1. INTRODUCTION1.1. Background of the Study Businesses play an important role in the economies of all countries, whether developed or developing. It contributes to the well-being of society by satisfying needs and is a source of income for millions of people around the world. Businesses do not operate in a vacuum but operate in commercial environments. Events occurring in a business's environment have a direct effect on the success or failure of that business. According to Jain, Trehan and Trehan (2009), business environments can be classified into two: (1) internal business environment; (2) external business environment. Institutions and organizations are generally able to control their internal business environment. In doing so, they gain the capacity to influence their institutional performance. On the contrary, it is difficult for a company to control the external environment; however, businesses can identify opportunities and threats presented by the external environment in advance and take decisive action to ensure their continued success (Jain, Trehan & Trehan, 2009; Goyal & Goyal, 2009). Academics and researchers characterize the business environment as dynamic. (Nieuwenhuizen and Rossouw, 2008). This is because; the business environment is not static but constantly evolving. Changes in the business environment are fueled by evolving consumer preferences and tastes. Changes in consumer preferences for products and services lead institutions and organizations into a never-ending sequence of research and development. Establishments invest a significant portion of their resources in research and development in order to meet market demands. In doing so, institutions gain the capacity...... middle of paper ......Reuters. (2013). Safaricom Limited. Retrieved March 29, 2013, .Sautet, FE (2000). An entrepreneurial theory of the business. London: Routledge Publishers. Shafer, SM, Smith, HJ, & Linder, JC (2005). The power of economic models. Business Horizons, 48(3), 199-207. Stokes, D.R., Wilson, N., Wilson, N., and Mador, M. (2010). Entrepreneurship. Connecticut: Cengage Learning. Teece, D.J. (1998). Economic performance and theory. Cheltenham: Edward Elgar Publishing Limited. Teece, D.J. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2-3), 172-194. Wantao, Y. and Ramanathan, R. (2012). Effects of business environment on international retail operations: Case studies from China. International Journal of Retail and Distribution Management, 40(3), 218-234.