Business environment refers to the inner and outer factors which create impacts upon the operating system or activities of a company. The business environment is comprised of different factors like customers, competitors, stakeholders, suppliers, laws, regulations and policies of government, social and economic issues, technological advances etc. (http://www.businessdictionary.com/definition/business-environment.html) Definition, characteristics and implications of these different environments are discussed below:
Placid environment:
Placid environment refers to a simple and easy atmosphere under which a company or firm runs its operation. It is a static and stable environment where firms are running their activities and taking strategies based on historical data and feel content that in future continuation of past will occur. Customer demand and sales forecasting are estimated from past records. Organizational goals of such type of companies remain unchanged and straight forward. For example, a tax preparing farm waits eagerly for the end of tax year for calculating tax related works for its clients. Fireworks manufacturer or greeting cards publishers are also in the same category which deals with special festivals every year.
In placid environment managerial decisions are not as important as the firms or companies follow hard and fast rules. However, such type of company can get a major shock if the nature of its environment changes quickly. For example, if government imposes restrictions on some types of fireworks, the company faces danger. In such type of situation managerial decisions are needed to overcome the crisis.
Dynamic environment:
Dynamic environment has the tendency to change in a sharp and rapid manner. Competitive interdependence is one of the main characteristics of this environment. Companies belonging to this environment do have large-scale