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Business environment. Prof. Kahn and Wiener have called the new development in technology as “Innovation”, “Revolution” or “Break Through”. For example, peoples’ demand determine the kind of products to be offered for sale; this demand is consequently affected by peoples’ attitudes, customs, cultural values, fashion and other related forces. We have only 0.052% of sweet water available to us in our rivers, lakes, crust of earth. Economic condition or the health of the national economy implies the consideration of many elements namely, the stage of development, economic resources, the level of income, the distribution of wealth and income etc. The external business environment consists of economic, political and legal, demographic, social, competitive, global, and technological sectors. The demand for further lowering of the interest rates however, continued due to rising and high U.S current account deficit as portrayed by the above graph. has often been resorted to by the government. The dominant features of technology have been made in the last three decades. Businessmen should not act with profit motive only. The technological development can contribute to the economic development. The activities of most business firms are affected by international factors like the raise of inflation in different countries with which they trade. It has branded stores and franchises globally, and sells through allowances in third-party stores. P.J. Most important factors of micro environment of business are as follows: 1. competitors, 2. customers, 3. suppliers, 4. public, 5. marketing intermediaries, 6. workers and their union! Legal environment. The doctrine of “Laizze-faire” has become an outdated or discarded principle and the Government all over the world regulate the business activities. The Government plays a number of roles as it interacts with business. Even big business houses have to remain confined within a limited area or region. Burberry is extending its web reach so that its customers worldwide can view its brands. For example, the company is targeting the Chinese shoppers directly by launching a site in China. A decade ago, we were all under an impression that natural resources like air and water are not exhaustible and their supply is unlimited. The Government has also introduced certain amendments in the Water (Prevention and Control of Pollution) Act in 1988 to remove administrative and practical difficulties that emerged over the years after the enforcement of the Act. Factors Affecting Business Environment (5 Dimensions): The business environment accordingly consists of five dimensions or components namely, economic, social, technological, political and legal factors, discussed in the following sub-sections: 1. Kotler and Armstrong (2004) explain that different restrictions are imposed on all organizations by the environment. Jute industry is located at Kolkatta due to the favorable geographical and climatic conditions to grow the raw material. The political environment of any country influences the business to a larger extent. Burberry Limited is a manufacturer of apparel, accessories and fragrances for all ages and gender. 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They need to recognize that the external environment has many aspects that can have a significant impact on the operations of a firm. The company targets people involved in hunting, fishing, skiing, archery, mountaineering, golf and tennis (Burberry 2012). Particularly for the last ten years, technology has worked wonders. Examples of Environmental Factors Affecting Business. Any enterprise, which translates a new technology into useful product as soon as it is discovered, shall reap a rich harvest and the profit volume will be comparatively low in case of other firms, which succeed the pioneering enterprise. Environmental Policies. Demand / Supply These include economic, legal, political, technological, and socio cultural factors. Monetary and fiscal policies, import and export policies and custom duties, etc. Another major general economic factor, which affects the prospects of the individual firm, is the size and the overall state of health of the national economy. There is also a comprehensive labour legislation, which force employers to pay minimum wages to workers in specific industries and statutory bonus payment is very liberal in approach. affects the business firm and the demand pattern of various goods and services. In developing countries, there is a shortage of efficient and co… Still on the economic aspect, it is undeniable that all business and non-business organizations felt the impact of the 2008 economic crisis, which rocked the whole world. This deficit peaked alongside the housing bubble whose onset began in 2006. But modern economists are of the view that developed countries are no longer worthwhile propositions for investments because developed economies have almost reached more or less a saturation level in certain spheres of their industrial activities. These may include market fluctuations, changes in government policy, inflation, emerging technology trends and other environmental factors affecting business growth and revenue. The range of government l… Today developed countries are seeking good avenues for investment in developing countries. These factors affect the performance of the business in several ways and understanding them is important for strategy formulation. In between these two-extreme situations are mixed economies. It is here that the Government acts as a regulator or controller, coordinator, caretaker and guardian, and supplier. business environment factors affecting business environment 2. BUSINESS ENVIRONMENT Business environment means all of the internal and external factors that affect how the company functions including employees, customers, management, supply and demand.There are various factors that are included in internal and external environment. Geographical and Ecological or Natural Factors. The particular type of industry develops, only where its raw materials are available. The time lag between basic discoveries and the application of these discoveries to commercial products have considerably decreased now. The company should tackle the business environment well since internal environment will reveal its strengths and weaknesses, while the external environment will reflect the opportunities available to the organization and the threats it faces. which affect the buying behavior of consumers and thus put an impact on businesses. This was meant to better business the economic situation after the 9/11. Joseph Schumpter was the first economist who recognized the place of technology in the sphere of economic development. So far we have discussed the economic environment within a country only. Mixed economy refers to a situation where public and private sectors co-exist. The company employs trade-marking and advertising to market its products. The public sector is now mobilizing resources from the open market by issuing securities and bonds, and the nationalized banks are all extending their utmost support in this task. This trend portrayed by the graph shows how the economic situation may affect the economy and general spending and therefore the performance of any business within such an economy. Business environment determines the success or failure of this policy. Burberry was able to establish its first foreign outlets in Paris, United States and South America, and export its first shipment of raincoat to Japan because of the government’s globalization policy. If a priority sector industry is started in a backward area, it can avail both the benefits available to priority sector as well as those meant for backward areas. The business enterprises should constantly watch the developments taking place and make necessary adjustments in their production and marketing plans and strategies to fulfill the new social demands. For example a country’s policy that restricts the growth of multinationals in the market will automatically limit the business operations of the company hence its growth. Within the mixed economic system itself there are wide variations. The Government has introduced certain amendments in the Air (Prevention and Control of Pollution) Act in 1987 with a view to make the law more effective and severe. In 1985, a new Ministry of Environment and Forestry was created. These three elements of the economic environment should be analyzed individually as well as collectively as a whole. Shaikh S, 2010, "Business environment" New Delhi: Pearson, 2010. In the US the nature of business environment is dominated by the government regulations with a view to ensure a certain level of economic life to the people. Adjusting with the social and cultural development, of course, will enable the firm to reap a rich harvest. Likewise, export oriented units and industrial units started in backward areas can also enjoy a number of benefits. Television moved from research to the commercial stage within 2 years and atomic bomb in six. The internal factors that affect a business are such factors as employees, competitors, customers, suppliers and the culture of the organization. The code of conduct that is supposed to be followed by the business is determined by the socio-cultural environment. The entrepreneurhas foresightedness and self confidence, which he utilizes for production activities. It also helps in … Various legislative measures are also being taken to protect the ecological environment. So let us start with the introduction to business environmentand learn its importance. Interest rates 2. of this report is to evaluate how a range of global business environment factors affect Myanmar, also known as Burma. Therefore, the industrial units cared very little about the pollution prevention norms prescribed, and polluted water and air recklessly. All these factors directly limit the scope of performance of the business firms. Bearing this point in mind most big companies now-a-days show less profit than that they should have normally earned, just to create a public image. The Government under the banner of rapid industrialization drive, had allowed industrialists to start new factories anywhere and everywhere in the country. These factors have a notable influence on business prospects. Even in South India, people in different states may not have similar tastes, likes etc. Taxes 6. But, in today’s world no country is isolated. The impact of this demographic factor is more vital in India than any other country in the rest of the world. Considering the outside environment allows businessmen to take suitable adjustments to their marketing plan to make it more adaptable to the external environment. Various internal and external factors affect the economic environment that a business operates in. When Burberry noticed the high demand of rainwear, it utilized this opportunity increasing its production in the market. As stated already, there are certain spheres in India where no private enterprise is allowed to operate. Likewise, certain industries are exclusively reserved for small sector, and large industrial houses and monopoly houses are debarred from entering into such lines of business. Natural environment includes factors such as seasonal variations, climatic differences, soil conditions and natural terrain.In consumer markets, the natural environment affects companies because of the differences in the nature of products bought by consumers due to variations in seasons and climate. Businesses can’t control external factors but must respond to them. These factors provide opportunities, threats and challenges to the firm. The Industrial Policy of India is an important consideration to our industrialists while starting their venture. The availability of physical facilities limits the scope and prospects of business.Technology refers to the knowledge of how to do things. Any unfavorable alteration of this natural environment is called environmental pollution. Of the total amount of water on this earth, 93% is the oceans and it cannot be used for drinking, washing or agriculture. Therefore, it can be concluded that economic trends are indeed significant determinants of general economic and business performance. The control of big business is exercised through MRTP Act. Business Environment is not concerned with a single factor. The priority industries shall get a number of incentives and other positive support from the Government as well as from other financial institutions. It is the main institution that translates discoveries into application for public use. Economic Environment: All these facts clearly reveal that Government has an upper hand in all the business policies in India. Globalization as government policy too has influence on the business. This fundamental difference gives rise to different demand patterns and calls for different marketing strategies. Social factors are basically sociological factors related to general society and social relations that affect your business. Business environment are categorized into three main categories; internal environment; operational environment; and general/external environment. Political and legal intervention in the field of marketing and business activities has now become a common factor. Particularly for the last ten years, technology has worked wonders. Entrepreneur and innovation is an important factor among several factors which effects the business environment of any country. Only because of the influence of this factor, most of the industrialists in India have limited their area of operations. These are factors which business can control. Your email address will not be published. In India also, its importance is now well recognized by the Government. For example, in order to reinvent its luxury brand status, the company launched the Prorsum designer collection. They should strictly adhere to the conditions laid down by the Pollution Control Boards in matters of treatment and discharge of trade effluents and wastage. The impact of the menace came into lime light only in 1984 when the Bhopal episode took 2,000 lives. The entrepreneur provides contribution towards economic development by taking advantage of technical knowledge, in utilisation of the resources. The micro-environment of a business includes the factors in the immediate area of operation affecting its performance and decision making freedom. There are two types of environment that a business. Through this the company will be able to implement business policies that will ensure success. Technological factors affects business concerning technological investment, technological application and the effect of technology on markets. In spite of this, we pollute and waste water”. In India, Government is the largest employer and the public sector controls a major share of the corporate sector. The lower the demand as portrayed in line two the lower the level of returns attained. We shall now briefly analyze how the ecological factors and the Government’s intervention influence business. It also includes the exact rulings and courts decision. as to consumption of goods in the people of South India may not be similar to that of in North India. Apart from these, their political loyalty also plays an important role in dividing them into various groups. For example, Burberry Limited makes a considerable portion of its income from licensing, which amounts to about £109 million pounds. Legal factors involve how flexible and adaptable the law and legal rules that govern the business are. The remaining is in the Polar Regions, ice burgs and glaciers. The business environment can include factors such as: clients and suppliers; its competition and owners; improvements in technology; laws and government activities; and market, social and economic trends” So, let’sget started! Some factors influence the performance of the firm directly while the influence of some other factors is only indirect. Burberry Limited is a manufacturer of apparel, accessories and fragrances for all ages and gender. Any successful organization pictures out the external factors that affect the business, anticipates the prospective market situations and work to minimize the costs while maximizing the profits. 1. social classes and their influence on the society, 2. average disposable income level, 3. wealth of people, 4. economic inequalities, 5. level of education, 6. access to education (free, paid), 7. level and access to health-care, 8. health consciousness in society (smoking, drinking, drug use, safe driving, etc. This is because the people of a particular geographical region will have similar tastes, preferences and requirements. They are the Macro and Micro factors. Business environment determines the success or failure of this policy. The entrepreneur while promoting a new firm should give due consideration to all these factors. Even banks are asked to ignore them while extending credit. The business has to prepare for the foreseen as well as unforeseen general environment factors that are most likely to affect it either positively or negatively. The spin off led to a high demand of financial assets and this lowered interest rates whilst raising prices of the respective assets. The Government passed the Environment (Protection) Act in 1986, which gives wide powers to the Government to take punitive action against erring industrialists. The business has less control over these factors … Particularly, after the Great Depression, State intervention in the economic life is clearly noticeable in all economies of the world. It is considered as the 98th most valuable brand globally. For instance, tastes, likes etc. It comprises of several factors and each factor influences the business firm in its own way. Was set up on 1st Nov 1980 through ” controller, coordinator, caretaker guardian! 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Evaluate how a range of global business environment economic development by taking advantage of technical,. The very survival of the market is large, large sale production shall also be there the demographics political. In 1985, a number of roles as it interacts with business the geographical situation the... Of its interaction with its environment because the business are as stated already, there is and... The respective assets that such resources are also being taken to protect the ecological environment way of Affecting the of. Its interaction with its environment because the business community to a lot tension... Is isolated Schumpter was the first economist who recognized the place of technology have been made in market!
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