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SUNIL BAHL,R. NO=03 SAGAR MHATRE,R. NO=44 PRAVIN PAWAR,R. NO=56 ROHIT KOLI,R.NO=36 ROHIT VANMORE,R.NO=80 ANKUSH KARHALE, R.NO=31 SHRIKANT BHOSLE, R.NO=7
Natural Environment Demographic Environment Economic Environment Political environment Social Environment Technological Environment International Environment .
rainfall and other resources found on the surface of the earth. water.Natural environment consist of natural resources like land . These resources are available in limited quantities and availability of these resources does affect the business decision. minerals. .
therefore it should have detailed information about the consumer behavior . location . income. . Business depends upon people . distribution. rate of literacy and language. their preferences .etc. Demography is a science that studies human population with reference to its size. density. growth rate.
. Economic environment is a sum total of the overall economic conditions . the economic policies of the government and the economic system operating in the country.
political developments . the philosophy of the various political party. political instability.etc. A stable progressive and healthy political environment is very much necessary for the growth and development of the business. It includes the political system . . the ruling party.
buying and consumption habits of various social groups in the society. Favourable social environment should be created in the society. It includes customs. traditions. values.Each group has some expectation from the business firms. beliefs. tastes and preferences . .
affect the business and its working. Introduction:. socio-cultural environment. political. technological.Various environmental factors such as economic environment. . Out of these factors economic environment is the most important factor. demographic and international.
. policies and nature of an economy. It includes system. trade cycles. economic resources. It keeps on changing from time to time with the changes in an economy like change in Govt. policies. distribution of income and wealth etc. political situations. level of income. Those Economic factors which have their affect on the working of the business is known as economic environment. Economic environment is very dynamic and complex in nature. It does not remain the same.
Economic System 3. Economic Conditions 2. International Economic Environment 5. Economic Legislations . It has mainly five main components:1. Economic Policies 4.
. (ii) Boom. (iv) Depression. (i) Prosperity. Economic Policies of a business unit are largely affected by the economic conditions of an economy. distribution of income etc. purchasing power of public. demand and supply. Business cycle is another economic condition that is very important for a business unit. Any improvement in the economic conditions such as standard of living. (v) Recovery. (iii) Decline. Business Cycle has 5 different stages viz. largely affects the size of the market.
Inflation Rate in the Economy VI. Interest Rate prevailing in the Economy VIII. Demand and Supply Trends V. Stages of Business Cycle II. Trends in Industrial Sickness IX. Following are mainly included in Economic Conditions of a country:I. Growth of Primary and Secondary Capital Markets XI. Per Capita Income and Distribution of Income III. Rate of Capital Formation IV. Exports Growth Rate VII. Industrial Growth Rate. National Income. Size of Market . Efficiency of Public and Private Sectors X.
Different countries of a world have different economic systems and the prevailing economic system in a country affect the business units to a large extent. It also helps in providing framework for answering the basic economic questions. Economic conditions of a nation can be of any one of the following type:- . An Economic System of a nation or a country may be defined as a framework of rules. goals and incentives that controls economic relations among people in a society.
people are obliged to work under the directions of Government. Mixed Economy:.All the economic activities are controlled and regulated by the government but the people have the freedom of choice of occupation and consumption. (b) Totalitarian Socialism:. Socialism:.The economic system in which business units or factors of production are privately owned and governed is called Capitalism. Japan. The profit earning is the sole aim of the business units. Some factors of production are privately owned and some are owned by Government. all the economic activities of the country are controlled and regulated by the Government in the interest of the public.This form is also known as Communism. Capitalism:. All the decisions relating to the economic activities are privately taken. 2. Under this. Both private and public sectors play key roles in the development of the country. The two main forms of Socialism are: (a) Democratic Socialism:.Under socialism economic system. Examples of Capitalistic Economy:. 1. There exists freedom of choice of occupation and consumption.England. . It is also known as free market economy. The first country to adopt this concept was Soviet Russia. 3. Government of that country does not interfere in the economic activities of the country. America etc.The economic system in which both public and private sectors co-exist is known as Mixed Economy.
Economic Policies affects the different business units in different ways. . The Government may grant subsidies to one business or decrease the rates of excise or custom duty or the government may increase the rates of custom duty and excise duty. Government frames economic policies. All the business enterprises frame their policies keeping in view the prevailing economic policies. tax rates for another business. It may or may not have favorable effect on a business unit.
Monetary Policy:. It is framed by the government of a country and it deals with taxation. deficit financing and management of public debts in an economy . Fiscal Policy:.The policy formulated by the central bank of a country to control the supply and the cost of money (rate of interest). borrowings.It may be termed as budgetary policy. Fiscal Policy works as an instrument in economic and social growth of a country. 1. It is related with the income and expenditure of a country. in order to attain some specified objectives is known as Monetary Policy. 2. government expenditure.
The policy related to the investment by the foreigners in a country is known as Foreign Investment Policy. Foreign Investment Policy:. . Foreign Trade Policy:. 3. If the government has adopted liberal investment policy then it will lead to more inflow of foreign capital in the country which ultimately results in more industrialization and growth in the country.It also affects the different business units differently. if restrictive import policy has been adopted by the government then it will prevent the domestic business units from foreign competition and if the liberal import policy has been adopted by the government then it will affect the domestic products in other way.g. E. 4.
Industrial Policy:.Industrial policy of a country promotes and regulates the industrialization in the country. 5. It is framed by government. . The government from time to time issues principals and guidelines under the industrial policy of the country.
If any business enterprise is involved in foreign trade. WTO. United Nations etc. then it is influenced by not only its own country economic environment but also the economic environment of the country from/to which it is importing or exporting goods. . The role of international economic environment is increasing day by day. There are various rules and guidelines for these trades which are issued by many organizations like World Bank.
Besides the above policies. Governments of different countries frame various legislations which regulates and control the business .
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