What is Business Environment? Explain its types

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What is business environment?
A business organization can not exist a vacuum. It needs living persons, natural resources and places and things to exist. The sum of all these factors and forces is called the business environment.

Business environment is of two types-
(i) Micro environment or the internal environment
(ii) Macro environment or the external environment

(i) Micro environment / Internal Environment of Business
Micro environment comprises of the factors in the immediate environment of the company that affect the performance of the company. In includes the suppliers, competitors, Marketing intermediaries, customers, pressure groups and the general public. Supplier form an important factor of the micro environment of business as the importance of reliable sources of supply are obvious. Supplier include the financial labor input. Stock holders, banks and other similar organizations that supply money to the organization are also termed as suppliers. Managers always strive to ensure a study flow of inputs at the lowest price. Customers are also an important factor in the internal environment of business. The customers or the clients absorb the output of an organization and a business exists to meet the demands of the customers. Customers could be individuals, industries, government and other institutions. Labor force is also an important part of the internal environment of business. Other than these the business associates, competitors, regulatory agencies and the marketing intermediaries are also a part of the micro business environment.

Macro environment / External environment of Business :
The forces and institutions out side of the organization that can potentially affect the performance of the organization come under the external environment of Business. The macro environment of business consist of the economic, demographic, natural, cultural and political forces. The external environment of business is often categorized into the economic environment, political and government environment, socio cultural environment and the international environment.

This article has been written by KJ Singh a MBA Graduate from a prestigious Business School In India
Article Published:December 17, 2011
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  • idries ahmad October 17, 2015 at 2:30 am

    simply the best

  • bad boy October 21, 2015 at 4:33 am


  • narayanan November 5, 2015 at 12:47 pm

    non worthy information about business environment

  • Ronnie November 11, 2015 at 10:17 pm

    Useful content but about what you termed the internal environment, isn’t it the external micro/operating environment?
    it’s external in the sense that it include factors that are outside the environment but are closely related to the business. Although the business doesn’t have complete influence over those factors it can make decisions which can lessen any negative effect resulting from any of those factors but is not responsible for that factor. For instance, a business is not responsible for how a supplier operates but can choose to have multiple suppliers to lessen the effect of one supplier failing to supply the goods.

  • Ronnie November 11, 2015 at 10:21 pm

    *** factors that are outside the business***

  • Neema Mchuruza December 11, 2015 at 3:34 am

    Specific meaning and direct one of business environment

  • maxwekl nato December 14, 2015 at 1:05 am

    cul definition

  • Khaled February 14, 2016 at 3:52 am

    It’s simple and easy to get the concept.
    Thank you.

  • Okeke Christian C. April 1, 2016 at 11:20 pm

    Correct definitions, though not comprehensive.
    It’s simply a summary.

    Ronnie, the actions of the internal business environment DIRECTLY affect the business, whereas the effect of the external environment is indirect.
    Well, perhaps you should know better; I am only an engineer.

  • swetha April 3, 2016 at 3:07 am

    its really very good to get the subject. ..
    Thank you.

  • humphrey April 11, 2016 at 2:59 am

    its woow…i like it

  • yuki July 10, 2016 at 4:43 am

    it was very helpful to get the subject understanding…..
    thank you.

  • sumith August 18, 2016 at 3:53 am

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  • Lameck mwitiwa September 2, 2016 at 2:14 pm

    Studying through this is good.I feel very good.

  • swapnajit sahoo December 15, 2016 at 9:14 am


  • MAHENDRA KUMAR NAGAR January 9, 2017 at 9:46 am

    thanks for tell us about the business environment

  • Gideon Pius Shino March 11, 2017 at 5:45 pm

    very easy to understand

  • Babajide Samson Ogunkole May 9, 2017 at 6:16 am

    what about the intermediaries environment

  • Babajide Samson Ogunkole May 9, 2017 at 6:18 am

    The Internal Environment. An organization’s internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. Although some elements affect the organization as a whole, others affect only the manager.

  • dilbagh kalsi September 28, 2017 at 10:43 pm


  • yagya prasad bhattarai January 30, 2018 at 1:12 am

    practical and knowledgeable answer which affect the clear understand a student

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