Monday, March 22, 2010


In studying the business environment, it is desirable to be familiar with our own country's environment. The prevalent economic, socio-culture, political-legal, and technological environment affects the development of trade and industry as well as foreign investors. The elements of environment that affect the establishment and development of organization must also be considered.Hence, emerging business environment also can be divided into four parts:

(1) Economic Environment

The new economic policies and reforms have affected practically all the sectors of the economy. Major shifts have been made in industrial policy, trade policy, privatization policy, labor policy and policies relating to foreign investment. The economic environment consists of economic condition, trade and transmit policy, industrial policy, foreign investment, privatization policy, and fiscal and monetary policies. These elements are:-

(a) Economic Condition
(b) Trade and Transmit Policy
(c) Industrial Policy
(d) Privatization Policy
(e) Fiscal and Monetary Policies

(2) Socio-Culture Environment

Organizations exist in the society. Socio-culture environment is made of demographic, attitude and belief, religion, education, and language, which affect society's basic values, preferences and behaviors. They are influence the organizational decisions. Hence they are listed below:-

(a) Demographic
(b) Attitude and Beliefs
(c) Religion
(d) Education
(e) Language

(3) Political-Legal Environment

The political-legal environment contains those government regulations that define the rules by which business must operate. As mentioned earlier it is important to the manager because (1) it imposes certain legal constraints on the business organization,(2) it establishes a market atmosphere that may be pro-business or anti-business,and (3) it has the potential to provide the ability needed for long term business planning. Hence, the political-legal environment consists of trade policy, industrial policy, privatization policy, etc.Some of its type are listed below:-

(a) Constitution
(b) Political Parties
(c) Administrative Policies

(4) Technological Environment

The technological environment consists of those processes by which organization transforms inputs into outputs. The rapid changes in our society are obviously related to and somehow dependent upon the development of new techniques and new inventions. It provides the knowledge, systems, processes, equipment, and software that faciliate the organization's efficiency and effectiveness. Hence, the modern industrialization is the product of technological development. Its categories are:-

(a) Transfer of Technology
(b) Science and Technology

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