Concept of Business

Business firm is a dynamic entity. It is dynamic because it operates within a context. The wider social, economical and cultural context of a firm is very divorce and complex. The failure of the manager to understand, access, predict and manage environmental forces ultimately affect the business and its operations. A business firm is surrounded by two different environment and they are internal and external environment. Internal environment includes infrastructure, physical assets, human resources, organizational structure, technology, work system and so on. Similarly, external environment contain social, economical, political, legal and competitive forces. In business organization there is a system which contains inputs, processing and output. A system is an entity consisting of functional and interdependent parts operating in a large environment.  A business firm is also a system. In fact it is an open system. There is constant interaction between a business system and its environment. The impact of this environmental factor is very powerful on the functioning of the business system. It is almost impossible for the business system to exist and grow without taking them into account. A firm is thus depending upon the environment for its functioning. This environment as they together influence business operations.