Ignou Assignment Ms-03 Economic and Social Environment

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1. “ The economic environment of business exercises a strong influence on the non-economic environment ”. Discuss this statement with the help of examples.

Ans. A business  unit  is a  macro/micro  economic  unit. The  business  environment furnishes the  macro-economic  context  within   which  the  firm  operates.-external  factors or  forces  which  affect  the  operation  of the  business  unit.business  firms  must  demonstrate  adaptability  as  well  as  adoptability to  environment. The  economic  environment of  business is  a  complex one. The  business  unit  has economic  relation  with 1. GOVERNMENT

These different  sectors together influence  trends and the structure  of  the  economy. The design and structure of  the economic  system is conditioned by the  socio-political arrangement which  affect  the macro-micro economic   decisions.

THE  NON-ECONOMIC  MACRO  ENVIRONMENT OF  BUSINESS These  non-economic  environment  is  complex  and dynamic. Political. Environmental regulations and protection
a). Tax policies: what tax  hinder the business and what  taxes  incentives  are available
b) International trade regulations and restrictions: Does  the  government    encourage  exports / with  high tariffs  on  import c) Contract enforcement law/Consumer protection : Does  the  government  enforce  on  consumer  protection.

d) Employment laws: Does the  government    encouraging  skilled  immigrants  with  temp. permits
e) Government organization / attitude: - Does  the  government  have  a very  positive  attitude  towards  this   industrY f) Competition regulation:- Are  there   regulation  for  limiting  competition

g) Political Stability: politically ,  does the   government    have   a  very   stable  government
h) Safety regulations:- Has  the  government  adopted  some  of  the  modern  safety regulations

i) Economic growth : what  is  the economic growth rate  /  what  are  the  reasons
j) Interest rates & monetary policies: are  the  interest  rates    under control /  is there   a  sound  monetary  policies] -Government spending
k) is  government  spending  is  significant   and  is it   under control
l) Unemployment policy: what  is  the  employment / unemployment  policies  of the government m) Taxation: Has  the  taxation    encouraged  the  industry n)Exchange rates: Is   there  well  managed   exchange  controls  and  is it  helping  the  industry

o) Inflation rates: Does   the  inflation  well   under  control p) Stage of the business cycle: is  your    industry  is  on  the   growth  pattern
q) Consumer confidence: is  the  consumer  confidence   is   high/ strong and  if  not, why
r) Income distribution: is there   balanced   income  distribution policy s) Demographics, Population growth rates, Age distribution: what  is   population   growth  and  why

t) Labor / social mobility: -hat   are the  labor  policies  and  is  there  labor  mobility u) Lifestyle changes: Are  there  significant  lifestyle   changes     taking  place--more  modernization/ why. v) Work/career and leisure attitudes: Are  the  population career  minded  and  are  seeking  better  lifestyle w) Education: what  are  the  education  policies /  is  it  successful

The economic  environment of  business   unit  exercises a  strong influence on  the  non-economic environment of  the  business just as  the  non-economic  environment can  influence  the  economic  environment.  THE  ECONOMIC  ENVIRONMENT   IS  BOTH

- exogenous.
- endogenous.
(1) social  factors  affect  the  economic ...
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