THE BUSINESS ENVIRONMENT
Introduction
? An organisation does not exist in a vacuum. It exists in its environment, which provides resources and limitations.
? If an organisation adapts to its environment, it will prosper, otherwise it will fail.
? An organisation and its environment are interdependent and interact very intensively.
o The organisation depends upon its environment for the resources and opportunities necessary for its existence.
o The environment contributes resources to the organisation only if the organisation returns desired goods and services to it.
Effects of the Environment on the Organizations
Environmental factors affect an organisation in 2 ways. They set limits and pose threats and they also provide opportunities and challenges. A change in the government export policy may suddenly threaten an export oriented organisation. A reduction in the rate of interest may provide cheap finance to an organisation.
Effect of Organization on the Environment
Effects of the organisations on its environment are quite obvious in the case of cigarette manufacturing; liquor manufacturing, film making, pharmaceutical companies, etc. These organisations have an obvious impact on its environment.
Elements of the Environment
The business environment that firms operate in can be divided into the internal environment and the external environment.
A. Internal Environment
This refers to all the factors or forces that affect the day to day activities of the business.
1. Customers
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