BOM Paper One
Chapter : 02 (Business Environment)
• Concept of business environment
• Components of Business environment
• Impact of business environment in business
operation
• Business environment in Bangladesh
• Problems of development of business
environment in Bangladesh
• Solution of Business environment Development
problems in Bangladesh
Environment and Business Environment
Environment: Sum of all surroundings of a living environment.
Includes: Natural resources, physical and social setting, culture,
education and so on.
Business Environment: Includes aggregate customers,
competitors, regulatory bodies like Government and societal
forces.
According to Robbins and Coulter, “Environment refers to
institutions or forces that are outside the organization and
potentially affect the organization’s performance.
Elements or Forces of Business Environment
Elements or Forces of Business Environment
Elements / Forces of Business Environment
Natural Environment:
• Which type of industry can be set up depends on soil
condition, availability of water, supply of electricity,
availability of war materials
• Affect human survival and economic activity.
• Business activities depends on this.
• Hilly areas having enough rainfall= Tea production
Economic Environment:
• Environment developed in a country based on income &
savings of people, finance and credit system, investment,
capital and human resource is known as Economic
Environment.
• Business progress depends on internal and foreign
investment, volume of capital and credit system of the
country
• Proper utilization of natural resources depends on
economic environment
Social Environment:
• Social environment means surroundings that develop by
combination of population of the society, , their religious
faith, thinking pattern, education, culture, customs and
local tradition.
• Two major environments: Religious and cultural
Religious Environment:
• Surroundings that are created from religious faith and code
of conduct and behavior of people is called Religious
environment.
• Created from religious belief and rules
• Influences the purchasing decision of the person
• No alcohol business in Muslim Country
• Eid in muslim countries create special environment.
Cultural Environment:
• Environment that develops in a society in combination of
thinking and faith, values and behavior created among the
people in the midst of the society over a long period of
time is cultural environment.
• Concepts, beliefs, characteristic pattern that are created
within the society after a very long time.
• Attitude, family bond
Political Environment:
• Surroundings that are developed in a country from sovereignty
of the country, stability of government, political parties, law
and order situation are together called political environment.
• Stable, honest, efficient, dynamic= Congenial environment of
business. And vice versa
Legal Environment:
• Government passes various types of laws for the welfare of
the people. Combination of all these laws form the legal
environment. Businessmen do their business within the
boundary of these laws.
• Commercial law, industrial law, Consumer law, labor law,
copy right acts and so on.
• Child labor, no industry in residential areas.
Technological Environment:
• Science and technology, research works in IT field,
use of improved technology, opportunity of
importing technology – all these together forms
technological environment.
• Allows production of new products at lower price
Problems of development of Business Environment in Bangladesh
Heading Situation
Political Absence of friendly business policy, presence of anti-business
instability programs: Hartal, strikers
Weakness in Role of govt- make business friendly policy, support export
Govt. role functions, subsidize local businessmen, develop law and order
situation.
Weakness of Banks, insurances, financial institutions are important players.
financial and High rate of interest, so businessmen cant avail loans. These are
other org. limited to town areas. Does not consider small businesses
Lack of Literacy rate is low, lack of practical and technical education
education and results less skilled manpower. Lack of awareness of business
awareness opportunities.
Lack of good increase in corruption, presence of adulterated foods and fake
governance products hampers the business functions of honest
businessmen. Law and order situation is weak. The investors are
discouraged to invest for lack of security.
Means of solving problems for development of
Business Environment in Bangladesh
• Establishing firm political commitment: (Business
friendly environment, Stop political turmoil)
• Disposal of economic hindrances: lower the interest
rates, less formalities
• Development of law and order situation: Remove
bribery, corruption, terror, illegal toll collection,
tender crime
• Emphasis on technological development: emphasis
on research, invent new technology, Import new
technology,
• Manpower Development: Skill based traininig
Elements of Direct action environment/Micro
Environment on Business
Internal Environment External Environment
Owners/Shareholders Competitors
Board of Directors Customers
Employees Suppliers
Organizational Culture Middleman
Internal organizational Strategic alliances
facilities
Govt. Agency
