"The environment includes factors outside the firm which can lead to opportunities for, or threats to the firm. Although there are many factors, the most important of the sectors are socioeconomic,
technological, supplier, competitors, and government. “ - Glueck & Jauch
"Environment factors or constraint are largely if not totally, external and beyond the control of individual industrial enterprises and their managements. These are essentially the 'givers' within which firms and their managements must operate in a specific country and they vary, often greatly, from country to country.“ - Barry M. Richman & Melvyn Copen
Objectives of Environmental Appraisal :
1. To understand the current and potential changes taking place
2. To obtain necessary inputs for strategic decision making.
3. To facilitate and foster strategic thinking in organisations
Characteristics of Business Environment :
- Environment is complex
- Environment is Dynamic
- Environment is multi-faceted
- Far-reaching impact
- Carries risks, uncertainties & opportunities
Micro Environment
Micro-environment is related to small area or immediate periphery of the organisation. It influences the organisation regularly and directly.
Decisions affected by Micro-Environment
• Employees, their characteristics, attitudes and profiles.
• The customer base
• Methods and sources of finance
• Vendors/ suppliers and the relationships
• The local community
• Direct competition
Macro Environment
Macro Environment consists of broad, indirect factors which affect the overall business environment in a country or region, across all industries.
