What are some factors affecting the business environment?

There are two types of environment that a business. They are the Macro and Micro factors. The macro factors are generally termed as PESTLE which is Political, Economic, Social, Technological, Legal, and Environmental factors. These are those which cannot be controlled by any company. They have to maintain a contingency for it. For example, let us demonetization. In the event of demonetization, no company or enterprise no matter how big it be, didn't have any control over the events. They had maintained a contingency and that's how they survived that phase.

Talking about the Micro factors, it includes all those which can be controlled by the company. It includes the company policies, relation with the customers, suppliers, etc. Since it takes place within the business space, that is why it can be monitored.

Business Environment is not concerned with a single factor. It comprises several factors and each factor influences the business firm in its own way. Some factors influence the performance of the firm directly while the influence of some other factors is only indirect. These factors provide opportunities, threats, and challenges to the firm. Thus, the environment is multi-dimensional and very complex in nature. At the same time, each factor should be studied individually.

Here we have discussed 6 important factors that influence the business environment in brief.

1. Geographical and Ecological or Natural Factors.

2. Demographic Factors.

3. Economic Factors.

4. Political and Legal Factors.

5. Social and Cultural Factors.

6. Physical and Technological Factors.