Definition of Business Environment – Internal & External

Learn the meaning of business environment and understand its internal and external analysis of strengths, weaknesses, threats and opportunities.

The Meaning of Business Environment

This signifies an analysis of all of the internal as well as external factors that influence just how the company performs including employees, consumers, management, supply as well as demand and also business regulations.

Importance of the environment of business

A study of environment really helps to justify the concept and to identify generally accepted components including strength, weakness, opportunities as well as threats. Analysis is extremely essential for the survival as well as growth of the company. The importance will clearly be seen in the study of the internal and external components and features of the environment that follows:

Internal environment


Identification of Strength

The study of the environment really helps to identify power of the firm . For example, if the business has good individual policies in respect of marketing, transfer, training, and so on then it can show strength of the company in respect of individual policies. This strength often is observed through the job satisfaction as well as efficiency of the human resources. After determining the strengths the company must aim to consolidate its power by further development strategy in its active plans & policies.

Identification of Weakness

The study of the environment shows not only power but also the drawback of the firm . A firm can be powerful in a few areas; whereas it can be weak in several other areas. The firm must do business research to identify such weakness in order to correct them as soon as possible.

External environment


Identification of Opportunities

A study of the external environs can help the business firm to specify the possibilities on the market . The firm must make each and every possible effort to take advantage of the opportunities when they come.

Identification of Threats

Business can be subject to threats from the competition as well as from other matters. Therefore environmental study will help to recognize these threats so the company can take steps to defuse them.

The concept of business environment opens up new possibilities for the growth and success of business. Study of environment is essential to be able to discover as well as exploit best business opportunities.

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Example of acceptable meaning of business environment