DIMENSIONS OF BUSINESS ENVIRONMENT

Dimensions or factors or elements constituting the business environment include economic, social, political, and legal condition, which are considered relevant for decision - making and improving the performance of an organisation.

Dimension of Business Environment: -

• political Environment
• Economic Environment
• social Environment
• legal and Regulatory Environment

Political environmnet: -

• political environmnet includes the country's political system or condition. it indicates the general stability and peace in the country and attitude of the elected governemnt representive towards business.
• Political environment is the outcome of a combination of various ideologies advocated by different political parties.
• Factors connected with the activities of the government are included in it, e.g., the type of government (single-party government or multi-party government), the attitude of the government towards different industries, progress in passing different laws.
• The platforms of the political parties, the tendency of the applicants for different posts, efforts by various groups to get effective support for themselves, etc. Every political party has a different attitude towards business community.
• A living example of this can be seen during elections in the shape of fluctuations in the share market. It is quite possible that the mere possibility of a particular political party coming into power can make the prices of share rise sky high. It is true conversely when the possibility of some other political party coming into power may bring the price of shares really nose-diving.
• It clearly shows that the attitude of the first political party towards business is positive which gets reflected in the positive effect on the share market. On the other hand, the negative attitude of the second political party towards business is reflected in the nose-diving of prices of shares in the share market merely on the possibility of its coming to power.

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The following are some of the examples of the impact of the political environment on business:

(i) In 1977, the Janata Government adopted a stringent attitude towards the multinational companies. As a result of this attitude, the multinational companies like the IBM and the Coca-Cola had to ignore India.

(ii) The new government encouraged the multinational companies for investment in India. This led to the opening of the doors of the Indian market for the multinational companies. Consequently, the Coca-Cola entered the Indian market once again.

(iii) It was only because of the political interest that Hyderabad came to be known as Cyberabad In other words; it came to be recognised as the centre of Information Technology (IT). As a result, many IT companies came to be established there.