company is going to be multi-national or globalized, the more intensive are the macro-economic factors which influence the company and its activities. In the Indian context, we find that the state of technological development varies among different sectors of the industry. Since there is no single factor that makes our macro environment but a group of various forces like political, legal, economical, social, technological etc, together build it. See our Privacy Policy and User Agreement for details. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of These factors do not depend on business activity but on extraneous factors that do not only affect businesses but the whole population. Demand / Supply Privacy Policy 8. With the introduction of economic reforms and the policy of liberalisation in our country, our exports have increased considerably and many foreign companies started to trade with our country. Emission of smoke dust and chemicals from manufacturing plants. (xi) Foreign Exchange Management Act, 1999. 2. The important factors operating in the technological environment are as follows: (i) Sources of technology like company sources, external sources and foreign sources, cost of technology acquisition, collaboration in and transfer of technology. It means making people (both the employees as well as the general public) aware about the causes and consequences of environmental pollution. Role of Business in Environmental Pollution: From the above discussion on environmental pollution, one thing can clearly be identified, that it is business that mainly contributes to all sorts of pollution i.e., air, water, land and noise. Business can equally be instrumental in fighting pollution and protecting the environment: To minimise the environmental pollution and improve the quality of environment the business can have three types of role, that is. For example, establishment of a cement factory or steel plant in the backward area will generate employment not only in the factory itself but a full-fledged market to cater to the consumption and other needs of those employees shall also come up. When the quality of environment deteriorates, it is said that the environment is getting polluted. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Thus, marketers must watch the technological … These assumptions are greatly based on the macro factors such as country or worldwide interest rates, gross domestic product (GDP) of a country, the growth rate of the economy, production and sales figures, population census etc. a financial system of a country which plays a major role while making the financial decision. FINANCIAL MANAGEMENT CONCEPTS IN LAYMAN’S TERMS, Use of this feed is for personal non-commercial use only. The evaluation calls for an analysis of various factors belonging to both macro as well as the micro environment. He is passionate about keeping and making things simple and easy. To export a reference to this article please select a referencing stye below: If you are the original writer of this question and no longer wish to have your work published on the website then please: Our academic writing and marking services can help you! These factors are uncountable by the business organizations. We will now discuss them one by one. Knowledge of business law is necessary for many management decisions. (iii) Impact of technology on human beings, the man-machine system and the environmental effects of technology. It clarifies to a great extent that financial decisions may go wrong if proper study of macro factors is not done. These factors do not depend on business activity but on extraneous factors that do not only affect businesses but the whole population. Every Society in India develops it s own culture over a time and this culture determines, how its members behave and interact with each other. ‘Ecology’ is a science telling about the relationship of all living beings (i.e., human beings, animals and plants), with non-living beings (air, water, soil, rivers, land and mountains). Under a democratic set up, the ideology of the ruling party influences ownership, management and size of a business. Interest rates 2. 3. The low income may be the reason for very low demand for a product in a country. It is essential to conduct a good analysis of the macro environment of a company because knowing what environment surrounds our business enables us to protect ourselves from those issues that can be harmful, and take advantage of situations that allow us to increase sales. It also helps to develop all the ancillaries and supporting business. In this article we will explain what the macro-environment of a company is. Non-economic environment includes political system, government policies, legal framework social system, cultural values, demographic factors, technological development and natural environment of the country. Also, one should be updated with various changes taking place around the world. Also, the availability of raw materials like minerals and other products in a particular geographical region affects locational decisions of a business. Now business firms organise the associations to influence the policies of the government. This may mean the emerge of opportunities for a business, but watch out: every new technology replaces an older one. It affects economic growth, our standard of living, and our culture. eval(ez_write_tag([[580,400],'efinancemanagement_com-medrectangle-4','ezslot_4',117,'0','0']));A simple example will help us understand the criticality of macro factors thoroughly. (ii) Political stability-impact of factors like civil war, the declaration of president’s rule and emergency, changes in the form and structure of governmental administration. (iv) Foreign Policy-alignment or non-alignment, tariffs, customs, and other foreign trade related policies. 4. The macro environment is a dynamic factor and keeps changing drastically, leading to an increase in avenues, competition and complexity. In fact, we feel its effect on our everyday life. All these are bound to have an impact on business decisions. The nature of such costs is being assessed by biologists, ecologists, sociologists, consumers and conservationists. Demand for packaged food and readymade garments have increased in recent times. Political Environment covers the actions of the government, that have a bearing on the company’s operations. These variables generally affect not only the company but the whole society and its activities, and encompass matters relating to population, legal or technological issues. No firm is immune to economic forces although some are less vulnerable than others. They are known as the macro environment of the company, to encompass all of them.

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