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Business environment consists of two sub-environments
Micro Environment Macro Environment
Internal Environment External Environment
Market Size Interest Rates
Demand Taxes
Supply Inflation
Competitors CurrencyExchange rates
Suppliers Unemployment Rate
Recession
Depression
ECONOMIC FACTORS AFFECTING BUSINESS
ENVIRONMENT
 What IS INTEREST RATE
 REASONS FOR INTEREST RATE
CHANGE
 TYPEs OF INTERES RATES
INTEREST RATES
UNEMPLOYMENT
Typesand causes
1)Imperfect
information
2)Disincentives
1)Economic Change
2)Globalisation and
Liberalisation of Trade
3)Capital replacement
1)immobility
of labor,
1)When an
economy
experiences a
downturn
1)People with plenty of
cash
Consequences
Statistics
Factors of inflation
Effects on business environment
Salestarget
Incomedistribution
Futurepredictions
Reputationof the company
 Deflation (a fall in prices – negativeinflation) is very harmful.
 Moderateinflation enables adjustment of wages.
 Inflation enables adjustment of relative prices.
advantages
Controlling the inflation
Labor cost
* Covers one of the major portions of the total cost of a product or job.
* Increase the profitability and competitiveness of the organization.
* Labor cost is more difficult to control as compared to material
* Affected due to a change in government policy and requirement of trade union.
* Adversely affected due to dissatisfaction , irregularity, inefficiency, idle time, high labor turnover,
lack of interest and negative attitude of the workers.
*Helpful in minimizing wastage of materials by workers , idle time and unusual overtime work.
Need and importance
Advantages
1)Keepscost down
2)Flexibleemployment pattern
3)Increasedlaborproductivity
DISADVANTAGES
1)HIGHERPRODUCTIONCOST
2)INEQUALITYON INCOMEDISTRIBUTION
3)LOWERMORALEANDPRODUCTIVITY
COMPETITION
DISADVANTAGES
MARKET SHARE IS
DIVIDED
NEGATIVE
ADVERTISINGCAN
HURT
ADVANTAGES
DRIVESINNOVATION
AND QUALITY
it leads COLLECTIVE
LEARNING
Specific
Measurable
Agreed
BUSINESS OBJECTIVES
Realistic
Time
specific
OBJECTIVESCANBE ACHIEVEDBT CONSIDERINGFOLLOWING
CRITERIA
Disposable income ,taxes and tariffs
DISPOSABLE INCOME
High level of disposable income is good for producing luxury goods.a large disparty in income
distribution will promote businesses dealing in luxury goods as well as inferior goods.
Taxes
 High level of taxes will lead to low disposable income and
contraction of demand in the economy. Business will find it difficult
to attract consumers
 Types of taxes
 Tariff
 Tariffs are taxes and imposed on imported goods. If the tariffs are
low the domestic market may be flooded with cheap imported
goods and the local businesses will have tough time selling their
products.
 http://articles.economictimes.indiatimes.com/
 http://www.yourarticlelibrary.com/
 http://inflationdata.com/
 http://marketrealist.com/
reference

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Business environment ppt