Accounting technicians scheme west africa

24 5. B
6. Db Short Answer Questions
1. Business
2. Analytical industry
3. Partnership
4. Memorandum of Association
5. Stakeholder
6. Profit

25
SECTION B BUSINESS ENVIRONMENT

Section contents

(a) Learning Objectives b) Definition of Business Environment c) Classification of the Business Environment d) Analysis of the Business Environment e) The Task Environment f)
General/Mega Environment g) Internal Environment h) Environmental Analysis i) Environmental Forecasting j) Techniques for Interacting with the Environment k) Review Questions

Learning Objectives
After studying this section, the readers should be able to
• Define and explain the term business environment
• Explain the classification of the organisation environment internal, task and general environments
• Explain the major forces in the environment with special analysis of the changes in the external environment
• Explain the major techniques that organisations adopt to interact effectively with its environment
• Explain globalisation and the factors influencing it.
B.1
Definition of Business Environment
Business environment is a combination of two words which are business and environment. Business includes all activities connected with production, trade, banking, insurance, finance, energy, advertising, packaging and numerous other related activities. Environment refers to all external forces, which have a bearing on the functioning of business. The environment includes factors outside the firm which can lead to opportunities for or threats to the firm. A business does not operate in a vacuum. Generally, a business operates in a multifaceted environment (an environment with many parts. The environment itself is subject to a lot of changes. The relationship between business and its environment is one of mutuality that is, the environment exerts pressure on the business while the business, in turn, influences some aspects of its environment. The nature of the environment in which the business enterprise operates, therefore, needs to be clearly understood by managers. Business environment can be defined as a set of factors or conditions that are external to the business but which have influence on the operations of the business enterprise. By external, we mean that these factors or forces are not usually within the control of the business enterprise. Business environment may also be seen as the web of forces which form the setting in which the

26 firm makes its decisions. For the firm to succeed, it must take its environment into account in making its decisions. Although there are many factors, the most important of these factors are socioeconomic, technological, supplier, competitors and government.

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