Component of Business Environment

Business environment refers to forces that influence the performance and outcomes of business organization. The component of business environment can be broadly divided into:-

1. Internal environment ( Micro environment )
2. External environment ( Macro environment )

Both the internal and external environment are interrelated and interdependent.

INTERNAL ENVIRONMENT (MICRO ENVIRONMENT)

Internal environment consist of conditions and forces within the business organization that affect its performance and outcomes. It is located in the organization. It provides strengths and causes weakness to the organization. It is controlled by organization.
Strength is inherent capacity which organization can use to gain strategic advantage over the competitors where as weakness is inherent limitation which creates a strategic disadvantage for the business organization in relation to competitors.
An organization’s internal environment has the following components.

1. Employees
2. Structure
3. Corporate culture
4. Shareholders
5. Unions

External Environment:
It is the outer environment of business.It is uncontrollable by the business management. The external environment of business are as follows:
Political and legal Environment
Sociological and cultural Environment
Economic Environment
Technological Environment