CONTENTS

Introduction  Features of Economic Environment  Elements of Economic Environment  Economic Environment in India  International Economic Environment  Interface between Business and Economic Environment  Conclusion  Bibliography


Environment : It means the surroundings , influences or circumstances under which someone or something exists .

INTRODUCTION

Business Environment : It means the surrounding within which business exists and operates.

Business Environment Internal Environment External Environment Macro Environment

Political Environment Economic Environment
Social and Cultural Environment

Micro Environment Suppliers Costumers Competitors

Marketing Intermediaries

Technological Environment

Regulatory Environment Demographic Environment

Natural Environment International Environment

Economic Environment
Economic Environment refers to all the forces , which have an economic impact on the business. The three major constituents of economic environment are economic conditions, economic polices and economic system.

Features of Economic Environment

         

Dynamic Effect of various factors Related with economic activities Affected by non-economic factors nonInfrastructure Role of government Economic disparities Public morality Effect of economic system Availability of capital

Objectives of Study of Economic Environment

Power Functioning of an economy  Knowledge of new opportunities and resources  Study of environmental factors  Removal of obstacles and challenges  Optimum use of resources  Minimizing ill-effects ill

Elements of Economic Environment

Economic Conditions

Economic System

Economic Policies

Economic Conditions
Output/Income  Economic Resources  National Income  Per-capita Income Per The Stage of Economic Development  Unemployment Rate  Inflation Rate


Economic System
1.    2.    3.  

Capitalist Economies Private ownership of means of production Profit motive Free market Economy Socialist Economies Control and regulation of economic activities by government Welfare motive Planned Economy Mixed Economies Existence of public and private sector Features of both market economies and planned economies

Economic Policies
Monetary Policy  Fiscal Policy  Export-Import Policy (EXIM Policy) Export Foreign Investment Policy  Industrial Policy


Economic Environment in India

1.    2.    3.     

Prior to 1991 Unfavourable to private sector Foreign exchange crisis Import restrictions New Economic Policy 1991 Liberalisation Privatisation Globalisation Developments Increase in Foreign Direct Investments Increase in economic growth rate (7%-8%) (7%Entry of Multinationals and foreign firms ( Egs: Microsoft, Mc Donalds, Kellogs) into India Increased role of private sector Considerable control of the government over the economy

International Economic Environment



  

International economic environment deals with international trade studies, determinants of goods and services flow across international boundaries. International Finance is a macro-economic field which examines the macroflow of capital. Increased trade in goods, services and capital between countries is a major effect of contemporary globalisation. Exchange rates and flow of money between countries.

Interface between Business and Economic Environment

 Business functioning is influenced

by the economic system, economic policies and economic conditions prevailing in the country.  Business organisations can also influence economic policies of the government by forming pools, cartels etc.

Conclusion
Economic environment is a very important dimension of the business environment. The various aspects of economic environment have a great influence on the functioning of a business enterprise. Similarly even a business firm influences its environment. International economic environment is also a very important aspect. Thus economic environment is a significant area which determines the economic growth, economic conditions, economic policies and economic reforms.

BIBLIOGRAPHY
Websites:  www.google.com  www.gurukpo.com  www.managementparadise.com Books:  Business Development (F.Y.B.Com.) by Dr. Parag Ajagaonkar and Anjali Patkar Sheth Publishers