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Legal Business Environment

The document provides an introduction to business environment and Indian culture framework. It defines business environment as the collection of internal and external factors that influence how a company operates. There are two types of business environments - micro and macro. The micro environment has a direct impact on business operations while the macro environment is less controllable but still influences business. Key factors that influence business are economic factors like interest rates, taxes, and inflation at the macro level and market forces at the micro level, as well as non-economic factors like social, political, legal and technological aspects. The document also gives a brief overview of India's mixed economic system which was based on social democratic policies from 1947-1991.

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Shivanshi Dwivedi
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132 views3 pages

Legal Business Environment

The document provides an introduction to business environment and Indian culture framework. It defines business environment as the collection of internal and external factors that influence how a company operates. There are two types of business environments - micro and macro. The micro environment has a direct impact on business operations while the macro environment is less controllable but still influences business. Key factors that influence business are economic factors like interest rates, taxes, and inflation at the macro level and market forces at the micro level, as well as non-economic factors like social, political, legal and technological aspects. The document also gives a brief overview of India's mixed economic system which was based on social democratic policies from 1947-1991.

Uploaded by

Shivanshi Dwivedi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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UNIT 1

INTRODUCTION TO LEGAL BUSINESS ENVIRONMENT AND


INDIAN CULTURE FRAMEWORK
Business Environment
Business Environment is sum or collection of all internal and external factors
such as employees, customers’ needs and expectations, supply and demand,
management, clients, suppliers, owners, activities by government, innovation
in technology, social trends, market trends, economic changes, etc. These
factors affect the function of the company and how a company works directly
or indirectly. Sum of these factors influences the companies or business
organisations environment and situation.
Business environment helps in identifying business opportunities, tapping
useful resources, assists in planning, and improves the overall performance,
growth, and profitability of the business.

There are various types of Business Environment:


Micro Environment: The micro environment is the operating
environment of the firm. This is because the functioning of the micro
environment has a direct and immediate bearing on the company. They are
more interlinked with the company than macro environmental factors.
Macro Environment: Macro environment is the remote environment of
the firm, i.e the external environment in which it exists. As a rule, this
environment is not controllable by the firm, it is to huge and to unpredictable
to control.

Factors influencing business


Economic factors: The economic environment consists of external factors in a
business market and the broader economy that can influence a business. You can divide the
economic environment into the microeconomic environment, which affects business
decision making - such as individual actions of firms and consumers - and the
macroeconomic environment, which affects an entire economy and all of its participants.
Many economic factors act as external constraints on your business, which means that you
have little, if any, control over them. Let's take a look at both of these broad factors in more
detail.
Macroeconomic influences are broad economic factors that either directly or indirectly
affect the entire economy and all of its participants, including your business. These factors
include such things as:
*Interest rates
*Taxes
*Inflation
*Currency exchange rates
*Consumer discretionary income
*Savings rates
*Consumer confidence levels
*Unemployment rate
*Recession
*Depression
Microeconomic factors influence how your business will make decisions. Unlike
macroeconomic factors, these factors are far less broad in scope and do not necessarily
affect the entire economy as a whole. Microeconomic factors influencing a business
include:
*Market size
*Demand
*Supply
*Competitors
*Suppliers
*Distribution chain, such as retail stores

Non-economic factors: The non-economic environment includes all those


elements or factors, which the business organization have to keep in view to establish and
operate. These are physical, social, cultural, political, legal, technical, educational, historical,
moral, environmental and international, etc.

Economic Systems: An economic system is defined by a way wherein the country’s


resources are utilized to produce goods and services in such a manner that these goods and
services are distributed for consumption. It is a system that involves production,
distribution, and consumption of goods and services between the entities in a particular
society.
The economy of India stands as the world’s 12th largest according to the market exchange
rates and is also the 4th largest economy on the basis of Purchasing Power Parity. The
Indian Economic System was based on the basis of Social Democratic policies from the year
1947 to 1991.

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