Business environment refers to all the external forces such as economic, social, political, technological or legal that affects the performance of a business organisation. In other words, everything that is outside the purview of an organisation but affects its performance, composes business environment.

Following are the features of business environment:
(i) Interrelated: Different forces acting in a business environment are closely related to each other. For example, an increase in the income of the consumers increases the demand for consumer durables such as television, refrigerator, etc.
(ii) Ever changing: Business environment is dynamic in nature i.e. it can be changed as per the requirement. For example, consumer tastes and preferences, technology, government rules and policies keep on changing continuously.
(iii) Complex: Business environment is the aggregate of different interrelated and dynamic forces. Thus, it becomes difficult and complex to understand it, and proper study is needed to understand the same: For example, all political, social, economic, technological and legal matters affect the performance of an organisation simultaneously. While, it may be easy to understand the individual effects of these forces, their cumulative effect is quite difficult to understand.