What Are The 5 Components Of Business Studies?
These business components each have direct or indirect influence over the business transactions and operations.
The five business components are:
The economic environment consists of Gross Domestic Product (GDP), Income level, Profit earning rate, Productivity, Employment rate, Industrial, monetary and fiscal policy of the government.
The political environment constitutes all the factors related to government affairs. For example, government in power, attitude of government towards different groups of societies, policy changes implemented by different governments.
The social environment consists of the traditions of the society in which business is existing. The standard of living, taste, preferences and education level of the people living in the society are examples of factors in the social environment.
The legal environment consists of the laws and legislations passed in the parliament. Businesses need to adhere to the legislations of the country they are located in.
The technological environment refers to changes taking place in the country which affects method of production, use of new equipment and machineries, the quality of product and more. In order for businesses to remain competitive and relevant, they must closely monitor the technological changes taking place in his industry.