Effects of Business Environment

i) Creates fair competition: The business environment plays a crucial role in fostering fair competition among companies. Competition encourages businesses to strive for excellence, innovate, and offer better products or services at competitive prices. This benefits consumers by providing them with more choices and improved quality, while businesses are motivated to continuously improve and differentiate themselves in the market.
ii) Creates satisfaction of human wants: The business environment facilitates the satisfaction of human wants and needs. Businesses identify market demands and develop products or services to fulfill those wants. By understanding customer preferences and adapting to market trends, businesses can effectively cater to consumer needs, leading to customer satisfaction and loyalty.
iii) Reduction of operational costs: The business environment can have a positive impact on reducing operational costs. A favorable business environment, characterized by factors like efficient infrastructure, supportive government policies, access to resources, and a skilled workforce, can help businesses streamline their operations and achieve cost efficiencies. This can lead to increased profitability and competitiveness.
iv) Motivating tool: The business environment serves as a motivating tool for businesses. Factors such as market demand, competition, and customer expectations push businesses to innovate, improve efficiency, and strive for growth. Businesses are motivated to adapt to changing circumstances, embrace new technologies, and continuously improve their products, services, and processes to stay relevant and competitive in the market.
v) Good relationships: The business environment influences the establishment of good relationships between businesses and various stakeholders. These stakeholders may include customers, suppliers, employees, shareholders, local communities, and regulatory authorities. Building and maintaining positive relationships with these stakeholders is crucial for business success. A favorable business environment promotes trust, collaboration, and mutually beneficial interactions, leading to long-term partnerships and a positive reputation.

in summary, the effects of business environment include:
i) Creates fare competition
ii) Creates satisfaction of human wants
iii) Reduction of operation costs
vi) Motivating tool
v) Good relationships