by

certain forces, institutions and organizations
operating from outside.
The influence is both individual and
collective.
It Can be divided into
1.
.

2.
.

The micro-environment
Customers, suppliers of input, workers along
with trade unions, market intermediaries,
competitors and the public
The macro-environment
Constitutes economic and non-economic
factors

THE ECONOMIC ENVIRONMENT

Economic Systems
Structural Equilibrium
Banking and Monetary Policy
Fiscal Policy
Economic and Price Stability
Money and Capital Market
Factor Endowments
Size of the Market
Social Overhead Capital : Example :transportation , postal service, water service
,electricity etc.
Income Distribution and Purchasing Power
External Trade/International Environment

THE NON-ECONOMIC
ENVIRONMENT
The
The
The
The

socio-cultural environment
educational environment
political-legal environment
demographic environment

THANK YOU..!!