Composition of Business Environment

Factors Affecting business Environment:

Business Environment refers to all external and internal factors which have a direct or indirect bearing on the activities of business.However some economists use it in a narrow sense and refer business environment only to the external factors which effect business.

Both internal factors and external factors together effect the environment of business. The external environment of business can be further divided into micro environment and macro environment.

There are two broad components of business environment.

a) Internal Factors:

1. Financial Resources 
2. physical and Human Resources 
3. Objectives of Business
4. Managerial Policies
5. Morale and Commitment of Human 
    Resources
6. Work Environment
7. Company Image and Brand Equity 
8. Labour Management Relationship
9. R&D and Technological
10. Promoter's Vision.

b) External Factors:

Micro/Operating                                  Macro/General
 Environment                                           Environment

1. Suppliers                                        1.Socio-cultural Environment
2. Customers                                      2. Legal Environment 
3. Market Intermediaries                   3. International Environment
4. Competitors                                   4. Political Environment
5. Public                                             5. Technological Environment
                                                            6. Economic Environment
                                                            7. Natural Environment