External Environment

The external environment consists of legal, political, socio -cultural, demographic factors etc. These are uncontrollable factors and firms adapt to this environment. They adjust the internal environment with the external environment to take advantage of the environmental opportunities and strive against environmental threats.

Business decision is affected by both internal and external environment though largely when one refers to the term ‘environment’, it is the external environment.

(a)Micro Environment:

“The micro environment consists of factors in the company’s immediate environment “. These factors affect the performance of a company and its ability to serve the customers. Every firm has a micro environment that consists of customers, suppliers, suppliers, competitors, and public and market intermediaries.

(b) Macro Environment:

The macro environment consists of the economic and non- economic environment that provides opportunities and threats to business firms. This is largely uncontrollable and, therefore, firms adjust their operations to these environmental factors. The macro- environment consists of the following:


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