#2 Business Environment~Dimensions of Business Environment

Dimensions or Components of Business Environment

1.       Economical Environment

2.       Social Environment

3.       Political Environment

4.       Legal Environment

5.       Technological Environment

Economic Environment

It includes factors such as

a.)    GDP and its related aggregates:- GDP or gross domestic product means the value of goods and services produced within an accounting year. Rise in GDP means rise in the level of disposable income and which is a good sign for business enterprises.

b.)    Per Capita Income:- Per capita income is a ratio of the amount of all region's income divided by its population. Higher per capita income of a particular region means the region’s population is prosperous and lower per capita income means that standard of living of that region is low. Thus it brings about the idea that which region will target first by the business.

c.)     Inflation:- Higher inflation means more constraints on the business enterprises because it increases the value of raw materials, labour and other important factors which is not a good sign for any business.

d.)   
Stock market conditions:- Stock market conditions may be categorised into two parts Bull market and bearish market. Bull market means that market is at its boom and growing day by day and bearish market is like a dull and stagnant situation of a market. Mostly bull market is a good sign for any business.

e.)    Stage of Economic Phase:- It includes like phases like early expansions peak slowing into recession recovery etc.

Social Environment

·         Customs and traditions of the society:- various kind of festivals like Holi, Diwali, Eid, Christmas etc. All are the part of our country’s tradition and customs. This will brings a great opportunity for greeting card companies, sweets or confectionaries manufactures and many other related businesses.

·         Standard of living:- A very high standard people can easily spend their money on various things as compared to those who are just earning their bread and butter.

·         Taste and preference:- Social trends has been changed tremendously. Now people are aware about the benefits of gym, health and fitness kinds of stuff. So it increases the demand of gyms, health related high nutrient supplement food, mineral water etc. and also decreases the demand of tobacco products and liquor.

·         Expectations of the society:- Changing in the social trend of business will create various opportunities for businesses and also creates threats for the businesses at the same time.

Political Environment

v  Government attitude towards business:- 

v  Stability or instability of government

v  Peace

Government attitude towards business:- Government creates rules and policies under which various business groups will sustain and grow. Thus, the positive side of government towards the business groups will likely to be the favourable impacts on businesses.

Stability of Government:- Business operates according to the forecast of near future and leaders of business houses hates instability of these factors, such as frequent strikes, social unrest and  chaos as their operations would be hit adversely due to these factors. It can be seen most of the time that these factors usually come up with the frequent change in the government.

 Peace:- Businesses will grow much faster in the peaceful environment where there is less chances of strikes, lockouts etc.

Legal Environment: The Law of land is the supreme power. Every business house must fulfil the conditions of law for the successful working of organisation. It includes various laws passed by the legislative assembly, orders made by the concerned authorities, various case judgements, etc.

Few examples of legal environment:

1.       Statutory warning on cigarettes pack- ‘Cigarette smoking is injurious to health’ is due to the  anti-smoking law.

2.       Same warning is also given on the packing of alcohol.

Technological Environment:-Every businessman must constantly watch the new upcoming technology related to his business. It helps him to facing the competition and creates innovation into the business.

1.       Smart TVs in place of LED and LCD

2.       Remote control Fans in place of ordinary fans

3.       Smart watches in place of ordinary watches

4.       Use of digital mode of payments in place of traditional mode of cash or cheque such as wallets and BHIM app.

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