In business, environment refers collectively to all the influences outside the organization that impact a business or a firm. Thus environment always refers to the external environment. Of course we can think of environment as consisting of several layers surrounding the form in its center. Moving from the most inner layer to outer layers we can group them in three groups.
Strategic group and markets: This consists primarily with the customers, suppliers, channel partners and other organization with whom the business has regular transactions. This layer has an almost direct influence on the firm.
Industry or sector: This is a layer that envelops the strategic group and market layer and embraces the complete industry or sector of which the firm is a part, irrespective of whether it has any business dealing with them. Some of the organization in this layer ma be direct competitor of the firm. This layer affect the firm within the same industry or sector more than those outside.
Macro-environment: This is the most general environmental layer. All the firm and all the firms exist within this layer and are affected by it. However each firm may be influenced differently by specific features of macro-environment.
The macro-environment of a firm is generally classified in six different kinds of influences.These are political, economic, sociocultural, technological, environmental and legal. These six are collectively referred as PESTEL framework.
there are two types of external environment.
1. micro environment
2. macro environment
micro environment is consist of 6 forces naming company, market intermediaries, supplier, competiter, customer and public.
macro environment also consist of 6 factors naming economic, demographic,natural, political, technological and cultural forces.