This article is about the business environment. It discusses how the various characteristics in which a business runs influence it.
It is too obvious to be doubted that both business and environment have influence over each other. Business environment is the sum total of all external and internal factors that influence a business. It’s worth noting that the success of every business depends on adapting itself to the environment in which it runs. Hence identifying the factors within the boundaries of the organization must be considered. However, when identifying the factors for successfully managing the business, the business managers may face many a problem attributable to the following characteristics of the business environment.
Internal and external factors- The environment of business is composed of internal and external factors. The internal business environment includes factors within the organization that impact the approach, operations and the success of a business.
Internal environment includes employees, business goals and objectives or plans, policies etc. As regards external environment, it is further broken down in to micro factor and macro factor. Micro factor covers society, customers, suppliers, competitors etc. Macro factor includes social, economic, legal, technological and other factors. Since internal factors are related to the organization’s performance and capability and so they can be controlled and influenced in one way or another, whereas the external factors that stem from outside the organization can be neither controlled nor are they predicted, as they directly affect the business environment.
Opportunities and Threats- Business environment is constantly changing process. It’s flexible as well. Since it’s a mixture of many factors and changes, it is dynamic in nature. Sometimes it may bring new avenues for rapidly evolving and sometimes it causes to pose increasingly dangerous threats to a business. So, the opportunities may be favorable to a business, whereas the obstacles created by the environment may be unfavorable to the business, as they affect its growth and development and profitability.
Environment is complex in nature- It is complex in nature, in the sense, it consists of such factors, events or conditions arising from different sources that it becomes easy to understand sometimes, while at times or most of the times it seems hard to understand, rather, it is harder when considering it in totality.
Environment is multifaceted- The business environment has many aspects and sides to be observed and perceived. Its perception depends upon its complex functions. The changes of business may have a number of impacts. This saying is worth mentioning. “Change is inevitable. Some people change for the better and some for the worst, so you can either embrace them or replace them.” The same goes with a business. Some people welcome change while some don’t. Similarly, a change may be considered as a good opportunity or it may be considered as a threat.
Thus it is quite clear that the environment is a set of relevant factors within which a business needs to be run and functioned while stressing and demonstrating the need for adapting to and adopting the environment. It’s then only to be said that not only a business can sustain survival but also make impressive achievements endlessly.
Working capital is defined as being the capital of a business which is used in its day-to-day operations. It is the net of current assets minus current liabilities.
Public memory is awfully short, and one of the reasons why financial crisis tend to recur as soon as the horrifying memories of the last crisis have died down. As we complete a decade of what was one of the worst and most wide spread financial crisis of last century, perhaps it is time to remind ourselves of the man-made follies that led to it, and try to ensure that they are repeated in near future. .
The current ratio is an indicator of a company’s short term liquidity. It’s mainly used to get an idea whether or not a business firm has enough resources to pay its debts over the next 12 months..