Concept of environment: environment literally means the surroundings, external objects, influences or circumstances under which someone or something exists. The environment of any organization is the aggregate of all conditions, events and influences that surround and affect it "since the environment influence an organization in many ways, its understanding is or crucial importance. The concept the environment can be understood by looking at some of its characteristics.

Characteristics of environment:

1.      Environment is complex: Environment is quite complex. An environment consists of large number of factors, which are interrelated and interdependent. Any change in one factor may generate changes in other factors. However, the nature of interrelationship and interdependencies among the various factors is not fixed. Therefore, predictability of the environment becomes a difficult exercise.

2.      Environment is dynamic: the environment is constantly changing in nature. Due to the many and varied influences operating; there is a dimension in the environment causing it to continuously change its shape and the character.

3.      Environment is multi factored: what shape and character an environment assumes depends on the perception of the observer. A particular change in the environment, or a new development, may be viewed differently by the different observers. This is frequently seen when the same development is welcomed as an opportunity by one company while another company perceives it as a threat.

4.      Environment has a far reaching impact: the environment has a far reaching impact on organizations. The growth and profitability of an organization depends critically on the environment changes has an impact on the organization in several different ways. Since the environment is complex, dynamic, multi faced and has a and has a far reaching impact, dividing it into external and in the internal components enables us to understand it better.