discuss about business environment

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2.  It is an economic activity undertaken in a
systematic manner with the intention of making
profit which involves risk and it results in the
production or exchange of goods or services.
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3.  Business environment includes set of conditions
or situation that affect business activities or
decision making.
 These conditions are broadly classified into
internal environment and external environment.
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4. • Internal environment consists of factors which are
within the control of the organization.
• Business ethics, Objective of the firm, Value
system, Management structure, Physical assets,
Technological resources, Financial resources,
Stakeholders, Human resources etc. are part of
the internal environment of business.
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5.  External environment include factors which are
outside the control of the business organization
but it provide opportunities or pose threats.
 External environment is further classified into two
categories micro environment and macro
environment.
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6.  Micro environment include factors which have a
direct impact on the functioning of the
organization.
 Micro environment consist of general public,
competitors, customers, suppliers, trade union,
marketing intermediaries (distributors, dealers,
retailers) etc.
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7.  Macro environment provides the business firms a
framework within which they have to operate and
adapt themselves. It indirectly affect any business
firm’s operation and working condition.
 Macro environment can be categorized into
economic environment and non-economic
environment.
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8.  Economic environment include the economic
factors only and it consist of both national and
international factors.
 Economic conditions, economic policies,
economic systems, global environment etc. are
part of economic environment of business.
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9. • Economic condition reflects the current status
of the economy in terms of prices, aggregate
demand, aggregate supply, investment, saving,
consumption, employment etc.
• Recession, depression, recovery, boom are
different type of economic condition.
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10.  Economic policies of the government can have a
great impact on business.
 Industrial policy, trade policy, foreign exchange
policy, monetary policy, foreign investment policy,
fiscal policy etc. are some of the important
economic policies.
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11.  Economic system determines the framework
within which major decisions are taken in the
economy. It decides the role of individuals, market
and the government.
 There are three major types of economic system-
free market economy or capitalism, planned
economy or communism, mixed economy.
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12.  The main characteristics of capitalism are
 Private ownership of means of production
 Freedom of enterprise
 Profit motive
 Competition and active entrepreneurship
 Limited role of government
 Absence of central plan
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13.  Key features of communism are
 Public ownership of means of production
 Planning authority
 Economic equality and classless society
 Prices and Quantities to be produced are
determined by government
 Social welfare is the motive of the government
 State is the final arbiter of all issues
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14.  In mixed economy we see the coexistence of both
private sector and public sector.
 Government controls and regulate the private
sector
 Resource allocation is through the price system
and government directions
 Welfare of poor is taken care by the government
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15.  Economic policies of the government can have a
great impact on business (Fiscal Policy)
 Credit Policy announced by the RBI (Monetary
Policy
 Industrial policy, trade policy, foreign exchange
policy, monetary policy, foreign investment policy,
fiscal policy etc. are some of the important
economic policies
 Sub-Prime Crisis of 2007-08
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16.  Economic system determines the framework
within which major decisions are taken in the
economy. It decides the role of individuals, market
and the government.
 There are three major types of economic system-
free market economy or capitalism, planned
economy or communism, mixed economy.
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