Unit 1 Economic Environment of Business

14187 Words Apr 10th, 2011 57 Pages
After studying this unit, you should be able to :
• Define what you mean by “environment”
• Classify the complex environmental variable on the basis of objective criteria
• Identify the critical elements of economic environment of business
• Analyse the interactions between economic and non-economic environment
• Explain the impact of economic environment on business management; and
• Illustrate your understanding of economic environment with reference to the Indian business situation.
1.1 Introduction
1.2 Environment of Business
1.3 Some Basic Propositions
1.4 Economic Environment
1.5 Critical Elements
1.6 Indian Economic Environment
1.7 Economic Environment and
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These environmental factors are many in numbers and various in form. Some of these factors are totally static, some are relatively static and some are very dynamic – they are changing every now and then. Some of these factors can be conceptualized and quantified, while other can be only referred to in qualitative terms. Thus, the environment 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 another countries like the USA the (former) USSR, the UK, and Japan. Similarly, the American/Soviet/British/Japanese environments may not be found in India. There may be some factors in common, but the order and intensity of the environmental 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 custom of “coolie” labour, the climate of the northern region of Assam, the policies of the
State and Central Governments in India and the size of the world market : all these factors together will have an important bearing on tea