Meaning and Definition of Business Environment
to Bayard O ‘Wheeler Business environment is “the total of all things external
to firms and industries which affect their organisation and operations”.
A business in order to remain successful and
competitive has to adapt to the constantly changing environment. The
formulation of strategic decisions , policies and programmes requires an
understanding of the environmental factors impacting the business. Therefore
scanning of the environment for identifying threats and opportunities is
essential for any business.
The significance of understanding the business
environment is as follows:
in formulating Strategy and future planning: The data relating to the business environment are used as a record for
devising important business strategies and to plan for the future development
of the business concerned.
to identify the opportunities available: The analysis of business environment helps a business to
identify new opportunities .For example in the 80’s Dr Reddy identified the
need for quality service in healthcare and started Apollo Hospitals. He was a
pioneer in corporate hospital care and thus enjoys the first ever advantage in
offering world class medical facilities in India.
scanning: It helps the firms to identify
threats which may affect the business. Thus measures can be taken by the firm
to overcome the threats.
aids: It stimulates systematic monitoring
of environment which helps business in taking steps to cope with the rapid
image: Environmental analysis helps a
business to enhance its image by being sensitive and quickly responding to the
changing environment and needs of people. Example large scale Retail stores
like Aditya Birla’s “More” are now providing home delivery services.
For Example Japanese camera film
making company Fuji Films which had global presence for over 50 years was
affected with the advent of digital cameras