Components of Business Environment

3098 Words Dec 10th, 2011 13 Pages
Components of business environment
On the basis of extent of intimacy with the firm, the environmental factors may be classified into different levels or types. There are broadly two types of environment, the internal environment, i.e. factors internal to the firm and the external environment i.e. factors external to the firm which have relevance to it.
The internal factors are generally regarded as controllable factors because the company has control over these factors; it can alter or modify such factors as its personnel, physical facilities, organisation and functional means such as marketing mix to suit the environment.
The external factors on the other hand are, by and large, beyond the control of a company. The external or
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The relationship between the members of Board of Directors and between the chief executives is also a critical factor.
 Human resources: The characteristics of the human resource like skill, quality, morale, commitment, attitude etc., could contribute to the strength and weaknesses of an organisation. Some organisations find it difficult to carry out restructuring or modernization because of resistance by employees whereas they are smoothly done in some others.
 Company image and Brand equity: The image of the company matters while raising finance, forming joint ventures or the other alliances, soliciting marketing intermediaries, entering purchase or sale contracts, launching new products etc. Brand equity is also relevant in several of these cases.
 Miscellaneous Factors: There are a number of other internal factors which contribute to the business success/ failures or influence the decision-making. They include the following.
1. Physical Assets and Facilities like the production capacity, technology and efficiency of the productive apparatus, distribution logistics etc. are among the factors which influence the competitiveness of a firm.
2. R&D and technological capabilities, among other things, determine a company’s ability to innovate and compete.
3. Marketing Resources like the organisation for marketing, quality of the marketing men,
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