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Business Environment

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Department of Marketing

Dhaka University

Course Name: Business Environment


The objective of this course is to provide requisite knowledge for successful business manager. To develop the understanding of the cultural, demographic, social, economical, political, technological and legal environment within which the business operates. Provide knowledge on how to adapt with the changing environmental situation. It also discusses the issues related to the relationship between business and society. The question is how much we have learnt from this course? Let us find out the answer to this question.

Global Environment

The global environment or total environment is an enormously complicated, dynamic and changing system. It is the sum total of all forces and conditions that, act on an organism or community of organism, including men. One party if this global environment is the natural system. There are three components of the natural environment. These are:

1. Atmosphere (Moisture, gas, dust etc.)

2. Lithosphere (Mineral, rocks, soil etc.)

3. Hydrosphere (Oceans, lakes, rivers etc.)

Each of these environmental components has resources - such as coal from the ground, fish from the rivers or crops from the soil - that are utilized economically and ultimately marketed in some form.

The living organisms i.e. plants, animals and men within these three spheres are collectively called the Biosphere.

Business relates directly to the natural environment in many ways. Climate, river, soil, mineral resources, plants, animals and other resources are all factors that businessman must take in to account. On the other hand business network evolves from the economic sector to serve the society and marketing is the performance of all business activities that direct the flow of goods and service from producer to ultimate consumer. That means business or marketing activities explore and economically utilize the resources available in the natural environment and try to make it suitable for human consumption. So without natural environment business can not exist.

The Human Environment System

In edition to the natural environment there is the human system. This system is actually created by human beings for survival and growth. The human system consists of:

1. Communities of population.

2. Culture

3. Economic system.

4. Technology

5. Ethics

6. Political system etc.

Together, all living organism and the natural and human system interacting with one another in the global environment thus influence business activities.

The business firm in the environment

Most business activity takes place within an organizational context. The environment comprises a wide range of influence - economic, social, political, technological, legal etc. - which affect business activity in a variety of ways and which can impinge not only on the transformation process itself, but also on the process of resource acquisition and on the creation and consumption of output. Business must be viewed with the total environment as it is operated within a dynamic environment which influences business activity.

Rational for the environmental approach

Business as a work of man is a part of the global environment and as such is constantly influenced by the various forces of the environment in which it is carried out. The response by business people to the dynamic environment actually determine how successful a business firm will be in serving its customers and ultimately in business profit. We can analyze the influence of environment on business in the following ways:

1. Every businessman should have sufficient knowledge not only about market demand but also about their culture, and their incomes, the legality of the business operations and the way it interacts with the natural environment

2. Another reason for an increased emphasis on the environment, particularly in recent years, is the need for business firms and their products to adapt to the larger changing environment. For example, new technology, changes in policies and laws all have their impact on what we business.

Therefore it is not unrealistic to state that a good job of business is a good job of adapting to the total environment, each and every part of it.

The Business Environment

Business environment consists of the forces that effect business manager's ability to develop and maintain successful transactions with its target customers. The changing and uncertain business environment certainly affects the company's activity, and at the same time, the ability to earn profit. Thus a business should carefully watch the changing situation of the environment. The business environment can be divided into two parts.

1. The Micro Environment

2. The Macro Environment

The Micro Environment

The micro environment consists of the forces close to the company and to some extent these factors are controllable. These factors include:

1. The company

2. Suppliers

3. Marketing Intermediaries

4. Customers



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