Business and Its Environment

Business and its Environment
Chapter
Copyright 2001, S.S. Gulshan
1 1
Business Law
Edition (3)
S.S. Gulshan
Excel Books
Business and its environment

What is Business? Business is as old as civilization itself. Also, it is the greatest thing in the world as no development could have taken place in the absence of business. Business provides to the society the things it needs in order to survive, enjoy life and improve its material and social well-being. Besides, it undertakes productive utilization of wealth-producing resources of the society. It also leads to innovation and improvements in production process and thus enriches the life of people by enhancing the functional capacity of the available resources.
Today business enterprises dominate our lives. There was a time when business played very insignificant role in economic, social, political and technological affairs but now it plays a very significant one. It is not too much to say that the wealth of a country is, to a great extent, created and controlled by business. This gives business and executives thereof the enormous power to affect the lives of different segments of society, such as customers, employees, shareholders, etc. Cont.
1 2
Business Law
Edition (3)
S.S. Gulshan
Excel Books
What is the Environment of Business? Systems approach considers business unit as an open system which has continuous interaction with its external environment for its survival and growth. Thus, a business unit exchanges information, materials and other resources with the environment. It gets inputs such as materials, capital, energy, human resources, information from the ENVIRONMENT environment.
E N V I R O N M E N T
Business
E N V I R O N M E N T
Cont.
ENVIRONMENT 1 3
Business Law
Edition (3)
S.S. Gulshan
Excel Books
Also, the relationship between business and its environment is one of mutual benefit and therefore, it has been shown as a two-way relationship in Figure. This may be referred to as a symbiotic relationship as business functions in such a way that it both takes from and gives nurture to the various segments of its environment. Only through such a relationship, a business can survive and prosper.
Social System Including Moral Political System Including Legal
Business
Scientific And Technology System
Economic System
Cont.
Relationship between business and its environment

1 4
Business Law
Edition (3)
S.S. Gulshan
Excel Books
What are the Different Segments Constituting Environment of Business? Business cannot function in isolation or in a vacuum. Its environment has, more
or less, a direct bearing on its success or otherwise. Business is a part of the total environment in which we live, being influenced by it, while being a force in influencing it. The environment of business comprises several segments which may be classified as under:

Social environment
Economic environment Politico-legal environment Technological environment International environment
1 5
Business Law
Edition (3)
S.S. Gulshan
Excel Books
Legal Environment of Business

The law is almost a universal human need. No society can exist without a legal order. We need institutions and a framework of rules and regulations to provide firmness to our mutual relations. Without law, there would be complete anarchy in society. That is why we regard rule of law as the essence of civilised society. It provides certainty to our relationships. It emphasises that laws ought to be general in character so that there is no arbitrariness in their exercise. It also emphasises complete equality before law and equal conformity to law by officials and individuals. Law seeks to control concentration of economic power. It is assumed that business which has economic power will abuse it to the detriment of its Publics as it is rightly said that power corrupts and absolute power corrupts absolutely. the legal environment of business is one of the major factors in regulating its conduct though some of the laws may act as facilitators for some segment of the business at some time or the other. Almost every aspect of business is controlled by law. Business managers cannot be absolutely assured of knowing all the legal ramifications of their decisions. Copyright 2001, S.S. Gulshan
1 6
Business Law
Edition (3)
S.S. Gulshan
Excel Books

Business and Its Environment

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