Journal of Hotel and Business Management
Open Access

Importance and Characteristics of Business Environment

Stephen Rogerson^{* *}Correspondence: Stephen Rogerson, Department of Hotel & Business Management, Jamia Millia Islamia University, Jamia Nagar, Okhla, New Delhi, India, Email:

Author info »

Description

The corporate world operates in a social environment, much like people do. Businesses must navigate a wide range of relevant environments in order to operate effectively. The way the company interacts with its surroundings determines how well it does. A company is doomed to slowly vanish into obscurity if it consistently shows no inclination to adapt to significant environmental changes. Businesses must not only be aware of the various environmental factors in order to be successful, but also respect, adapt to, or otherwise control these factors. To survive and grow, the company must constantly assess its environment and adjust.

Any company's primary difficulty is staying alive. A business must have at least the following two capabilities to survive in the long run.

• The capacity for growth and

• The capacity for transformation

In this chapter, the components of the business and commercial environment are explained. The relationship between an organisation and its environment, environmental analysis and scanning, and an organization's response to the environment are also covered in this chapter.

Importance of business environment

Business environment is the sum of all internal and external aspects, including employees, customer wants and expectations, supply and demand, management, clients, suppliers, owners, government activities, technical advancement, social trends, market trends, and economic changes, among others. These elements have a direct or indirect impact on how a firm operates and performs its functions. The environment and circumstance of businesses or corporate entities are impacted by these aspects when they are considered collectively.

By assisting in the identification of business possibilities, utilising useful resources, and assisting in planning, the organisational environment improves the overall performance, growth, and profitability of the business. Business environments come in a variety of forms, including macro and micro environments.

The key component of any firm is its environment. Suppliers, competitors, the media, the government, customers, market circumstances, investors, and numerous other entities operating on the outside all contribute to the business environment. So let's begin by learning about the business environment's basics and its significance.

Characteristics of business environment

Complex

• It is complicated in the sense that it is highly challenging to determine the precise influence of a given component on the entity.

• Different elements of the business environment are closely interrelated and interdependent.

• The other elements are impacted when one element changes. The non-economic environment has an impact on the economy, which in turn has an impact on the economy.

Dynamic

• Dynamic means are always changing, and the environment is volatile as a result of the various contributing variables' constant shifts in nature, shape, and character.

• Relativity.

• The term "business environment" is ambiguous. It varies from nation to nation and even from region to region.

• Compared to communist economies, capitalist economies like the US and the UK have a distinct type of atmosphere. A country's economic system has an impact on the business climate.

• The state of technology varies from one nation to the next.

Uncertainity

• The business environment is highly unpredictable since it is very difficult to predict the future.

• Uncertainty also rises in volatile environments, or environments that change quickly.

Multi-faceted

• The phrase suggests "having a variety of sections or sides."

• The perception of the observer is crucial since a new shift or development may present new opportunities to one person while being a threat to another due to the complexity, ambiguity, and volatility of the business environment.

Far reaching impact

• The phrase means that anything "has significant and broadly relevant impacts or ramifications."

• Every business organisation functions in a certain environment that it both shapes.

• The business climate has a significant impact on the organization's survival as well as growth. The business may fail if you don't adapt to the new circumstances.

Conclusion

The phrase "business environment" refers to all the people, groups, organisations that compete with one another, as well as the government, courts, media, investors, and other factors that are out of the control of business organisations but have an impact on how well businesses perform. Because of this, changes in government economic policies, quick technological advancements, shifts in consumer preferences and tastes, rising market competition, etc. are all beyond the control of business organisations but have a significant impact on the performance of the business.