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B.2 Classification of the Business Environment
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| B.2 Classification of the Business Environment Business environment can be categorized into the following i) Micro or internal environment ii) Meso or task environment iii) Macro, mega, external or general environment (i) Micro or internal environment The conditions or factors within the firm constitute its internal environment. Unlike the elements of the external environment, these conditions, factors or processes are generally regarded as controllable by the firm. For example, Company’s mission, vision and objectives, organisational structure, organisational culture, company resources, marketing mix product, price, promotion, place (distribution, unique selling proposition (USP, the nature of the production and distribution facilities, financial and human resources, the quality of interpersonal and inter-group relationships, etc, are subject to the control of the firm. (ii) Meso or task environment Some elements of the external environment have direct implications for the successful operations of the firm. The direct-action environment is also known as the task environment or operating environment. For example, the behaviour of a firm’s customers, bankers and suppliers have immediate and direct effect on the operation of the firm. Other elements of the direct-action environment are competitors, distributors, government agencies, immediate community. special interest groups and the general public. (iii) Macro, mega, external or general environment The external environment is generally regarded as uncontrollable as no single firm can determine or influence it. The external environment is the setting in which all firms in the industry operate. It is not every element of the external environment that is relevant or significant at a point in time to a given firm as it makes decisions. Some aspects of the external environment are directly relevant and must betaken into consideration by a firm in making decisions. The indirect-action component of the external environment consists of factors or forces that have a general influence on the operations of the firm. These factors or forces are common to all the firms in the economy. While each firm in the society must understand the nature of, and the changes occurring in the indirect-action environment, such changes apply to every firm operating in the economy. The indirect-action environment is also referred to as the general environment which can be classified into economic, socio-cultural, political, technological and legal/public policy 27 environment. Usually, a firm’s external environment is discussed in the context of the national economy in which it operates. Hence, another level of the firm’s external environment is the international or global environment. Like the general environment, the components of the international environment are economic, socio-cultural, political, technological and legal/public policy environment. Download 3.37 Mb. Share with your friends:
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