Business environment is a macroframework within which a businessenterprise – a macro unit – operates. Theinfluence of external factors constitutebusiness environment. Businessenvironment refers to all forces-economic,social, political, technological etc andinstitutions like suppliers, consumers,competitors, financiers, government etc.which are external to business.

Business Environment isthe aggregate of allconditions, events andinfluences that surround andaffect it.

- Keith Davis

1) Economic environment

2) Non-economic environment

Economic environmentconsists of factors likeindustrial policy, monetarypolicy, fiscal policy, nature ofeconomic system, pace ofeconomic development etc.

Non-economicenvironment refers to social,cultural, political, legal,technological factors etc.

Forces external to business.

Beyond control of business.

Differs from place to place.

Creates uncertainty for the business.

Provides opportunities to the business.