Business environment refers to the world around a company over which the company has no direct control. The business environment is covers many different influences or dimensions impacting a company's activities and performance.
We can think of business environment consisting of several layers of influences surrounding a business. The outermost or the most general layer of environment, called the macro-environment, consists of factors or dimension that impact almost all companies in an economy. These factors are often termed as PESTEL framework which is an acronym for the following six aspects of business environment - political, economical, social technological, environmental (physical) and legal.
Within this general environment, the next layer closer to the company may be called the industry, of which the company forms a part.
The layer closest to the company consists of its specific markets and other organizations that contribute to its production and distribution activities. Among others it includes a company's customers, competitors, suppliers and distribution channel partners. It may also include other businesses manufacturing and marketing complimentary goods and services.