Business environment consists of a number of activities that affect the operations of a business. The environment of a business is full of intricacies and highly dynamic. So for a business to survive, it must monitor what is going on in the environment.
The business environment can be classified as follows:
- TECHNOLOGICAL ENVIRONMENTS: The development of technologies has made previous materials to become outdated or obsolete. A business must be concerned about the technical knowhow as technological development will lead to increase in the quality and quantity of goods to be produced.
- POLITICAL ENVIRONMENT: Here the policies in the political party in power will affect the operation of the business. The continuous changes of government law and change in power affect the operation of the business.
- FINANCIAL ENVIRONMENT: The effect of the present economic crisis is reflected in the financial position of much business organization. The inability to obtain, raise, share or loan affects the performance of business, so it is suffering from financial deficiency.
- ECONOMIC ENVIRONMENT: A country economic system will determine the nature of business. In a socialist economy there is much state intervention while in capitalism, market forces prevail. The state of the economy also affects business operation such period of boom or recession will affect a business either positively or negatively as the case may be.
- INFRASTRUCTURAL ENVIRONMENT: The availability of social amenities like road, telephone, railways ports will affect the operation of a business. is because facilities within the environment of a business play crucial role in the survival of an organization.
- CULTURAL ENVIRONMENT: The socio-cultural attitudes of the people will affect their consumption patterns e.g. Shari state which do not allow alcohol consumption or sale. So a business organization must take into consideration the beliefs attitudes, needs, values and lifestyles of the people
- DEMOGRAPHICAL ENVIRONMENT: This takes into consideration the composition of the population i.e. size and structures and how it will affect the performances of the business.
- NATURAL CONDITION AND TECHNOLOGICAL ENVIRONMENT: The climatic and ecological change in an environment. Such as drought, erosion, pollution, flood etc which will definitely affect the operation and performances of a business