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Business Environment and Impact of Business Environment on Strategy

Business Environment and Impact of Business Environment on Strategy


In fact the premises or foundation of strategy formulation is different assumption taken in respect of business environment. Business environment and SWOT analysis are two most important base of strategy formulation.

There are two forces of business environment- Macro and Micro. In fact by and large environment forces are external.


Let us understand macro and micro force of business environment. 


Macro forces influence industry. Industry is a group of firms whose products have the same and similar attributes such that they compete for the same buyers”.  Micro forces influence business firms.                                                                                                                                                                                                                        
Political – Political ideology Customer – Buys products
Economics - Exchange Rate, Inflation Rate, Taxes, Duties, Finance and Credit, Cost of Living GDP and GNP Organizations - Board of Directors, Employees
Social and Cultural – Belief, Value, Rule, Rituals, and Relationship Customs, Tradition. Market – Place of exchange of products, services and idea
Technological – Speed, accuracy. Connectivity, Automation, efficiency, Internet, 3D technology etc. Intermediaries - Banks, Agents
Environmental Ecological factors-the climate change, consumer health, Climate of Earth Competitors – Rivalry among existing players
Legal – Judiciary and Government Supplier – Supplier of input

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