The economic system of a country may be capitalist, socialist,

communist or mixed. (iii)Economic Policies: - The government

decides the economic environment of business through Budges,
Industrial regulations, Economic planning, Import and Export
regulations, Business laws, Industrial policy, Control on prices and
wages, Trade and transport policies, the size of the national
Income, Demand & supply of various goods etc. (iv)Economic
Growth: - The stage of economic growth of the economy has direct
impact on the business strategies. Increased economic growth rate
and increase in consumption expenditure, lower the general
pressure within an industry and offers more opportunities . (v)The
rate of interest affects the demand for the products in the economy,
particularly when general goods are to be purchased through
borrowed finance. Low interest rated provides opportunities to the
industries to expand whereas rising interest rates pose a threat to
these institutions. (vi)Currency Exchange: - Current exchange rates
have direct impact on the business environment. When the rupee
was devalued in 1991, it was to make Indian products cheaper in
the world market and consequently boost India's exports.

Political environment refers to the influence exerted by the three

political institutions they are; Legislature, Executive, Judiciary etc.
The legislature decides on a particular course of action.
Government is the executive and its job is to implement whatever
was decided by parliament. The judiciary has ensure that both the
legislature and executive function in public interest.