Q. 3

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

Answer :

The various dimensions of the business environment explain below:

a. Economic environment- economic environment refers to all the changes in the economic policies by the government of India. The Reserve Bank of India plays an extremely important role in this. 8 consists of various economic variables such as interest rate, stock market, money supply, the functioning of banks etc. For example, an increase in the income of the consumer means an increase in the demand for the goods and services of the Enterprises.


b. Social environment- social environment refers to all the social force in such as customs, traditions, social values, and social trends. For example, the youth of India is bending towards the Western Lifestyle which has led to an increase in the demand for Fast Food.


c. Technological environment- it consists of all the technological changes and improvements. It provides new opportunities to the Enterprises but is also a threat for the Enterprises which are using obsolete Technologies. For example, with technological innovations, it is now easier to book a railway ticket through online medium.


d. Legal environment- it refers to the legislation and rules passed by the government of the country set up the Companies Act. It is essential for an enterprise to have thorough knowledge about the legal environment to avoid any legal trouble. For example, an export-import company in India has to comply with the rules under the EXIM policy and the foreign trade act 1992.


e. Political environment- political environment refers to all the political conditions such as law and order, and peace and stability. For example, the Government of India had introduced the new economic policy in 1991 which led to many business opportunities for the companies.


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