Question

In: Finance

As you've read about, businesses exist and operate in many different environments. This has always been...

As you've read about, businesses exist and operate in many different environments. This has always been the case, but many consumers don't realize the different environments or how businesses must adapt to operate in each.

what are some of these environments? Can you give some examples as to how they might influence operations? In your opinion, which has the most influence?

Solutions

Expert Solution

There are mainly two types of business environments.

A.)INTERNAL ENVIRONMENT ...

   1) Value Systems : These are the ethics and beliefs that guide the organisation in achieving the Mission and Vission of the organisation The value system of a business organisation also determines its behaviour towards its employees, customers and society at large. The value system of a business organisation makes an important contribution to its success and its prestige in the world of business.

   2) Mission and objectives of organisation: Main of objective of an organisation Is profit maximization.. Mission is defined as the overall purpose or reason for its existence which guides and influences    its business decision and economic activities.

   3) Structure of organisation. It is structure of decision making, Like composition of board of directors, the number of independent directors, the extent of professional management and share -holding pattern.. An efficient working of a business organisation requires that its organisation structure should be conducive to quick decision making

4) Human resources : The success of a business organisation depends to a great extent on the skills, capabilities, attitudes and commitment of its employees. Employees differ with regard to these characteristics.

B))) EXTERNAL ENVIRONMANT.

1) Economical : Economic Environment combination of GDP, Income level at national level and per capita level, Profit    earning rate, Productivity and Employment rate, Industrial, monetary and fiscal policy of the government. Role of Private and Public sector. Rate of Saving and Investment, Rate of growth of GDP, GNP, and Per Capital Income.

2.) Social : It is combination customs and traditions of the society in which business is existing.. It includes the standard of living, taste, preferences and education level of the people living in the society where business exists.it includes Quality of life, Importance or place of women in workforce,Birth and Death rates, Attitude of customers towards innovation, life style etc, Education and literacy rates,

3.) Political : It is related to government affairs such as type of government in power, attitude of government towards    different groups of societies, policy changes implemented by different governments etc. i.e how government is    promoting the business by subsides and all. Some aspects are as follows . Present political system,    Constitution of the country, Profile of political leaders, Government intervention in business, Government    intervention in business..

4.) Legal : The businessman cannot overlook the legislations because he has to perform his business transactions within    the framework of legal environment

1. Various laws and legislative acts.

2. Legal policies related to licensing.

3. Legal policies related to foreign trade.

4. Statutory warnings essential to be printed on label.

5. Foreign Exchange Regulation and Management Act.

6. Laws to keep a check on Advertisements

Most influential Depend up on the type of industry....

Some of are If the organisation if an Banking sector it mainly influence by the macro economic factors like … Economic environment ….

If Industry is in Clothing if most influenced by the social environment …

Like wise we cant prioritize the influence it depends up on the type of industry …

But general are Political... Social,,, Legal...


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