The Domestic Environment refers to the surroundings and conditions within a country that affect its people and businesses. This includes factors like the economy, culture, laws, and social norms. For example, a strong economy can lead to increased consumer spending, while cultural values can influence buying habits. Additionally, the Domestic Environment encompasses the political landscape, which can impact business operations. Government policies, such as taxes and regulations, play a crucial role in shaping how companies operate. Understanding this environment helps businesses like local restaurants or retail stores adapt and thrive in their specific markets.