Dimensions of business environment

April 22, 2020

Good morning boys! Our next topic is dimensions of business environment.

Learning outcomes- At the end of the lesson, students will be able to-
1) Explain the dimensions of business environment.
2) Identify the dimensions of business environment.

Q.5 Explain the dimensions of general business environment. (5)
Ans- There are five dimensions of general environment which are explained as follows:
1. Economic environment-
a)Some of the economic factors that can affect management practices in a business enterprise are interest rates, inflation rates, stock market indices, value of rupee, changes in disposable income of people, etc.
b) For example- A rise in the disposable income of people due to increase in the GDP of a country creates increasing demand for products.
2.Social Environment-
a)The social environment of business includes the social forces like customs and traditions, values, social trends,  society's expectations from business, etc.
b) For example - Customs and traditions define social practices that have lasted for decades or even centuries like the celebration of Diwali , Christmas, etc in India provides significant financial opportunities for greeting card companies, sweets manufacturers, tailoring outlets and many other related business.
3. Technological environment-
a) It includes forces like scientific improvements and innovations which provide new ways of producing goods and services ,new methods and techniques of operating a business, etc.
b) For example- Airline companies have internet and world wide web pages where customers can look for flight times, destinations and fares and book their tickets online
4. Political Environment-
a) Political environment includes political conditions like general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
b) For example-  Political stability builds up confidence among business people to invest in the long term projects  for the growth of the economy whereas political unrest may  bring uncertainty of business activities and threats to law and order.
5) Legal environment-
a)It includes various legislations passed by the government, administrative orders issued by the Government, Court judgements and decisions rendered by various commissions and agencies at every level of the government .
b) In India, there are various acts for doing business like Companies Act, 2013,  Consumer protection act 2019, Factories act 1948, etc. The Packet of cigarettes must carry the statutory warning,'Cigarette smoking is injurious to health.'

Watch the video given below for better understanding of the topic: