What Is Economic and Non Economic Environment of Business

The country`s economic environment includes the economic system, macroeconomic parameters and phases of the business cycle, the financial system and the government`s economic policy. The components of climate are temperature, rain, humidity, etc. Ecological conditions and climate affect the company`s demand and supply. The availability of raw materials such as minerals and other products in a particular geographic region also influences a company`s location decisions. Because it is always cheaper to transport the finished product compared to the raw material. Without exception, steel mills are located near iron ore mines. The socio-cultural environment is another important element of the non-economic business environment. These include people`s attitudes towards work and wealth, ethical issues, the role of the family, marriage, religion and education, and corporate social responsibility. As a general rule, all companies operate in a certain socio-cultural environment and must formulate their business policy taking this factor into account. Economic activities are measured in monetary terms, but non-economic activities are not measured in monetary terms.

Non-economic activities are defined by the following characteristics: Here are some of the most important aspects of economic activities: The political stability of the country is another factor that influences business activity. The economy thrives where there is political stability. All businesses are more or less affected by government programs in central, state, or local institutions Changes in these programs are usually the result of changes in the political weather resulting from changes in the attitudes, preferences, and goals of voters and political leaders. Business people try to anticipate changes in government policy or in the political forces behind them so that they can work successfully. The business sector has economic relations with government, the capital market and the household sector. Together, these different sectors influence the trends and structure of the economy. There is little that individual companies can do to change their economic environment. The technical and technological environment affects the activities of professional organizations as follows: In a modern economic structure, there are roughly five sectors, namely the business sector, the household sector, the capital market, the external sector and the general government sector. The division is closely linked to the other four sectors.

Business activities will suffer if companies do not use the latest technologies when needed. As a result, companies are highly challenged to pay attention to the changing technological environment and see how new technologies can best meet human needs. The environment includes the factors that affect a country`s foreign trade. These factors may include foreign policy, international treaties and foreign investment policy, as well as various legal acts relating to trade relations with other countries. With the accusations of the government and its policies, there will be changes in the international environment. Infrastructure such as water, energy, roads, transport, finance, insurance, facilities, training, research, technical facilities and other services are necessary for the development of the economy and industry. The 5 main indicators of economic development. The distinction between economic and non-economic activities can be clearly identified by the following criteria: The technological environment is an important element of the business environment. Technology involves the systematic application of scientific or other organized knowledge to practical tasks or activities. Francis Stewart noted: “The technology available for a particular country is the set of techniques that it knows (or can acquire knowledge about without much difficulty) and that it could acquire, while the technology used is the subset of techniques it has acquired.” The government of a country must formulate a different economic policy. Non-economic environment refers to the environment or the factors or elements within which a country`s trade institutions must operate.

In other words, the non-economic environment includes all the elements or factors that the business organization must keep in mind in order to establish and operate it. These are physical, social, cultural, political, legal, technical, educational, historical, moral, environmental and international factors, etc. Non-economic environment that affects the business environment The macro environment refers to factors that are external forces in the company`s activities and do not affect the immediate environment. The ecological environment means a combination of physical and biological situations that affect the company at every moment. The economic environment of the modern economy is very complex. The entire economic environment includes the dominant economic system, the basic economic philosophy and policy of the government, stages of economic development, agricultural and industrial production, infrastructure, planning process, business cycles, national income, savings, population, money supply, and price level. Business decisions are always made taking into account all these complex factors that make up the company`s economic environment. Factors such as social attitude towards education, literacy, fashion, trend, population growth, family structure, dynamism, materialism, etc.

influence the company. The term “culture” encompasses values, norms, facts and patterns of behaviour.