1)- Totality of external forces: Business environment is the sum total of all things external to business firms that is why it is aggregative in nature. Hence, Business environment includes all the forces, institutions and factors which are external to business organizations.
2)- Specific and general forces: Business environment includes both specific and general forces. Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working.
General forces (such as social, political, legal and technological conditions) have an impact on all business enterprises and thus may affect an individual firm only indirectly.
3)- Inter-relatedness: Different elements or parts of the business environment are closely interrelated.
Hence, all forces and factors of the business environment are related to each other.
For example, increased life expectancy of people and increased awareness of health care have increased the demand for many health products and services like soft drinks, fat-free cooking oil, and health resorts. New health products and services have, in turn, changed people’s lifestyles.
4)- Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market, which in turn make it highly flexible and keep changing.
It is not static or rigid that is why it is essential to monitor and scan the business environment continuously.
5)- Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries.
6)- Complexity: Since a business environment consists of numerous interrelated and dynamic conditions or forces which arise from different sources, it becomes difficult to understand at once what exactly constitutes a given environment.
Although it is easy to scan the environment, it is very difficult to know how these changes will influence Business decisions. Sometimes change may be minor but it might have a large impact. For example, a change in government policy to increase the tax rate by 5% may affect the income of a company by a large amount.
For example, it may be difficult to know the extent of the relative impact of the social, economic, political, technological or legal factors on change in demand of a product in the market.
7)-Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France.
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