Explain, with examples, the various dimensions of business enviornment.

(1) Economic Environment: Among the various dimensions of business environment, the economic environment has a special significance. Economic environment can be divided into three parts. They are as under:

(i) Economic System: Economic system influences the freedom or openness of business.

(ii) Economic Policies: The economic policies are laid down to direct the economic activities.

(iii) Economic Conditions: Economic Conditions are those conditions which are related with the possibilities of economic development of a country. Businessmen are influenced by these programmes and they start their own programmes like the advertisement policy, discovery of new market, bringing new products in the market, new methods of production, etc.

(2) Political Environment: Political environment is the outcome of a combination of various ideologies advocated by different political parties. Every political party has a different attitude towards business community. A living example of this can be seen during elections in the shape of fluctuations in the share market.

(3) Social Environment: Various social factors e.g., customs, fashions, traditions, wishes, hopes, level of education, population, standard of living of the people, religious values, distribution of income, corruption, family set-up, consumers’ consciousness, etc. influence business in some way or the other.

(4) Legal Regulatory Environment: Many acts are passed from time to time in order to control and regulate business activities. The sum-total of all these Acts creates legal regulatory environment.

(5) Technological Environment: Technological environment includes the discovery of new methods and implements for the production of goods and services. Technological changes make available better methods of production and that makes the optimum use of the raw material possible. The technological changes offer both the possibilities and threats for business.