The Impact of Business Environment on Organizational Structure

TallyDekho is here to acknowledge its readers about the impact of the business environment on the business and how its effective analysis can help you get to the right way of business stability.

In a business organization, everything that surrounds the business is the environment. However, there are certain tools like ratio analysis, statements like cash flow & fund flow, business ethics, etc, that affect the business directly or indirectly and its proper analysis can help you attain efficiency as well. But, there are certain external and internal forces in an organization outside the control of business affecting the business directly or indirectly. That forces constitute the business environment.

Well, the environment in general means, all the forces that surround you. Therefore, in the context of business, the business environment refers to the sum total of all the external and forces constituting individuals, and institutions that are totally out of the business control but it does affect its performance.

It implies that the business environment plays a major role in any business and the business does not possess any control over it. The only thing the organization can do is to manage its internal operations and coordinate with the external factors.

Features of Business Environment

Totality of the forces


Dynamic in nature

Out of business control

Presence of uncertainty

Complex in nature

Classification of Business Environment

Well, there is a vast diversification of business environment, but broadly speaking there are two main categories of the business environment.

  • External Environment
  • Internal Environment

External Environment

Micro Environment

  • Customers
  • Intermediaries
  • Competitors
  • Public

Macro Environment

  • Political
  • Legal
  • Technology
  • Global
  • Socio-Cultural
  • Demographic
  • Natural
  • Ecological

Internal Environment

  • Business Objects
  • Financial Resources
  • Human Resources
  • Internal Resources
  • Technological Factors
  • New Developments
  • Work Culture

Role of Business Environment in the business world

Helps the business gain the first-mover advantage

Helps in the early identification of threats

Guides in fullest utilization of resources

Easy adaptation to the changing environment

Helpful in increasing performance bar

Summing up all, we can come to the conclusion that the business environment plays a major role in making a business win a competitive edge over others. A thorough analysis of every component will definitely help you in adapting the dynamic market situations. Stay connected for more interesting articles. Feel free to share your feedback.

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