Current News

Today’s take away

 UNIT: IV

Macroeconomics environment of
business

• Introduction to business environment

• Economic environment of business

• Non-economic environment of business

 Learning Outcome

• Enable the student to identify the need of

studying business environment

• How economic environment of business is

different from non-economic environment
of business
What is Business Environment??
• The term ‘Business Environment’
comprises of two words – Business and
Environment
• Business refers to all the activities which
involve production, buying and selling of
goods, rendering of services, and so on,
with the primary objective of earning profit.
• The word ‘Environment’ refers to the sum
total of the living things and natural forces
that surround us.
• The business environment refers to the
conditions in the surrounding that affect
the functioning and activities of a business
firm.
The term ‘business environment’ connotes
external forces, factors and institutions
that are beyond the control of the business
and they affect the functioning of a
business enterprise
• These include

a) customers,

b) competitors,

c) suppliers,

d) government,

e) the social, political, legal and

technological factors etc.
Polling question
• The term business environment is
combination of:
a. Business
b. Environment
c. Both (a) and (b)
d. None of the above
Nature of Business Environment

1. Dynamic

2. Aggregative and inter-related

3. Unpredictable
Why to study Business Environment??
1. Determination of New Opportunities

2. Identification of Potential Threats

3. Identification of Strengths and Weaknesses

4. Helps in Strategy Formulation

5. Provides Direction for Growth

6. Helps in Focusing on Customers’ Changing

Needs

7. Helps to meet Competition

 TYPES OF BUSINESS ENVIRONMENT

Economic Environment Non-Economic Environment

• The economic • Non-economic

environment includes environment comprises
economic conditions, social, political, legal,
economic policies and technological,
economic system of the demographic and natural
country. environment.
 What are the factors that
affect economic environment?
1. Economic conditions
2. Economic policies
3. Economic system
What are the factors that
affect non-economic
environment?
 Non Economic Environment
1. Social environment
2. Political environment
3. Technological environment
4. Legal environment
5. Demographic environment
6. Natural environment
Polling question
• Demand for new clothes increases during
festive season is one of the factor
affecting:
a. Economic environment
b. Non-economic environment
c. Both (a) and (b)
d. None of the above