Meaning of Business Environment:

Business environment means the sum total of those factor which influence the business and over which the business has no control.

Importance of Business Environment:

The importance of business environment is highlighted by the following facts:

i. First Mover Advantage: The study of business environment enables us to know about the opportunities available. A company which is more conscious about the changes taking place in the business environment is the first mover. It takes advantage of it by becoming the first supplier. In other words, a company which has the capacity to know the possibilities of the opportunities available can be the greatest beneficiary.

ii. Warning Signal: Along with the availability of opportunities provided by the study of business environment, we also come to know about the threats accompanying them. If the knowledge about the threats is available in time, efforts can easily be made to face or surmount them. This is possible only by regularly studying the changes taking place in the business environment.

iii. Tapping Useful Resources: An organisation needs a number of resources to carry on its business (e.g., material, machine, man, money, etc.). With the help of these resources goods and services are produced. A business gets resources from the environment and provides goods and services to the same environment. A study of business environment tells a business the requirements of the environment and what can it make available to get its needs fulfilled. Therefore, it is possible to get useful resources from the business environment.