Factors Affecting Business Environment And Their Impact On Business Pdf

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factors affecting business environment and their impact on business pdf

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It is important for every business organization to interact and transact with its environment because the business environment has direct relationship with the organization.

A business concept that looks perfect on paper may prove imperfect in the real world. Sometimes failure is due to the internal environment — the company's finances, personnel or equipment. Sometimes it's the environment surrounding the company. Knowing how internal and external environmental factors affect your company can help your business thrive. In a bad economy, even a well-run business may not be able to survive.

External Factors Affecting Business Environment

Marketers must be aware of the business cycle, and react appropriately according to which stage of the cycle the economy is in. The state of the economy is always changing—interest rates rise and fall, inflation increases and decreases. Economic changes will affect the demand and supply sides of the market, meaning that the marketer must always be aware of the general economic environment. Fluctuations in our economy follow a general pattern known as the business cycle. These fluctuations in economic conditions affect supply and demand, consumer buying power, consumer willingness to spend, and the intensity of competitive behavior. The four stages in the business cycle are: prosperity, recession, depression, and recovery see and try to identify the different stages.

Environmental Factors Affecting Business

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Business Environment is not concerned with a single factor. It comprises of several factors and each factor influences the business firm in its own way. Some factors influence the performance of the firm directly while the influence of some other factors is only indirect. These factors provide opportunities, threats and challenges to the firm. Thus, environment is multi-dimensional and very complex in nature. At the same time, each factor should be studied individually.


Three mains categories of the business environment are suggested: that the institutional and the technological factors are the most positively and significantly their impact on companies' performance in order to identify the.


What Are Internal & External Environmental Factors That Affect Business

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by disabling your ad blocker. This simple analysis, which revolves around the Political, Economic, Social, Technological, Legal, and Environmental factors that affect a business, is an extension to PEST analysis which only looks at the first four of the aforementioned factors. However, plenty of individuals run into confusion when trying to decide what falls into which category, and why. This can include things like consumer health, climate change, the availability of energy, or any direct consequences of these things.

PESTLE Analysis: Environmental Factors Affecting Business

If a business wants to be successful in the marketplace , it is necessary for them to fully understand what factors exert impact on the development of their company.

5 Comments

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  3. Eglantine L. 25.04.2021 at 19:35

    The economic environment can have a major impact on businesses by affecting patterns of demand and supply.

  4. Guemonsceki 26.04.2021 at 19:54

    It affects the decisions, strategies, process and performance of the business. The environment is consisting of factors which are beyond the control of the business (STEP) social, technological, economical, legal and political. It provides opportunities or poses threats to the organization.

  5. Robert K. 28.04.2021 at 06:57

    Marketing strategy is a very important aspect of making a business successful.