Dimensions of Business Environment: Dimensions of, or the factors constituting the business environment include economic, social, technological, political and legal conditions which are considered relevant for decision-making and improving the performance of an enterprise.
However, management of every enterprise can benefit from being aware of these dimensions instead of being disinterested in them.
The various factors constituting the general environment of business is given below:
1. Economic Environment: The economic environment includes interest rates, inflation rates, changes in disposable income of people,
2. Social Environment: The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Values refer to concepts that a society holds in high esteem. Social trends present various opportunities and threats to business enterprises.
3. Technological Environment: It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
4. Political Environment: Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. The significance of political conditions in business success lies in the predictability of business activities under stable political conditions. Political stability, thus, builds up confidence among business people to invest in the long term projects for the growth of the economy.
5. Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government centre, state or local.
an adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance. Non-compliance of laws can land the business enterprise into legal problems.
