Dimensions of or the agents forming the business environment involve economic, social, legal, technological and political circumstances which are contemplated properly for decision-making and enhancing the achievement of the trading concern. In distinction to the precise environment, these aspects manifest the prevailing environment which often affects many companies at the same time. However, the administration of every business can profit from being informed of these dimensions rather than being unbiased in them. A concise argument of the multiple factors comprising the global environment of the company is provided below:
- Economic Environment: Inflation rates, interest rates, stock market indices and the value of rupee, changes in disposable income of people are some of the economic aspects that can influence management systems in a business. Short and long term interest rates primarily influence the demand for goods and services.
- Technological Environment: Technological environment involves forces associated with scientific developments and modifications which render new ways of manufacturing commodities and services and new ways and procedures of performing business. For instance, modern technological, progress in electronics and computers have changed the policies in which businesses promote their products.
- Social Environment: The social environment of industry involve social forces like traditions and customs, social trends, values, society’s expectations from the company, etc., Traditions describe social practices that have persisted for decades or even centenaries.
- Legal Environment: It involves multiple legislation legislated by the Government official regulations published by government officials, court judgments as well as the judgments given by various commissions and offices at every degree of the government – local, state or centre. It is necessary for the management of every company to accept the law of the land.
- Political Environment: Political environment involves political situations such as global stability and harmony in the nation and particular approaches that selected government legislators to support towards business. The importance of political situations in business success rests in the predictability of business pursuits under constant political situations. On the other hand, there may be the risk of business ventures due to political uncertainty and perils to law and order. Political stability, therefore, builds up trust among business people to finance in the long term projects for the development of the economy.
Related Read: What Is Business Environment?
The above mentioned is the concept, that is elucidated in detail about the Dimensions of Business Environment for the class 12 Commerce students. To know more, stay tuned to BYJU’S.