The Global Business Environment

Chapter 1

What is the term “Business” mean to you?

It is an organisation that provides goods and services, but its main goal is to earn profit.

What is “Profits”

It is the difference between a business’s revenues and its expenses.

What is meant by “External Environment”

It is everything outside an organisation’s boundaries that might affect it.

Dimensions of the External Environment

And what are the factors in more detail?

The Domestic Business Environment is the environment in which a firm conducts its operations and derives its revenues.

The Global Business Environment encompasses the international forces that affect a business and includes international trade agreements, international economic conditions, and political unrest. (For example, wars)

Technological Environment encompasses all the ways by which firms create value for their constituents and includes human knowledge, work methods, physical equipment, electronics, and telecommunications.

Technological Environment encompasses all the ways by which firms create value for their constituents and includes human knowledge, work methods, physical equipment, electronics, and telecommunications.

Political-Legal Environment is the relationship between business and government.

Sociocultural Environment includes the customs, mores, values, and demographic characteristics of the society in which an organization functions and determines the goods and services, as well as the standards of business conduct, that a society is likely to value and accept.

lastly, the Economic Environment includes relevant conditions that exist in the economic system in which a company operates.

What is meant by the term “Economic system”

It’s a national system for allocating its resources among its citizens, both individuals and organisations.

What are the five factors of production?

Labor.

Capital.

Entrepreneur.

Physical resources.

Information resources.

What are the types of economies?

Planned Economy.

Market economy.

Mixed market economy.

Privatisation.