Business is an economic activity which is related with continuous production of good and services for satisfying human wants.

1. Exchange of goods/services
2. Deals in numerous transactions.
3. Profit is main objective.
4. Risk and uncertainties.
5. Buyer and seller.
6. Marketing and distribution of goods/services.
7. To satisfy human wants.
8. Social obligation

Business does not function in isolation or in vacuum. It is affected by internal and external factors. These internal and external factors collectively constitute business environment. Internal environmental factors are within the control of business, whereas external factors are beyond the control of business.

‘Environment’ refers to the system in which human beings live and they have to adjust themselves according to it. So it is surroundings, external agents, influences or circumstances under which something exists.

Business Environment can be defined as the aggregate of all those forces, factors and institutions which directly affect the working of a business organization.

Some of these constituents may be static, while others may be changing.

“Business Environment is the aggregate of all conditions, events and influences that surround and affect the business.”

– Keith Davis

“Business Environment encompasses the climate or set of conditions-economic, social, political or institutional in which business operations are conducted.”

– Prof. Weimer

“The term Business Environment of a company is defined as the pattern of all external influences that affect its life and development.”

-Andrews

“The total of all things external to firms and industries that affect the function of the organization is called business environment.”

-Wheeler