Types of Environment

All the factors and forces affecting the survival and growth of business organizations are known as the business environment. There are two types of environment internal and external.

1. Internal environment- Internal environment is a component of the business environment, which is composed of various elements present inside the organization, that can affect or can be affected with, the choices, activities and decisions of the organization. An organization’s internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behaviour. Although some elements affect the organization as a whole, others affect only the manager.
2. External environment- An external environment is composed of all the outside factors or influences that impact the operation of the business. The business must act or react to keep up its flow of operations. The external environment can be broken down into two types: the microenvironment and the macro environment.

• Microenvironment- Micro-environment. the factors or elements in a firm’s immediate environment which affect its performance and decision-making; these elements include the firm’s suppliers, competitors, marketing intermediaries, customers and publics. The micro-environment of a business includes the factors in the immediate area of operation affecting its performance and decision making freedom. They include competitors, customers, distribution channels, suppliers, and the public.
• Macroenvironment- A macro environment is a condition that exists in the economy as a whole, rather than in a particular sector or region. In general, the macro environment includes trends in the gross domestic product (GDP), inflation, employment, spending, and monetary and fiscal policy. These factors include the economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces. Specific examples of macro environment influences include competitors, changes in interest rates, changes in cultural tastes, disastrous weather, or government regulations.

Therefore the types of environment are explained above.

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