These are the major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies.The macro environment is typically segmented for the reasons of analysis. This analysis, commonly referred to as a PESTLE analysis, allows researchers to look at the main six environmental factors that affect a business. These factors are political, economical, technological, environmental, legal and social. Each of these factors indirectly affects the company but the company cannot control them. Instead the company is required to adapt to these factors in the most efficient way possible. The results of this analysis allow the company to see where their strengths are when adapting to the macro environment and where they could improve on their methods. 1. Economic Environment:
Economic environment of business has reference to the board characteristics of the economic system in which the business operates. The business sector has economic relation with the government, capital market; household sector and global sector. These sectors together influence the trends and structure of the economy. The form and functioning of the economy vary widely. The important external factors that affect the economic environment of a business are; (i)Economic Conditions: - The general Economic conditions prevailing in the country viz. national income, per capita income, economic resources, distribution of income and assets, economic development etc. are important determinants of the business strategies. Business cycles and economic growth of the economy are important factors defining the economic environment. (ii)The economic system operating in the country also affects the business enterprise to a very great extent. The economic system of a country may be capitalist, socialist, communist or mixed. (iii)Economic Policies: - The government decides the economic environment of business through Budges, Industrial regulations, Economic planning, Import and Export regulations, Business laws, Industrial policy, Control on prices and wages, Trade and transport policies, the size of the national Income, Demand & supply of various goods etc. (iv)Economic Growth: - The stage of economic growth of the economy has direct impact on the business strategies. Increased economic growth rate and increase in consumption expenditure, lower the general pressure within an industry and offers more opportunities then threats. (v)The rate of interest affects the demand for the products in the economy, particularly when general goods are to be purchased through borrowed finance. Low interest rated provides opportunities to the industries to expand whereas rising interest rates pose a threat to these institutions. (vi)Currency Exchange: - Current exchange rates have direct impact on the business environment. When the rupee was devalued in 1991, it was to make Indian products cheaper in the world market and consequently boost India's exports. 2. Political and Governmental Environment:
Political environment refers to the influence exerted by the three political institutions they are; Legislature, Executive, Judiciary etc. The legislature decides on a particular course of action. Government is the executive and its job is to implement whatever was decided by parliament. The judiciary has ensure that both the legislature and executive function in public interest and within the...