Business schools offer business environment course for the masters students all around the world.

Why do you think they offer this course? Do you believe that study of business environment is essential for managers? If so why? Business is a form of regular activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted. Thus, business is a system made up of all environmental forces which require the business to adopt new strategy. Business environment refers to these surroundings of business enterprise which affect its operation and determines its effectiveness. Business is highly influenced by its environment, and at times tries to influence the environment also. Todays fast-paced competitive business environment is characterized by change and innovation. Organizations need to understand and respond to ever increasing customer demands, to develop agile supply chains and to mitigate risk. According to M. Weimer, "Business environment is the climate or set of conditions -i.e., economic, social, legal, technological and political situations in which business activities are conducted. In the words of Keith Davis, 'Business environment is the aggregate of all conditions, events and influences that surround and affect it." In the words of Reicre and Schoell, 'the environment of business consists of those external things to which it is exposed and by which it may be influenced directly or indirectly. From the above discussion, we conclude that business environment is a wide term as it has got two dimensional relationships with the environment. On the one hand it affects the social, political and economic environment and on the other hand it is affected by country's social, political, economic and legal environment. The following are the key components of business environment: Economic environment Economic environment consists of economic factors that influence the business in a country. These factors include gross national product, corporate profits, inflation rate, employment, balance of payments, interest rates, consumer income, etc Socio cultural environment

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It describes the characteristics of the society in which the organization exists. Literacy rate, customs, values, beliefs, lifestyle, demographic features and mobility of population are part o the social environment. Social environment includes cultural aspects as well. Culture includes language, religion, values and attitudes, manners and customs, material elements, aesthetics, education, and social institutions as its important elements. It is important for managers to notice the direction in which the society is moving and formulate progressive policies according to the changing social scenario Political environment It comprises political stability and the policies of the government. Ideological inclination of political parties, personal interest on politicians, influence of party forums etc. create political environment. Legal environment The legal environment refers to the framework of laws, regulations, and court decisions intended to encourage, guide and control business activities. Technological environment It includes the level of technology available in a country. It also indicates the pace of research and development and progress made in introducing modern technology in production. Technology provides capital intensive but cost effective alternative to traditional labor intensive methods. In a competitive business environment technology is the key to development Global Environment Globalization is a leading concept which has become the main factor in business life during the last few decades. This phenomenon affects the economy, business life, society and environment in different ways, and almost all corporations have been affected by these changes. It includes international rules and regulations of the business industry. Countries have different ways of doing business so their environments will be different. There is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively.

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As stated above, the business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways: Understanding the nature of environment: An analysis of environment enables business firms to understand that today's environment is turbulent, complex and dynamic, and hence they cannot afford to remain passive to the fast-paced changes taking place and at the same time the organization must learn to live with chaos in order to cope with the radical changes. Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises to identify threats and early warning signals and meet the challenges successfully. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors. Identifying strengths and weaknesses: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments. A firm may be strong in certain areas; where as it may be weak in some other areas. The firm should identify its weakness so as to correct them as early as possible. Exploitation of Business Opportunities: Environment scanning opens new opportunities for the expansion of business activities. Study of environment is necessary in order to discover and exploit such opportunities fully. Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities. Continuous Learning:

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Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business. Image Building: Environmental understanding helps the business organizations in improving their image by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Diesel Power Plants in their factories to meet their own requirement of power. Meeting Competition: It helps the firms to analysis the competitors strategies and formulate their own strategies accordingly. Understanding customers in a context: What distinguishes the strategic concept of marketing from the 'new' concept of marketing is the emphasis on environment. "Knowing everything there is to know about the customer is not enough. To succeed, marketers must know the customer in a context including the competition, government policy and regulation, and the broader economic, social, and political macro forces that shape the evolution of markets." Ensuring Optimum Utilization of Resources: The study of business environment is needed as it ensures optimum use of resources available. For this, the study of economic and technological environment is useful. Such study enables organization to take full benefit of government policies, concessions provided, and technological developments and so on. From the above discussion it is clear that many environmental factors, especially economical or social factors, play a big role in a companys decisions, because the analysis and the monitoring of those factors reveal chances and risks for the companys business. Furthermore, many other strategic decisions are based on this analysis. It is finally the task of the management to adapt the firm to its environment or to influence the environment in an adequate way. Hence analysis of business environment is essential for managers and it is imperative that business schools offer business environment course for the masters students all around the world.

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