SOCIAL ENVIRONMENT

SOCIAL ENVIRONMNET :-

• The social environment of business include the social forces like customs and tradition, values, social trends, society's exception from business. social factors have a tremendous impact on business
• Business originates and develops in society. Therefore, the effect of various social factors on business is but natural.
• Social factors include customs, fashions, traditions, wishes, hopes, level of education, population, standard of living of the people, religious values, distribution of income, corruption, family set-up, consumers’ consciousness, etc.
• All social factors influence business in some way or the other. For example, the production of things should be according to the fashion. Similarly, religious values also influence business. For example, some years ago the manufacturers of Vanaspati Ghee used to import animal fat for manufacturing ghee.
• On the basis of the strong public protests, the government cancelled the import license of these manufacturers. Similarly, with the news that some popular cold drinks contain pesticide elements, people protested against it and minimized the consumption of these cold drinks.

Legal Regulatory Environment

• Many Acts are passed from time to time in order to control and regulate business activities.
• The sum total of all these Acts creates legal regulatory environment. Acts are mossy passed to regulate such business activities as sale-purchase, industrial disputes, labour, regulating partnership business, regulating company business, foreign exchange, etc.

In India, the following Acts have been passed in connection with the above business activities:

(i) Sale of Goods Act

(ii) Industrial Disputes Act

(iii) Minimum Wages Act

(iv) Indian Partnership Act

(v) Companies Act

(vi) Trademark Act

(vii) Essential Commodities Act

(viii) Consumer Protection Act

(ix) Standards of Weights and Measures Act.

All these Acts influence business decisions.

The following are the examples of the impact of the legal regulatory environment on business:

(i) By removing control on the capital market, a huge amount of capital was collected by issuing various new issues in the primary market.

(ii) With introduction of relaxation in Foreign Direct Investment (FDI) and Foreign Exchange, many multinational companies entered the Indian market. Consequently, there has been a tremendous increase in the foreign exchange reserves in the country.

Technological Environment

• Technological environment includes the discovery of new methods and implements for the production of goods and services. Technological changes make available better methods of production and that makes the optimum use of the raw material possible.
• The technological changes offer both the possibilities and threats for business. In case a company understands these things well in time it can achieve its objective, otherwise the very existence of the company is threatened.

For example,

It becomes a technological change for the automobile industry to produce vehicles which consume less petrol in view of the ever increasing prices of petrol.

Only that company will be able to survive which can move with the changes taking place in the environment. Therefore, the companies should constantly watch the technological changes so that they are able to exploit the business opportunities.

The following are the examples of impact of technological environment on business:

(i) With the advent of television in the market, the cinema and the radio industry were adversely affected.

(ii) With the arrival of the Photostat machines in the market, the carbon paper industry suffered a setback.

(iii) With the entry of synthetic thread in the market, the cotton cloth industry was badly affected.

(iv) The digital watches have almost eliminated the market of the traditional watches.

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