Comment on the following: Business environment is aggregate of all conditions, events and influences that surround and affect the business.

Answer 6A(ii) The term environment in context of business refers to all external forces or factors having a direct or indirect bearing on events related to functioning of business. A business organisation does not exist in a vacuum but has to take into account both external and internal environment. Business environment may offer opportunities for any firm or pose threats to the firm. A business firm is also affected by a number of internal factors, which are forces internal to the business organisation. While the policy makers and the managers on the top are concerned with the external environment, the middle level and lower level management are more concerned with the internal environment. Suppliers, competitors, consumers, government, bankers, customers, economic conditions, market conditions, investors, technologies, political parties, international institutions and multiple other institutions working externally to a business constitute its business environment. These forces influence the business even though they are outside the business organization. Thus, business environment is the sum total of all individuals, institutions and other forces that are beyond the control of a business enterprise but the business is still influenced by them as they affect the overall performance and sustainability of the business enterprise.