5 Business environment
This chapter discusses the following facts.
5.1 Importance of studying the business environment
5.2 Classifying the business environment
5.3 Internal environment and its influence
5.4 External environment and its influence
5.6 Nature of the Sri Lankan economy
5.7 Major business sectors of the Sri Lankan economy
5.8 Abundant resources in Sri Lanka
5.9 Environmental trends
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,5.1 Importance of studying the business environment
Business environment can be defined in simple terms as all the factors and forces
that influence the business activities positively and negatively, from within the
business and from the outside.
Business environment keeps on changing. If one identifies these changes and
responds appropriately to them, he/she can run a business easily. In addition, this
provides important business related benefits for an entrepreneur. At present, Sri
Lanka has a market-oriented economy. By studying the changes in the Sri Lankan
business environment, many creative business ideas or opportunities can be
generated in the different sections of the environment.
Examples :-
V Tendency towards using computer technology, communication
technology and e-commerce.
V Environmental tourism and the increased number of tourists
(both local and foreign)
V Opportunities in the construction sector
While entrepreneurs contribute to create a business culture of quality, business
environment provides a good foundation to ensure the survival of entrepreneurs. In
order to attain business objectives, it is necessary to study the business environment
with care.
Identifying the favourable and unfavourable influences of the business environment
is useful to achieve the business goals and objectives. The opportunities and strengths
arising through the environmental factors are advantageous to the business, while
the weaknesses and threats are disadvantageous.
The entrepreneur should identify the favourable influences and use them to strengthen
the business further. Similarly, he should also identify unfavourable influences and
take steps to minimize them. It is the factors of the business environment that pave
the way for the entrepreneur to make correct decisions.
60
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, The following table demonstrates how the modern business environment differs
greatly from the business environment of the past.
Table 3.1 - Differences between the business environments in the past and in the present
Business environment of the past Business environment at present
People often satisfied their basic needs People are keen to satisfy their basic
at a minimum level needs at a very high level
Needs and wants have become
Needs and wants were simple complex
There were limited goods and services There are many goods and services to
to fulfil a certain need fulfil a certain need
There was not much competition Competition is severe
Businessmen were powerful Consumers have become powerful
In addition to the profit motive, there
Profit was the principal motive
are other motives such as social
responsibilities
It was limited to a small area It has expanded globally
Speed of change was very low Speed of change is very high
Understanding the changes in the modern business environment is very useful for
an entrepreneur. Given below are some advantages that can be gained this way
V Identifying the strengths and weaknesses of the business
V Identifying the various business opportunities available in the environment
V Identifying the threats faced by the business
V Conducting the production and sales activities according to the changes
in the environment
V Formulating plans and determining strategies according to the changes in
the environment
61
For free distribution
This chapter discusses the following facts.
5.1 Importance of studying the business environment
5.2 Classifying the business environment
5.3 Internal environment and its influence
5.4 External environment and its influence
5.6 Nature of the Sri Lankan economy
5.7 Major business sectors of the Sri Lankan economy
5.8 Abundant resources in Sri Lanka
5.9 Environmental trends
59
For free distribution
,5.1 Importance of studying the business environment
Business environment can be defined in simple terms as all the factors and forces
that influence the business activities positively and negatively, from within the
business and from the outside.
Business environment keeps on changing. If one identifies these changes and
responds appropriately to them, he/she can run a business easily. In addition, this
provides important business related benefits for an entrepreneur. At present, Sri
Lanka has a market-oriented economy. By studying the changes in the Sri Lankan
business environment, many creative business ideas or opportunities can be
generated in the different sections of the environment.
Examples :-
V Tendency towards using computer technology, communication
technology and e-commerce.
V Environmental tourism and the increased number of tourists
(both local and foreign)
V Opportunities in the construction sector
While entrepreneurs contribute to create a business culture of quality, business
environment provides a good foundation to ensure the survival of entrepreneurs. In
order to attain business objectives, it is necessary to study the business environment
with care.
Identifying the favourable and unfavourable influences of the business environment
is useful to achieve the business goals and objectives. The opportunities and strengths
arising through the environmental factors are advantageous to the business, while
the weaknesses and threats are disadvantageous.
The entrepreneur should identify the favourable influences and use them to strengthen
the business further. Similarly, he should also identify unfavourable influences and
take steps to minimize them. It is the factors of the business environment that pave
the way for the entrepreneur to make correct decisions.
60
For free distribution
, The following table demonstrates how the modern business environment differs
greatly from the business environment of the past.
Table 3.1 - Differences between the business environments in the past and in the present
Business environment of the past Business environment at present
People often satisfied their basic needs People are keen to satisfy their basic
at a minimum level needs at a very high level
Needs and wants have become
Needs and wants were simple complex
There were limited goods and services There are many goods and services to
to fulfil a certain need fulfil a certain need
There was not much competition Competition is severe
Businessmen were powerful Consumers have become powerful
In addition to the profit motive, there
Profit was the principal motive
are other motives such as social
responsibilities
It was limited to a small area It has expanded globally
Speed of change was very low Speed of change is very high
Understanding the changes in the modern business environment is very useful for
an entrepreneur. Given below are some advantages that can be gained this way
V Identifying the strengths and weaknesses of the business
V Identifying the various business opportunities available in the environment
V Identifying the threats faced by the business
V Conducting the production and sales activities according to the changes
in the environment
V Formulating plans and determining strategies according to the changes in
the environment
61
For free distribution
