Question

What do you mean by business environment discuss the various dimensions of bhsiness environment?

Answer 1

business environment is the sum total of all individuals institutions and other forces that lie outside the control of a business organisation but that may affect its working.

dimensions:-

social ,legal, political, technological economical.

Answer 2

Answer:

Business environment refers to forces, factors and institutions which are outside the control of business enterprise but these may effect its performance.

The dimensions of business environment are:

1. Legal Environment

• It includes various laws passed by the government, administrative orders issued by government authorities, court judgments as well as decisions rendered by the central, state or local governments.

• Understanding of legal knowledge is a pre-requisite for the smooth functioning of business and industry.

• Understanding the legal environment by business houses help them not to fall in a legal tangle.

• The legal environment includes various laws like Companies Act 2013, Consumer Protection Act 1986, Policies relating to licensing & approvals, Policies related to foreign trade etc.

Example: Labour laws followed by companies help them to keep away from penalties.

2. Political Environment

• It means that the actions were taken by the government, which potentially affect the routine activities of any business or company on a domestic or at the global level.

• The success of business and industry depends upon the government’s attitude towards the business and industry, Stability of Government, Peace in the country.

Example: Political stability and central government’s attitudes towards business, industry and employment, has attracted many national and international business entrepreneurs to invest in India.

3. Economic Environment

• The economic environment consists of an economic system, economic policies and economic conditions prevailing in a country.

• Interest Rates, Taxes, Inflation, Stock Market Indices, Value of Rupee, Personal Disposable Income, Unemployment rate etc. are the factors which affect the economic environment.

Example: A rise in the disposable income of people due to a decrease in tax rates in a country creates more demand for products.

4. Social Environment

• Social Environment consists of social forces like traditions, values, social trends, level of education, the standard of living etc. All these forces have a vast impact on business.

Tradition: It refers to social practices that have lasted for decades, such as Ugadi, Deepavali, Id, Christmas,etc.,

Impact: More demand during festivals provides opportunities for various businesses.

Values: It refers to moral principles prevailing in the society, such as Freedom of choice in the market, Social Justice, Equality of opportunity, Non-discriminatory practices etc.

Impact: The organisations that believe in values maintain a good reputation in society and find ease in selling their products.

Social Trends: It refers to a general change or development in the society, such as health and fitness trend among urban dwellers.

Impact: Health and fitness trend has created demand for gyms, mineral water etc.

5. Technological Environment

• It consists of scientific improvements and innovations which provide new ways of producing goods, rendering services, new methods and techniques to operate a business.

• It is very important for a firm to understand the level of scientific achievements of a particular economy before introducing its products.

• Technological compatibility of products also drives the demand for manufactured products by a company.

Example: E-commerce has changed the scenario of doing the business, buying goods and availing services at the click of a mouse or through mobile, Digital India initiative by the government and move towards a paperless society.