(Attock VU Group) MGT503- Principles of Management Assignment Solution

MGT503- Principles of Management

 

Business, now-a-days is vitally affected by the economic, social, legal, technological and political factors. These factors collectively form business environment. Business environment, as such, is the total of all external forces, which affect the organization and operations of business. The environment of an organization has got internal, operational and general lives managers must be aware of these three environmental levels and their relationship and importance.

 

The term 'business environment implies those external forces, factors and institutions that are beyond the control of individual business organizations and their management and affect the business enterprise. It implies all external forces within which a business enterprise operates. Business environment influence the functioning of the business system. Thus, business environment may be defined as all those conditions and forces which are external to the business and are beyond the individual business unit, but it operates within it. These forces are customer, creditors, competitors, government, socio-cultural organizations, political parties national and international organisations etc. some of those forces affect the business directly which some others have indirect effect on the business. These details are as under:

 

S.No.	Factor	Effect on the Organization
01	Political &  Economical factor	Governmental policies effect organization business law and foreign policies Economical factor is another most important factor of growth of organization o        Banking policies based on economic and government policies State bank play another most important role in the same term.
02	Social, culture and Demographical factor	Cultural environment and social policies are brain of business. Peoples of the different countries like different choices based on his social cultural and demographical values.
03	Technology factor	Technology is major and most important external threat. Technology is silence threat. Most of good businessmen and entrepreneur fail in business or in international market because of technology.
04	Competitor factor	Competitor is another and important physical threat. Competitors push back business or business growth of organizations.

 

 

 

 

Economic dimensions of environment
Economic environment refers to the aggregate of the nature of economic system of the country, the structural anatomy of the economy to economic policies of the government the organization of the capital market, the nature of factor endowment, business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, anticipating the prospective market situations and makes suitable to get the maximum with minimize cost.

Social dimensions or environment
The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as costs structure, customs and conventions, cultural heritage, view toward wealth and income and scientific methods, respect for seniority, mobility of labour etc. have far-reaching impact on the business. These factors determines the work culture and mobility of labour, work groups etc. For instance, the nature of goods and services to be produced depends upon the demand of the people which in turn is affected by their attitudes, customs, so as cultural values fashion etc. Socio-cultural environment determines the code of conduct the business should follow. The social groups such as trade unions or consumer forum will intervene if the business follows the unethical practices. For instance, if the firm is not paying fair wages to its business in indulging in black marketing or adulteration, consumers forums and various government agencies will take action against the business.

Political environment
The political environment of a country is influenced by the political organisations such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc. political stability in the country, foreign policy, Defence and military policy, image of the country and its leaders in and outside the country. The political environment of the country influences the business to a great extent. For instance, the Government of India, bottling and sale of cocoa-cola was discontinued in India in the late seventies following policy of restricting the growth of multinationals in Indian markets. But, its entry was allowed under the New Industrial policy of 1991. Under this new policy, government allowed liberalized licensing, imports and exports, inflow of foreign capital and technology on more liberal terms. The trend towards globalization and signing of GATT in 1993 have posed new challenges before Indian business.

Legal regulatory environment
Legal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts. These affect the business and its managers to a great extent. For instance, in 1992, the Supreme Court ordered the closure of a number of tanneries in Kanpur as they were polluting Holi Ganga. In August 1993 several foundries around the famous Taj Mahal were ordered to be closed down because of air-pollution caused by them had adverse impact on the whiteness of Taj Mahal.

Technical environment
The business in a country is greatly influenced by the technological development. The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used. Technological environment influences the business in terms of investment in technology, consistent application of technology and the effects of technology on markets. In India, advancements in automation and information technology have posed the challenging situation for the organisation in future.

--
Zindagi mein 2 Logo ka buhat khayal rahkoooo

Ist woh jiss ney tumhari jeet ke Liye buhat kuch hara hoo (Father)

2nd woh jiss ko tum ney har dukh me pukaara hoo (Mother)

Regards, 

Umair Saulat

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