How Low Inflation Affects Business

Topics: Inflation, Monetary policy, Fiscal policy Pages: 14 (4202 words) Published: July 28, 2012

Business Environment

1. Define the term ‘Business Environment’. Explain the various elements of the internal environment of business. What do you understand by the task environment? A business environment can be defined as the surroundings, external factors, circumstances and all the influencing factors that affect the operations of a business. In a business environment there are two main classes of factors namely internal and external. The internal factors are considered those that the company can have control over in such as the vision. The external factors are those that the company has no control over such as government policies, cultural factors and others. Value system

The value system of the founders and those at the helm of affairs has important bearing on the choice of business, the mission and the objectives of the organization, business policies and practices. Mission and vision and objectives

Vision means the ability to think about the future with imagination and wisdom. Vision is an important factor in achieving the objectives of the organization. The mission is the medium through which the objectives are achieved Management structure and nature

The structure of the organization also influences the business decisions. The organizational structure like the composition of board of directors influences the decisions of business as they are internal factors. The structure and style of the organization may delay a decision making or some other helps in making quick decisions Internal power relationships

The relationship among the three levels of the organization also influences on the business. The mutual co-ordination among those three is an important need for a business. The relationship among the people working in the three levels of the organization should be cordial. Human resource

The human resource is the important factor for any organization as it contributes to the strength and weakness of any organization. The human resource in any organization must have characteristics like skills, quality, high morale, commitment towards the work, attitude, etc. T he involvement and initiative of the people in an organization at different levels may vary from organization to organization. The organizational culture and overall environment have bearing on them. Company image and brand equity

The image of the company in the outside market has the impact on the internal environment of the company. It helps in raising the finance, making joint ventures, other alliances, expansions and acquisitions, entering sale and purchase contracts, launching new products, etc. Brand equity also helps the company in same way

A task environment is the external environment of an organization which affects its ability to reach business goals. Any business or consumer with direct involvement with an organization may be part of the task environment Customers and Clients

Customers and clients of an organization refer to those individual and organizations that purchase its products and services. Organizations exist to meet the needs of customers through which they earn large sum of profits. But these customers possess potential uncertainty to an organization success because of their changing tastes, preferences, lifestyle etc. Therefore various organizations are making efforts to improve the quality of their products and services, stay close with the customers, listen to the customers about their needs etc. Suppliers

Organizations need different resources such as raw materials, goods and services etc to conduct their operations. Therefore they purchase these resources from various individuals and organizations known as suppliers. The term suppliers also include providers of financial inputs (such as banks, insurance companies, pension funds etc) and labor inputs (such as labor unions, universities, local labor markets etc). It is the responsibility of each manager to ensure the steady flow of needed inputs at the lowest price...
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