Question

How would you characterise the business environment? Explain with examples the difference between specific and general environment.

Answer 1

The business environment is the sum total of all individuals or institutions and other forces that are outside the control of a business enterprise but that may affect its performance.

Features of business environment

(i) Totality of External Forces: Business environment is aggregative in nature because it is the sum total of all things external to business enterprise. comprising of social political, economic, legal and technological factors.

(ii) Specific and General Forces: Business environment includes both specific and general forces. General forces are economic, social. political, legal and technological conditions, which affect all the enterprises indirectly. Specific forces are investors. customers, competitors and suppliers that affect individual enterprises directly.

(iii) Inter-relatedness: Different elements of business environment are closely inter-related. e.g. increased awareness for healthcare have increased the demand of many healthcare products like sugar free, diet coke, cholestrol free oil, etc.

(iv) Dynamic Nature: Business environment is dynamic in nature as it keeps on changing whether in terms of upgradation of technologies, shifts in consumer preference, change in government politl or changes in trends and traditions.

$\begin{array}{ccc}\text{Basis}& \text{Specific Environment}& \text{General Environment}\\ \text{Scope}& \text{It effects individual}& \text{It has impact on all the}\\ & \text{enterprises directly.}& \text{business enterprises.}\\ \text{Examples}& \text{Investors, customers,}& \text{Social, political, legal}\\ & \text{competitors and}& \text{and technological}\\ & \text{suppliers.}& \text{conditions.}\end{array}$