Business environment refers to a set of external factors - such as the economic factors, socio-economic factors, government and legal factors, demographic factors, technological factors - which are uncontrollable in nature and affect the business decisions of a company. The environment of the business is dynamic in nature. Many factors in the environment undergo changes. they keep on changing as years roll by, so does business. All this indicates that the business policy should be dynamic enough to be successfully adaptable to the changing environment. Thus, a very important function of business manager is to identify the various environmental factors and their relevance to a particular industry. Modern business firm is expected to operate in a dynamic environment. business is a product of environment. A firm and its environment interact with one another continuously and both are mutually interdependent. Success of a business firm depends on its ability to cope with changes in the environment.
- Teacher: Amritha Titus