Relationship Between Business System and Its Environment

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Relationship Between Business System and Its Environment

A business system is a combination of policies, personnel, equipment, and computer facilities to coordinate the activities of a business organization. A business system consists of inputs processors, and outputs. Creating effective business systems is the only way to attain results that are consistent, measurable, and ultimately benefit customers. It cuts down the operating costs and increases savings, ensures a smooth flow of data through various levels of the organization, eliminates duplicated, conflicting, and unnecessary services, and defines a proper method of handling business activities.

Physical resource:

The physical resource is the resource that is made by a person through their knowledge, skills, and abilities. The buildings, machinery, equipment, furniture, computer, robot, technology, and many more products that are made by people are examples of physical resources. The production process cannot imagine without physical resources, Low prices having higher quality resources enhance the ability of the organization.

Financial resource;

Another available resource is a financial resource. It is the money or nearer to money available to a business for spending in the form of cash, liquid securities, and credit lines. An entrepreneur needs to secure sufficient financial resources in order to be able to operate efficiently and sufficiently well to promote success. Financial resource is regarded as the lifeblood of an organization. There should be an excellent balance between organizations, financial institutions, creditors, debtors, and cash. Well-accepted accounting system and auditing is essential. See the following given exhibit to know how to manage the financial resource in an organization.

Human resource:

Human resource refers to the personnel or workforce within an organization responsible for performing the tasks given to them for the purpose of achieving Of objectives of the organization. Employees are the human resources of an organization, Human resource is regarded as a significant asset in terms of knowledge, skills, and abilities. Human resources can be executive, managerial, and operating. They are conscious and intelligent. They have certain norms, values, and attitudes. They should provide appropriate compensation and benefits and maintain proper labor relations.

Technological resources:

Technological resource refers to the methods, systems, procedures, tools, machinery, and so on. It is a dynamic resource of the company. It changes at in fast pace, It can be manual, mechanized, automatic, computer or digital, or robotized, Organizations should adopt modern technology to get competitive advantages.


The business environment is the sum total of all external and internal factors that influence a business’s decisions. The internal environment consists of all elements inside an organization that is relevant to its operations and the external environment consists of all elements outside an organization that is relevant to its operations. The business establishes, grows or operates, and dies in the environment and it surrounded and interacts with its environment-internal and external. Thus, there is a strong relationship between business systems and the environment.

Internal environment:

Goals, policies, and strategies, organizational culture; organizational resources; organizational structure are the main components of the internal environment, These components are usually under the control of the business organization.

External environment:

Political-legal, economic, socio-cultural, and technological (PEST) are the major components of the external environment. These components remain beyond the control of business organizations.

Objectives of Business Systems

  • To meet the user and customer needs,
  • To cut down the operating costs and increase savings,
  • To smooth the flow of data through various levels of the organization,
  • To speed up the execution of results with the reliable data available in a system,
  • TO handle data efficiently and provide timely information to the management,
  • To establish the most desirable distribution of data, services, and equipment throughout the organization,
  • To define a proper method of handling business activities, and
  • To eliminate duplicated, conflicting, and unnecessary services.

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