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DYNAMICS OF

BUSINESSENVIRONMENT

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Business environment

Business environment refers to those

aspects of the surroundings of business

enterprise which have INFLUENCE on

the functioning of business. An organization can survive and grow

only when it quickly and continuously

adapts to changing environment.

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Definition of business environment

Business environment is the total of all

things external to business firms and

industries which affect their organization

and operations.According to WHEELER

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Dynamics of Business

Environment

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FACTORS PRODUCING CHANGES

IN BUSINESS ENVIRONMENT

Changes in Government Policies

Variations in Growth PerformanceCorrective Policy Actions

Changes in Market Structure and

Competition

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FACTORS PRODUCING CHANGES

IN BUSINESS ENVIRONMENT(contd..)

Future Expectations and Business

Speculation

Changes in Consumer Attitudes, Tastes,

and Preferences

Imports and Foreign Investment Changes

Non-Economic Factors

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Changes in Government Policies

Government affects business environment

in various roles such as:

Regulators Promoters

Entrepreneur

Planner Consumer

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Variations in Growth Performance

Variations in growth rate from year to year

bring about corresponding change in the

business environment and business firms

adjust to the changing scenario..

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Corrective Policy Actions

Corrective actions are taken when actual

performancedeviates from intended or

planned performance.

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Changes in Market Structure and

Competition

The market structure basically depends

upon such factors as the no. of buyers and

sellers in the market, freedom of entry

and exit, independence between firms,

mobility of the factors of production and

availability of market information to the

various participants.

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Future Expectations and Business

Speculation

Both individuals and business firms on the

basis ofpast trends and current

scenario anticipate future changes in avariables such as rate of interest, rate of

inflation, exchange rate, taxes,

government borrowings, advertisementexpenditure etc.

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Changes in Consumer Attitudes,

Tastes, and Preferences

The main factors that bring about changes

are Education, Geographical mobility,

Fashion trends and compulsions ofSeasonal factors. Consumers perceptions,

attitudes and lifestyle are influenced by

Advertising and result in changing tastes

and preferences.

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Imports and Foreign Investment

Changes

Exposure of foreign products and foreign

business firms can cause a sea change in

the nature of business environment.

Differences in the prices of imported

and domestically produced goods pose

challenge to the domestic firms to become

lean and efficient so that they can stay inCompetition.

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Non-Economic Factors

There is a wide variety of non-economic

factors which can destabilise the business

environment. Such as social and cultural

factors, political changes, naturalclimates.

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Thank You