factors of environment

7/29/2019 Factors of Environment

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Micro Environment of Business

Micro environment of business becomes from internal part of company. This environment includes

different factors which can be controlled by company. Following are the main factors of micro

environment

1. Suppliers

These people supply the goods to company. We can control them, if we pay them on the time. We

should also keep contacts with multiple sources because it is very less risky. If one supplier stops to

supply us, we can get raw material from other supplier.

2. Customers

Customers also affect on company's business. If we do not care our customers, our customers will

buy from other company. Due to this, our sale will decrease. We should make good relation with our

customers.

3. Market Intermediaries

Middlemen, physical distribution firms and marketing service agencies are main market

intermediaries. We should choose best market intermediaries for fast distribution of our products.

4. Competitions

Company also have to face competition. If company has to win competition, it has to sell good

quality product at lower price.

5. Public

Public is any group that has an actual or potential interest in or impact on an organisations ability to

achieve its interests. Examples are

a) Media

b) Citizen

c) Local public

If we have to make public happy, we have to protect our environment. We have to produce ourproducts in less polluted system.

Macro Environment of BusinessMacro environment of business means that environment which can not be controlled by company.

In this environment economic, social, political and technical environments are included. These

environment powers affect not only our company or firm but these may affect whole industry. So,

we can not stop of its affect. It means changing in this environment may be risky for our business.

I can explain this in simple world. For example a MNC is doing his business from 30 years in India. It

is generating high profit and providing high value to the peoples of India. It has controlled its micro
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environment. But Govt. now has changed and Govt. has issued order to stop the business of that

MNC because it may decrease domestic business. So, it may be very risky. So, MNC's officers should

have to prepare for this. If they study macro environment of business. They can also get good idea

for protecting its risk.

Technological EnvironmentDefinition of Technological Environment :-

Technological Environment means the development in the field of technology which affects

business by new inventions of productions and other improvements in techniques to perform the

business

work. "

Explanation

We see that in 21st century, technology is changing fastly. Now, all work is done online and business

shops are using machinery at high level. There are following technological environment factors

which affects business.

New inventions to produce the products.

New inventions relating to marketing like BPO for selling online in international market.

Status of Technological Environment or Technology in India :-

After Independence, India had basic problems like poverty , unemployment and development of

India . Indian Govt. has taken many following steps for technological development.

1. Establishment of technological and research institute

Indian govt. has established 500 technological institutes for providing education to Indian students.

It has also established 1080 research institutes. In these institutes major names like space research

centre, medical research centre and agricultural research centre have developed India technically.

2. Positive Technical policy

India has strong and positive technical policy for technological development. This policy opens door

to import technology from foreign countries for increasing agricultural and industrial developments.

3. High Growth Rate of Information Technology in India

In India, IT sector is developing with 35% growth rate, India is second country after China who is

using internet at large scale for e-commerce , e-education and e-accounting .

4. Incentive for promoting Technology in India

Indian Govt. has given 100% income tax exemption for expenses incurred in research of technology

in India.

State financial corporation is uplifting domestic technology by supporting finance to domestic

Industries.
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Economic EnvironmentWe can introduce economic environment as all the factors which affect business due to changing

the economic policies, economic system and economic conditions. In big companies, there may be

large number of economist whose work is to make economic policies and economic planning. They

control the prices of product of company. They also control the production level and try to best to

reach it on optimum level. They monitor all external economic factors and to reduce company's

economic weaknesses and risks.

Political Environment of Business

Political environment is the mixture of the environment of legislature, executive and judiciary. In

legislature and executive of Govt. decide the different work of nation. Judiciary sees whether it is

legal or illegal. It is continue changing. As a businessman you should watch it. You can see the

changes in the political environment with the help of media. Media shows the updates of politics.

These days, Indian corruption is on the top of politics. You can watch and also analyze its effect onyour business.

Political environment also affects business with different business laws. These laws controls all the

activities of business. In India, there are lots of laws which has been made by Indian Govt. In these

laws, we can add company law 1956 and Factory act 1948. For controlling stock exchanges, Govt. has

made SEBI. For controlling banking business, Govt. has made RBI.

Social Environment of BusinessSocial class, Social circle, Social group, Social mobility, Social position, Social status

Meaning of Social Environment

Social or Societary environment of business means all factors which affects business socially . Every

business works in a society , so societies ' different factors like family , educational institutions and

religion affects business .

Main elements Of Societies and its effect on Business

1. Family :- Family is basic part of society from the birth of a person and upto death , he lives in

family so personal decision of buying and selling of goods are affects from family . In the culture of a

family , it may happen that parent does not allow to use any product , then sale of such product will

decrease , so businessman must analyze different families needs . Many occasion of family like

marriage of any family member , can increase the demand of goods .

2. Educational institutions :- Educational institutions are also main part of societies . They provide

good knowledge , education , awareness , thinking what should students buy or not to buy . Suppose

if a student is habitual to drink the tea and if his teacher advice him that this is harmful to his health

after his guidance students can avoid to drink tea after this the sale of tea will decrease .

3. Religion :- Like family and education institution , religion is also effects the business socially .Religion means the system in which group of persons trust in God . They believe that there is one
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supernatural power in this earth and its name is God . They gives many name like Ek onkar sat nam ,

om and many more etc. Different religions have different principles , rules and regulations in which

they sacrifice to use some products and to eat some food , in Hindu religion , they never use leather

products . They affects the sale of leather industries . So, businessman must analyse the targeted

audience and after listening their religious thoughts , he should produce the goods .

Natural Environment of Business

Natural environment is the group of natural resources which is used by business. Let me explain it in

detail. Suppose, one business is of manufacturing. You know, from where will it get its raw material?

For producing goods, manufacturing business gets all raw material from nature. All agricultural input

will use in manufacturing. His machines are also made by nature's metals. His used energy is also

from natural gas or diesel oil or electricity which come from nature.

In business, when we use these natural resources without any limit, natural environment changes.

Global worming, floods, famines, tsunami and earth quake are its result. So, now it is the duty of

business to protect this natural environment. He should support for planting more and more trees.

He also stops to misuse of natural resources. After this, he can create co-ordination with nature.

1. SOCIO-CULTURAL ENVIRONMENTA business can not exist without the contributions of society. To interact efficiently with the society,

we have to know its cultural background and social practices. Because the behaviour and

expectations of the surrounding people are determined by this environment.

Our country follows traditional culture. It is transmitted through numerous generations to us. So we

have different set of social systems and practices. The customs, habits, ceremonies, attitudes,

values, beliefs, tastes and preferences etc., of or people are to be understood to take the right

business decisions.

The reactions of people while playing the roles of workers, consumers, suppliers and others are to

be studied. Then only the positive relations with them could be developed by businessmen.

2. ECONOMIC ENVIRONMENT.It means the total climate that affect the human activities related to production of wealth. We know

that the basic economic activity is producing and exchanging commodities to satisfy the people. The

business process involves some inputs namely the factors of production. The cost and their

availability are the important economic factors, which will finally determine price of commodities.

On the other side the output of business is the goods or services that reach consumers. Here also

the economic phenomenon namely the purchasing power of people will determine the demand

level.
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There are also some general economic conditions that affect volume of trade domestically and in

foreign markets. Hence a businessman should analyze carefully the trend and changes in the

economy, to know his opportunities and challenges.

3. POLITICAL AND LEGAL ENVIRONMENTThis means and includes the various controls, programs and activities of the government. In the

mixed economy like India the role of government is considerable in promoting industries and

controlling private business enterprises.

In the economic planning the sources of funds and its allocation to various sectors are decided by

the govt. In the fiscal policy, government d3ecides the tax revenue, public expenditure and public

debt. That is, it reallocates the funds of the society. Moreover, the industrial development,

assistance for agriculture, employment generation, public welfare measures etc. are made by the

government. All these activities affect business units directly or indirectly.

The government as the regulatory organ of the society, takes a number of control measures on the

business units. Such regulations include registration under the Acts, licensing, control on investment

and location, control on prices and trade practices and so, on. Much legislation for the welfare of

workers, consumers and the public.

The governments policies on foreign exchanges, international trade, public sector industries,

banking regulations public utility services etc. indicate that the political climate has numerous

influences on business sector.

4. TECHNOLOGICAL ENVIRONMENTThis factor may be considered as a part of economic environment. But its impact on business and

industries is quite large. The technological changes helps business to grow by means of new and

improved goods, reduction in cost and variety in goods.

The term technology indicates macro level improvements in the method of production. A

technological change in a country results in a total change of atmosphere in industry. For example,

electronic industry, computer industry, space research and satellites, resulted in mushroom growth

of industries and wide application of these facilities for the development of business.

Therefore, every unit tries to cope up with the technological changes, other wise it can not produce

improved goods to compete in the market. The consumers tastes and preferences are also changing

fast. So, the scientific inventions, and the results of industrial research and development ( R & D ) are

converted into innovative products and services. We have to remember here, that some countries

that could imp[rove the technologies more effectively, have become economic giants in the world.


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5. NATURAL ENVIRONMENTThe natural resources are the gifts to a country by which economic activities could be developed.

The minerals, materials and also the climate, coil conditions, rainfall etc., help in this progress. On

the other side, the people, especially the businessmen, should take care I preserving natural and

ecological balance of the earth.

There are many challenges to the natural environment, which will affect the society in the long run.

For example, air, water and atmospheric pollution, soil erosion, holes in ozone layer, green house

effect on sea levels, climatic disorders, acid-rains and so on. Finding solutions is not only the moral

duty of the businessmen but also for their future business growth.

6. COMPETITIVE AND GLOBAL ENVIRONMENTTo meet out the competition is the routine task for business. This is because the producers of goods

and services become unlimited. Hence close watch on the competitive strategies on prices,improved products and promotion appeals will help a businessman to take right decisions. This is so

important, as it is a question of survival and growth in the market.

The globalization concept has opened up the market for international competition as well as

opportunities. Now, our businessmen have to face the challenges from the multinational

corporations (MNCs) and trans national corporations, other than the local competitors. The

technology and resources of MNCs are very much improved and our businessmen should increase

their ability up-to the international standard.

The merit claimed for globalization is that our share in the world trade would increase due tomultilateral agreements. For this, we have to increase our productivity. Also there is a danger of

excess reliance of developing nations on the developed countries.

Thus leading the competitors or following them is unavoidable for business, challenging with

international standards will also become a part of this game in the near future.

factors of environment

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