To understand the meaning of business environment, we must know the meaning of two important terms by bifurcating this term into - “business” and “environment”.
Business: Business is an economic activity because it includes all those activities whose purpose is to earn profits by transfer or sale of goods and services. Business means creation of utility.
Whether a business unit has one or two people working at home, 10 operating in a retail store, 1000 employed in a factory or 100,000 operating in multiple units spread across the country, all businesses share the same purpose: to earn profits.
However, if all the economic activities are treated as business then theft, dacoity, etc., will qualify themselves to be treated as business because their objective is also to earn money. But it is essential for any human activity to be designated as business to indulge in the exchange of things or services and these activities should be pursued regularly with a view to earn profits.