Environment of Business

The term 'environment' refers to the totality of all the factors which are external to  beyond the control of individual business enterprises and their management. Environment furnishes the macro-context, the business firm is the micro-unit. The environmental factors are celestially the 'givens'  within which the firms and their nonagenarians must operate. For example, the value system of the society, the rules and regulations laid down by the government, the monetary policies of the central bank, the institutional set-up of the country, the ideological beliefs of the leaders, the attitude towards foreigner capital and enterprises, etc., all constitute the environment system within which a business firm operates. These environmental factors are numerous in libertine aid various in form. Some of motliest factors are totally static. some are relatively static and some are very dynamic -they are clinging every now and then. Some of these factors call be conceptualized and quantified, while others can be only referred to in qualitative terms. Thus, the environmentalist of business is an extremely complex phenomenon. 

The environmental factors generally vary from country to country. The environment  that is typical of India, may not be found in other countries like the USA,the USSR. the UK and Japan. Similarly, the America/Soviet/Britis/Japanese environment may not be found in India. There may be some factors in common, but the order and intensity  of the environment factors do differ between nations. What to say of countries, the magnitude and direction of environmental factors differ over regions within a country and over localities within a region. Thus, one may talk of local, regional, national (domestic) and international (foreign) environment  of business. For example, the local custodial of  coolie labour, the climate of the Northern region of Assam, the policies of the Stat? and Central governments hi India and the size of the world market : all these factors together will have an important bearing on the tea industry. The production, con sump ti or arid marketing of tea will be affected by the environmental factors. 

Environment differs not only over space but also over time within a country. As such we can talk of temporal patterns of environment.  i.e, past, present arid future environment - future environment  is the product of past and present environments. The Indian economy of tomorrow will be influenced by what the state of the economy is at present and what it was like in the past. 

Sometimes the environment may be classified into market environment and non-market environment depending upon whether a business  firm's environment is influenced by market forces like den land, supply, number of other firms and the resulting price competition or non-price competition, etc., or by non-market forces like government laws, social traditions, etc. 

Finally, we may classify the environment into economic and non-economic. Non-economic environment refers to social, political, legal, educational and cultural factors that affect business operations. Economic environment, on the other  is give shape and form by factors like the fiscal policy, the monetary policy, the industrial policy resolutions, trade policy,'physical limits on output, the price and conchie trends, the nature of economic system at work. the tempo of economic development, economic plan, etc. The non-economic environment has economic implications just  as the economic environment may have non-economic implications. Since the environment  is the sum total of history, geography, culture, sociology, politics and economics of a nation, the interaction between economic forces and non-economic forces is bound to'take place.