Non-economic environment


1. Economic Environment - Includes the structure of the economy,  the industrial,  the agriculture,  tariff,  transport and trade policies of the country,  the growth and pattern of national income and it's distribution,  and the various policies and programmes related to them.
Economic environment is influenced and moulded by :
(a)  the state of the economy
(b)  the type of the institutional framework within which the various economic activities have to be carried.

2. Non economic Environment - Consists of a number of elements that condition and influence the society.  These are :

(a)  Natural Environment - Includes air, land water and all natural resources,  to be indifferent toward it,  a business firm cannot afford.  The government can does legislate to protest the natural resources from the mismanagement or mis-utilisation by the business firms.

(b)  Political Legal Environment - Is the contents of laws and regulations within which a business firm conduct its affairs.  Political legal environment is made by government efforts as a regulator,  supplier,  competitor and a customer.

(c)  Cultural Environment - Includes the cultural backgrounds of all inhabitants of the economy in which a business firm has to operate.  Business decision are influenced by this background as it financially support and encourage dramas,  theaters,  art show,  ballets,  etc.  It also sponsor sporting events like cricket,  soccer tournament and badminton competition.  It also make large donation for the cause of education which helps promote education.

(d)  Historical Environment - Refers to the heritage of the country.  As a matter of fact,  history is often the explanatory factor behind the prevalent business situation.

(e)  Social Environment - This environment seriously poses a challenge to business.  The social environment may be described as the environment of the society as a whole which is made up of shareholders,  employees,  consumers,  government,  society,  etc.  The business cannot operate in a 'social vacuum'.  This phenomenon has come to be know as the 'Social responsibility of business'.