Now business firms organise the associations to influence the policies of the government. Individually business firms can do little to change their economic environment.īut collectively business firms can do a lot to make economic environment conducive to their activities. These different sectors together influence the trends and structure of the economy. The business sector has economic relations with the government, capital market, and household sector. It is the reason the firms operating in the same economic environment often take different decisions. The existing economic environment of business is highly complex and it is not easy to comprehend it. The present day economic environment of business is a mixture of national and international environments. Intact, all these factors are very relevant to the present business.Įconomic environment of business has reference to the broad characteristics of the economic system in which the business firm operates. Non-economic environment includes political system, government policies, legal framework social system, cultural values, demographic factors, technological development and natural environment of the country. The economic environment of the country includes economic system, macroeconomic parameters, and stages of business cycle, financial system and economic policies of the government. Since the business is basically an economic activity, economic environment of business both national and international gets importance.
Macro environment can be classified into economic environment and non-economic environment. These factors are uncontrollable and the company is powerless and incapable of exercising any control over them. Macro environment are the forces which indirectly affect company’s operation and working condition.
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