Business Environment and Economics

Environment literally means the surroundings, external agents, circumstances under which someone or something exists. The environment of any organization is the aggregate of all conditions, events and influences that surround and affect it. Environmental factors are essentially governing factors within which the firms and their managements must operate. For example, the value systems of the society, the rules and regulations laid down by the government, the monetary policies of the Central bank, the institutional set up of the country, the ideological beliefs of the leaders, the attitude towards foreign capital and enterprise etc. all constitute the environmental system within which a business firm operates. These environmental factors are various in forms and numerous in numbers. 1. Environment is complex. 2. Environment is dynamic. 3. Environment is multifaceted. 4. Environment has a far reaching impact on an organization. A business firm is a product of several environments. To survive the firm must adopt itself to its environment as it occurs.