Meaning and Definition of Business Environment
According 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:
i. Helps 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.
ii. Enables 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.
iii. Environment 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.
iv. Business aids: It stimulates systematic monitoring of environment which helps business in taking steps to cope with the rapid changes
v. Public 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