Business and the Environment PDF

Notes on Business and the Internal Environment 1. Definition: The internal business environment includes all the components within a business that influence its operation and function. These components include employees, resources, organizational structure, and company culture....

Notes on Business and the Internal Environment 1. Definition: The internal business environment includes all the components within a business that influence its operation and function. These components include employees, resources, organizational structure, and company culture. 2. Control: Business owners and managers have a great deal of control over the internal environment. They make decisions about the supplies they purchase, which employees they hire, the products they sell, and where they sell those products. 3. Influence: The internal environment can significantly influence a business's success. For example, a motivated and skilled workforce can drive productivity and innovation, while efficient use of resources can reduce costs and increase profitability. Notes on Business and the External Environment 1. Definition: The external business environment consists of all elements outside a business that may act as pressures or forces on the operations of a business. These include customers, markets, competitors, and broader societal trends. 2. Sub-environments: The external environment can be grouped into seven key sub- environments: ○ Economic Environment: This includes the economic system, income level, income distribution, and availability of human and natural resources. ○ Political Environment: This includes the political system, government policies, and stability of the political process. ○ Legal Environment: This includes the legislations and rules operating in a country. ○ Demographic Environment: This refers to the size, structure, age, sex, and geographical distribution of the population. ○ Socio-Cultural Environment: This includes the culture, customs, religion, and way of life of the people. ○ Technological Environment: This refers to the level of technology which determines the volume and quality of production. ○ International Environment: This refers to import and export regulations, policies of foreign trading partners, international trade protocol, etc. 3. Influence: The external environment can have a significant impact on a business. For example, changes in customer preferences can influence product demand, while changes in technology can affect a company's production processes. 4. Control: Unlike the internal environment, the external environmental conditions that affect a business are generally beyond the control of management and change constantly. To compete successfully, business owners and managers must continuously study the environment and adapt their businesses accordingly.