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Business environment influences business management. The critical elements of business environment often interact with the critical elements of business management. The critical elements of business management are planning, direction, organization, control or coordination, staffing and supervision and evaluation. Management at all the levels, top, middle as well as supervisory, is concerned with these critical elements to a certain degree. Similarly, these very critical elements are the concerns of the management that specializes in different functions such as production, finance, marketing, purchase, inventory control, personnel, public relations, research and development etc.

Management, at all the levels of specialized functions, is influenced by the critical elements of economic environment. For example, when an industry faces business recession, the management may decide to cut down the rate of production or to pile up inventory accumulation. When the market is being invaded by an increasing number of closely substitutable products, the management may decide to go in for aggressive advertisement or cut-throat competition. When the financial institutions start interfering too much with the day-to-day business operations of a firm, the firm's management may decide to depend exclusively on its own internal funds rather than borrowed capital. When the government enforces minimum wage legislations and other social security measures for all permanent workers, the management may decide to recruit only casual laborers through a labor contractor.

Management, at all the levels of specialized functions, is influenced by the critical elements of economic environment. For example, when an industry faces business recession, the management may decide to cut down the rate of production or to pile up inventory accumulation. When the market is being invaded by an increasing number of closely substitutable products, the management may decide to go in for aggressive advertisement or cut-throat competition. When the financial institutions start interfering too much with the day-to-day business operations of a firm, the firm's management may decide to depend exclusively on its own internal funds rather than borrowed capital. When the government enforces minimum wage legislations and other social security measures for all permanent workers, the management may decide to recruit only casual laborers through a labor contractor.