Business Miscellaneous

Understanding the Business Environment

Businesses function in an ever-changing environment, no business can survive in isolation. Imagine a business environment like an entire eco-system made up of factors within the organization and the one outside that could directly or indirectly have an impact on the business. The performance and growth of an organization depends on its business environment.

To understand the business environment in detail we should be aware of the certain characteristics that it exhibits.

Features of a Business Environment

Dynamic – A business environment is ever-evolving. It is continuously changing and is highly flexible. Therefore, it becomes imperative to monitor the changes in the business environment. This feature is also prevalent since a wide range of factors affect a business.

Uncertain – You have probably heard it from experts in the field of business that stepping into a business is like setting foot into uncertainty. You can never truly be sure about the outcome. This makes it difficult to predict any changes. 

Complex – Since there are so many external factors affecting business, it can be a little difficult to understand the impact of each factor. A small change can have a huge impact on your business and you might take too long to figure it out.

Relative – As mentioned earlier, a business environment is similar to an ecosystem. The only way you can establish balance in an ecosystem is when all the related factors are working in harmony.

Composite – If you are part of the business community, you probably understand how there will always be ten ways of analyzing a particular situation. Each person analyzing the situation would do it through their perspective.

Factors Affecting a Business Environment

Several factors form a business environment. These factors can be broadly categorized as external and internal factors.

External Factors

No matter what kind of business you have, the changing trends in the outside world will have an impact on it. The sooner you come to terms with this, the better it will be for you and your business. Many external factors will impact your business, however, due to the nature of your business, there may be certain factors that have a greater impact as compared to others.

Political/Legal Influence 

The political situation of a country plays an important role in dictating the business environment of a business. Politically stable countries are generally more inviting for investors. The political climate also has an impact on tax laws, regulations on business property, and export restrictions, etc.

Economic Situation 

The economic situation is probably the most critical factor that dictates a business environment. There are many economic factors that could directly affect the outcome of your business. Some of the most important are inflation, exchange rate, taxes, and recession.

Your product/service holds no value in a crashing economy. Keeping up with market trends will alert you to any threats. If you are planning to launch your business in another country, a thorough feasibility study will help you analyze the economic situation in detail.

Social Factors

The social norms of a society are related to the ethics, values and the general lifestyle of the people living in a particular community. To understand the demand for your product/service, it is important to be aware of all the social factors related to the particular audience you are targeting.

There are several factors which you need to consider such as the poverty line, the average monthly wages, and the role of women in society. The role of women has been playing an important role in how different societies are transforming. With women working side by side with men, households have a larger income which has changed the frequency at which families shop.

Internal Factors 

Understanding internal factors is equally important when it comes to running a business. These factors are all those elements that are under the control of the business and are unique. The internal factors discussed below will affect your business in one way or another.


Resources is a broad term that refers to either materials, employees or money. Planning out your resources effectively can help you establish your business in a better way. Resources planning can help you to predict the outcome easily. It is also a great way to effectively manage your resources and be wary of any threats which you may be facing within the organization.

Office Environment

The physical environment of an organization is an important internal factor that contributes to the business environment. Most organizations ignore the importance of a clean and hygienic office environment. A clean environment leaves a good impact on any potential clients who walk into your office.

Moreover, it also helps to improve productivity. Investing in cleaning products and commercial cleaning services could help improve the overall office environment and the productivity of the employees as well. Offices based in London can take the services of any reliable London carpet cleaners to improve the overall look of their office.

Operational Efficiency

To keep up with marketing trends and practices, businessmen must be keen on improving their operational efficiency. Developing a strong strategy can help a company improve its operations. Procedures taking place within the company must be optimized to their best. Any redundancy in processes must be avoided to prevent wastage of all kinds of resources.

Organizational Culture

The culture of an organization is the sum of the beliefs and practices of the organization. Every individual which belongs to the organization contributes towards the culture. Organizational culture should encourage communication at all levels. Employees must feel they are at ease and there is a prospect of growth for them.


It has been proven that organizations which make their employees feel valued are more successful. This goes for employees at all levels, even the photocopier at the office deserves the same amount of respect for the work he does. The importance of treating your employees in the right way is mostly undervalued. Employees who are valued and appreciated are generally more productive and contribute to a healthy business environment. 

About the author


Shawn Mike

Shawn Mike provides ghostwriting and copywriting services. His educational background in the technical field and business studies helps him in tackling topics ranging from career and business productivity to web development and digital marketing. He occasionally writes articles for Hire PHP Programmers.