What is Business Environment?
The term 'business environment' means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.
Features of Business Environment:
- Totality of External Forces: The things that are out of the control of Business to an enterprise. Sum total of all these things makes business environment of an Enterprise.
- Specific and General Forces: specific forces are those affects the individual firm directly, whereas general forces are those who affects all the individual firms of an industry.
- Inter-relatedness: all the elements of the environment are inter-related, change in one lead to change in other.
- Dynamic Nature: Business environment always keeps changing, and facilitates advancements.
- Uncertainty: it is uncertain as one cannot analyse each and every change in whole industry throughout the world, it becomes extremely difficult to predict the future happenings.
- Relativity: business environment differs from place to place and time to time, due to difference in nature of humans of different places and time and humans are basis of environment.
- Complexity: business environment consists of interrelated and dynamic elements; it becomes difficult to understand it as whole, as compared to parts.
Importance of Business Environment:
- Discovery of opportunities: Enables the Firm to Identify Opportunities and Getting the First Mover Advantage.
- Warns about threats: Helps the Firm to Identify Threats and Early Warning Signals, to be ready to face it.
- Tapping useful resources: Helps in Identification and procurement of useful resources which helps in improving enterprise produce.
- Coping with Rapid Changes: Helps in Coping with Rapid Changes and facilitates survival of an enterprise.
- Helps in planning and policy formation: Helps in Assisting in Planning and Policy Formulation as it give a quite clear idea of future.
- Helps in improving efficiency: Helps in Improving Performance, as it introduces enterprise to latest technology and techniques which are more efficient.
Dimensions of Business Environment:
- Economic Environment: Value of rupee, inflation rate, disposable income, interest rate.
for example, a rise in the disposable income of people creates increasing demand for product.
- Social Environment: Customs and traditions, social trends and values which bring various opportunities and threats to business enterprises.
For example: Increase in diet soft drinks, mineral water, etc. because of health-and-fitness trend.
- Political Environment: Stability, peace, government attitude towards business.
For example, if the government provides subsidy in the production of cotton garments, it will have positive effect on cotton textile businesses.
- Legal Environment: Legislations, administrative orders, court judgements.
For example, advertisements for packets of cigarettes must carry the statutory warning. "Cigarette Smoking is Injurious to Health.
- Technological Environment: Scientific improvement and innovations.
For example, booking railway and air tickets through internet.
What is Demonetisation?
can be defined as an economic policy where a certain currency unit eases to be recognised or not recognised as a tegal tender
In simple terms, Discontinuation of unit of currency for use of exchange and legal tender under an economic policy.
Objective of demonetisation:
- Curb Corruption.
- To Prohibit Accumulation of Black Money.
- To simplify and improve Tax Administration.
- To stop tax evasion.
- Channelising savings into the formal financial system.
- Creates cashless or cash-lite economy.
Impact of Demonetisation:
- Money/Interest Rates: As Cash transaction declined, Bank deposits increased and also Increased in financial savings.
- Private wealth: Private wealth declined as a lot of black money was ceased and some went in vain.
- Digital transaction: Digital transaction amongst new users, widespread of digital transaction.
- Real Estate: Decline in price of both residential and commercial infrastructure.
- Tax Collection: As digitalisation made hard to hide black income. Hence, lead to huge increase in tax collection.