NON-ECONOMIC

ENVIRONMENT OF BUSINESS

INTRODUCTIONBusiness:- “Business is an institution

organised and operated to provide goods and services to society under the incentives of private gain.”

Business Environment “Business environment is an aggregate of

all the conditions,events and influences that surround and affect it.”

Business Environment

Economic Non-Economic

ECONOMIC ENVIRONMENT

Economic environment is the sum total of the overall economic conditions, the economic policies of the government and the economic system operating in the country. Economic environment is the net result of-

a) Economic system:- Capitalist economy, Socialist economy, Mixed economy.

b) Economic policies:- Industrial policy, Monetary policy, Fiscal policy.

c) Economic condition:- Boom, Depression, Level of Income, Price Trends.

NON-ECONOMIC ENVIRONMENTNon-economic environment of business

includes:-1. Natural Environment2. Social & Cultural Environment3. Demographic Environment4. Political Environment5. Technological Environment6. Regulatory Environment7. International Environment

NATURAL ENVIRONMENT Natural environment consist of natural resources

like land, water, minerals, climatic conditions, rainfall and all other natural resources found on the surface of earth & it’s bowels.

The study of natural environment is important because these resources are available in limited quantities at selected places & the availability of these resources does affect business decisions.

SOCIAL & CULTURAL ENVIRONMENT

Social environment consists of factors related to human relationships and the developments, forms and functions of such a relationship having a bearing on the business of an organisation.

Social environment is supplemented by Cultural environment .Culture may be defined as a sum total of knowledge, belief, art, morals, laws, customs and other capabilities and habits acquired by individuals and groups as elements of society.

DEMOGRAPHIC ENVIRONMENT

Demography is a science that studies human population with reference to it’s size, density distribution, growth rate ,age & sex composition, rate of literacy & language.

Business should have detailed information about the consumer behaviour,their preferences,income,lacation and other related matters.

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POLITICAL ENVIRONMENT Political environment is a comprehensive term

& includes the political system , the ruling party, the philosophy of various political parties, political developments, the style of leadership, political instability & many more factors.

A stable progressive and healthy political environment is very much necessary for the growth and development of business.

TECHNOLOGICAL ENVIRONMENT Technology is related to the application of scientific

knowledge to improve the technique of production,quality of goods and productivity.

Technology changes fast and to keep pace with it, businessmen should be ever alert to adopt changed technology to their business.

REGULATORY/ LEGAL ENVIRONMENT

Government controls the functioning of private sector through its various policies and legislation. The objective of Regulatory Environment is to prevent exploitation of consumers, employees and investors, to ensure better utilisation of natural resources, to control environmental pollution and finally preserve the ecological balance.

Regulatory environment is the outcome of the plans and policies of the government.

INTERNATIONAL

ENVIRONMENT International Environment of business comprises of

a country’s foreign policy, bilateral relations, international agreements, the policies of trading blocks, foreign trade policy, monetary policies, etc.

Business units engaged in import or export trade or domestic units using imported raw materials, technology or machinery are affected more by a minor change in international environment.

CONCLUSION Non-economic variables have a greater impact on

the functioning of a business enterprise. It provides the opportunities and threats to the functioning of a business enterprise.

A firm needs to adapt its strategies to the ever-changing environment. Constant monitoring of the environment is necessary to identify the emerging opportunities and threats.

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KAUSHALKIRANSHAHBAZRAHULYOGESH

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