Business Environment Analysis

This essay examines the micro and macro environmental factors that influence business operations, emphasizing the importance of sustainable management and ethical behavior for businesses to thrive in a socially, economically, and environmentally responsible manner.

Table of Contents
INTRODUCTION...........................................................................................................................1
a) Micro and Macro environmental factors that affects the business- .......................................1
b) Needs of organization to manage sustainably and behave ethically for the benefits of social,
economic and environmental factors of business. ......................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4
INTRODUCTION

Business environment consists all those factors that affects the working of business.
These factors are Internal factors and external factors. Internal factors lies within the
organization which includes Physical, financial, human resource and technological factors of
business which introduce to the company's strengths. External environment comprises of micro
and macro factors that affects the working of business. These factors will be discussed further.
a) Micro and Macro environmental factors that affects the business-
Micro factors- These factors affect the performance of company and its ability to serve
customers. Micro factors are-
Customers- Customers are the one to whom products are sold by business. Business exist
because of customers. Customers serves as the important segment of micro environment of
business. Customers can be of different types as households, retailers, government and foreign
buyers etc.
Suppliers- These are the persons who supply inputs which may include raw materials and other
factors of production to business. High prices by suppliers in exchange of their goods will
increase the cost of production and their shortage of supply will lead to less productivity of
business. Thus any business must have more than one supplier in order to avoid such
complications.
Competitors- Competitors are the other business firms selling similar goods for competing in
the market. Competitors attract customers by their different policies and gain competitive
advantage which affects the business firm as its customers get reduced resulting to low
profitability(Kolk, 2016).
Macro Factors- Macro factors includes various economic and non economic factors that affects
the business by providing opportunities and causing threats. These factors include-
Political and legal factors- This includes intervention of government and their impact on
business firm. These factors are government regulation, taxation policies, political stability,
Labour laws, union, consumer protection act and other rules and regulations imposed by
government to business organization. Instability of these factors will affect the growth as well as
functioning of business (Hamilton and Webster, 2018).
Economic Factors- These factors are the ones that affect the economic stability of business.
Factors such as inflation, interests rates, currency exchange rates, return on investment etc. Any

change in these factors affects the profitability and growth of business. These factors also include
types of economy- emerging and developed economy, and other economic policies that affects
the business.
Social factors- Society plays an important role in survival of business. Social factor comprises
of attitudes, lifestyle and interests of people in a particular society. These factors enables the
selling of business products as according to the demand of people and their interests.
Technological factors- Technology plays an important role in functioning as well as growth of
business organization. More advancement in technology adoption will provide more productivity
to the business firms and use of traditional methods will be time consuming and less productive.
So in this way technology affects the working of business (Huang, Krasikova and Liu, 2016).
Environmental Factors- Environmental factors consists of all the components related to
environment. Components include availability of raw materials, weather conditions, climate
changes and pollution standards that affect the working of business.
b) Needs of organization to manage sustainably and behave ethically for the benefits of social,
economical and environmental factors of business.
Business ethics refers to identifying what is right and wrong and then performing the right task
for benefits of the above factors. Sustainable behaviour refers to use of resources in such a way
that it can be utilized for the same amount in future. The following are the needs to use these
behavioural aspects in relation to-
social and cultural factors- Customers are the main main aspect of society. Adopting ethical
behaviour will lead to greater customer satisfaction. Various activities such as employment
generation for the people, donations to NGOs, providing healthcare facilities and education to
poor etc. all these serves as social responsibility of business towards society. Other components
include respecting the culture and designing the products according to interests of people. All
these activities will benefit society and create a good image of Business.
Economic factors- Ethical business practices will keep the business away from legal
complications. Further it will enhance the growth of business and its profitability as well. Timely
payments to shareholders and its debts, will attract new investors and create credit facilities for

business (Dibrell and et.al., 2015). This will therefore maintain economic and financial stability
of business. Strong economic position of business can lead to its growth in several markets and
create a good brand image of the company and also can earn maximum profits as well. Thus
ethics in the business creates impact on economic factors in such a way that these factors favours
the business in all cycles of economic conditions.
Environmental factors- Natural resources which imposes raw materials for business are the
prime inputs of business. These raw materials helps to produce and manufacture different
products which are further sold in market and income is generated. But I the present time there is
scarcity of such resources and thus its a sole duty of business organizations to make a sustainable
use of this resources, so that they can be used for longer period of time. Also, using techniques
of recycling the wastages and converting it into new input materials and avoiding the wastage of
resources will further lead to optimum utilisation of resources. Business performs ethics by
controlling its carbon units and hence benefits to environment and nature through their
contribution and reducing pollution standards. Thus, the environment will benefit in all the above
ways by sustainable management and ethical use of behaviour by business organizations.
CONCLUSION
From the above observation and study it is noted that how business environment consists
of various factor and its dependent on such factors. The study also includes the impact of all
these internal and external, micro and macro factors on business activities globally and how
business needs to make an positive use and advantage of these factors. Further it was studied
about the need to manage sustainability and perform ethics by business environment and how it
will relate to social cultural, economical and environmental issues and benefit these components
as well.

REFERENCES
Books and Journals-
Dibrell, C and et.al., 2015. The impact of external and internal entrainment on firm
innovativeness: A test of moderation. Journal of Business Research.68(1). pp.19-26.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Huang, L., Krasikova, D.V. and Liu, D., 2016. I can do it, so can you: The role of leader creative
self-efficacy in facilitating follower creativity. Organizational Behavior and Human
Decision Processes.132. pp.49-62.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business.51(1).pp.23-34.