This chapter focuses on the impact of the external environment on business and of business on that external environment. It then focuses on the different ways in which the various influences impact on business organizations and the way they are managed, and concentrates on the factors that are covered in a political, economic, social, technological (PEST) analysis. The chapter describes the interaction of business in general, and the financial services sector in particular, with the business environment from both the contextual and operational points of view. It explains the broad concepts of the contextual and operational environments and their relevance to business management, which comprise the contextual environment, political, legal, economic, technological and social influences. The chapter concludes with an example of a way in which the influences of the contextual environment have had recent and substantial impact on the financial services sector.