CONCEPT OF BUSINESS MANAGEMENT

An organization is a part of society and the business environment has a direct relationship with the policy of the organization. The environment may impose several constraints on the organization as it has a tremendous impact and influence. The organization on the other hand, has very little control over its environment. Therefore, the success of an organization depends to a very large extent on its adaptability to the environment.

Business organizations are neither self-sufficient nor self-contained. They exchange resources with the outside environment and depend on it for their survival. They draw inputs such as raw materials, capital, labor, energy and information from the external environment. They transform inputs into products and services and supply as outputs to the external environment.

Generally, there are two sets of environment in business: internal and external environment, which influences the business policy of an organization. The internal environment is known as controllable factors because the organization has control over these factors. They consists of employees, shareholders and board of directors, and culture. Organization can modify or alter such factors to suit the environment.

The external environment is known as uncontrollable factors because such factors are largely beyond the control of the organization. They consist of economic, socio-culture, political legal,and technological environment. They are uncertain and complex.

The term 'business environment' generally refers to the external environment. It includes factors outside the organization, which can lead to opportunities or threats to the organization. Both internal as well as external environmental factors play an important role in influencing the outcomes of business organization.