"Air increase in interest rates will discourage borrowing and therefore will curtail growth of industries." Which component of business environment highlighted in aforesaid statement?
(a) Economic environment (b) Social environment
(c) political environment (d) Legal environment
Answers
Answer:
A... Economic environment
Explanation:
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(A) Economic environment
There are 5 dimensions to business environment. These are economic, social, legal, political and technological.
Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise.
The social environment of business include the social forces like customs and traditions, values, social trends and societys expectations from business. For example, the celebration of Diwali, Id and Christmas in India provides significant financial opportunities for greetings card companies, confectionery manufacturers, tailoring outlets and many other related business.
Technological environment could influence businesses because of a new product or technique of producing a new product. For example, recent advances in computer have given rise to innovative marketing strategies.
Political environment includes political conditions such as general stability and peace in the country Legal environment includes various legislation passed by the Government administrative orders issued by government. It also includes the decisions rendered by various commissions and agencies.