![]() ![]() International managers face intense and constant challenges that require training and understanding of the foreign environment. Technology helps to run the business better and faster. In a competitive business environment technology is the key to development. Technology provides capital intensive but cost effective alternative to traditional labour-intensive methods. It also indicates the pace of research and development and progress made in introducing modern technology in production. The business firm must constantly monitor the changes in the technological environment, which may have a considerable impact on the working of a business. There is a constant technological development-taking place. Technology has brought about far reaching changes in the methods of production, quality of goods, productivity, and packaging. Changes in the economic factors can adversely affect the working of a business firm. Business depends upon economic environment for their inputs and also for market. The economic system includes capitalism, socialism, and mixed economy. Every country has different economic system. ![]() (b) Economic policies of the government: monetary policy, fiscal policy, industrial policy, trade policy, foreign investment policy etc.Įconomic system prevailing in the country also affects the business growth. (a) Economic conditions in the market i.e. Economic environment is dynamic and complex in natureĪ business firm closely interacts with economic environment that consist of: These factors include economic system, economic policies, trade cycle, economic resources, gross national product, corporate profits, inflation rate, employment, balance of payments, interest rates, consumer income etc. Business should be organized and governed, taking into consideration various values and norms of the society.Įconomic environment consists of economic factors that influence the functioning of a business unit. Any change in the cultural factor affects the business in large. Culture shapes the attitude and behaviour of the society. Society is largely influenced by the culture and in turn culture influence the business firm. Business is an integral part of the social system. Culture passes from one generation to another through institutions like family, schools, and colleges. For instance, symbols may carry a negative meaning in another culture.Ĭulture involves knowledge, values, belief, morals, laws, customs, traditions etc. Many cultural blunders occur due to the failure of businesses in understanding foreign cultures. The basis for these factors is formed by the fact that people are part of a society and cultural group that shape their beliefs and values. The Social forces link to factors that affect society’s basic values, preferences and behavior. A stable progressive and healthy political environment is very necessary for the growth and development of business. Legislature, executives and judiciary are the important pillars of political environment. They are also known as dispute settlement bodies. It includes Supreme Court, High Court who sees whether the decisions taken and implemented by the executive are within the constitutional framework. ![]() They include government beurocracy who implements the decision. They are the law making bodies that frame rules and regulations. This includes parliament, legislative assemblies. Political environment means influence exerted by: The political environment in a country influences the legislations and government rules and regulations under which a firm operates. can also affect the business environment. Natural calamities like flood, drought, cyclone, Tsunami etc. The business organization should consider the natural factors before starting their operations. Natural environment has a great influence on the working of a business. The natural environment largely determines the functioning of a business firm. It includes natural resources, weather, climatic conditions, port facilities, topographical factors such as soil, sea, rivers, rainfall etc.Įvery business unit must look for these factors before choosing the location for their business. Resource availability like land, water and mineral is the fundamental factor in the development of business organization. In the same way educational level is also an important factor affecting business. It will have favourable effect on the business. For example: If the population is large, then the demand for goods and services will be more. ![]()
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