The framework of business environment explains how a business interacts with its surroundings to run its operations effectively. It shows how external factors influence business decisions and how organizations respond through continuous improvement. The basic framework involves Input → Process → Output → Feedback.
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Inputs are the resources, information, and environmental factors that enter into a business system. These include raw materials, human resources, capital, technology, market information, government policies, customer needs, and competitor activities. The business collects these inputs from its environment to make decisions and produce goods or services. Without proper inputs, a business cannot operate effectively.
2. Process
The process is the set of activities that transform inputs into useful outputs. It includes production, planning, decision-making, organizing, marketing, and managing operations. During the process stage, businesses analyze information, use technology, assign tasks, and coordinate resources. How well a business processes inputs determines its overall efficiency and competitiveness.
3. Output
Outputs are the final results produced by the business after processing the inputs. They include goods, services, ideas, and experiences delivered to customers. Outputs also include financial results such as profit, customer satisfaction, brand image, and market share. Effective outputs help a business survive, grow, and compete in the market.
4. Feedback
Feedback is the information that a business receives from its environment after delivering the output. It includes customer responses, sales performance, complaints, employee feedback, market reactions, and competitor responses. Feedback helps a business know what is working and what needs improvement. Positive feedback encourages the company to continue existing practices, while negative feedback helps identify problems and make better decisions.