Business Environment Test - 3

Technological environment includes changes relating to scientific improvement, method of production, use of new equipment and machineries to improve the quality of product etc.

Thus it is an example of technological environment.

Liberalisation refers to end of licence, quota, unnecessary restrictions and controls over industry and trade.

Privatisation is an economic reform aimed at giving greater role to private sector and limiting the area of public sector in the economy.

Globalisation refers to integration of domestic economy of a country with the international economy. It involves greater interaction and interdependence among various nations of global economy.

Political environment includes political conditions such as general stability and peace in the country and specific attitudes with the elected govt hold towards business.

Political instability will shake the confidence of business people.

Increase in the tax rate means increase in tax on a specific commodity. Such a tax may raise the price of the commodity to the consumer and reduce the net price received by the producer. Thus being an expense it will raise the cost of production.

Increased competition may lead efficiency and effectiveness in utilisation of resources. As well as it compelled the manufacturers to reduce their margin of profit. So that thay can stay in competition for long period

Social environment consists of customs and traditions of the society, standard of living, taste, preference and educational levels etc. of people living in the society where business exists.

When social environment will change, it will change the demand of existing product to new one.

The political stability builds up the confidence among business people to invest in long term plans.  Political instability can shake that confidence.

Example of recent changes made old techniques obslete

• Digital watches to traditional watches
• Word processor to Typewriter
• LED TV to CRT TV
• Xerox machine to photo copier etc.