Economic Environment

A business organization exists in three types of economic environment. First in the total economic; second in a particular industry, and third, in a specific geography area. In each of these types of environment, the company wills wants to consider or potentials customers. 

As regards the total economy, the enterprise will have no consider a broad range of business indicators, such as, industrial production, wholesale and consumer prices, nature and extent of employment and unemployment average work week and average earnings, personal incomes, sales and inventories, gross national product disposition of personal income and corporate profits.

Every enterprise as a system, imports various thing from the economic environment and export a product or service to it. Since to it. Since the object of business is essentially economic, an organization must introduce a number of elements as inputs from the economic environment. For instance, every types of organization must procure capital kinds and cash. Another extremely important element of the input-side of the economic environment is the availability, quality and price of labor of all kinds---Skilled and unskilled, trained and untrained. Price level changes also affect the input side of the enterprise. Inflation for example not only upsets business but has highly disturbing influences on every kind of organization. Again, productivity of labor and capital has considerable impact on enterprises.  Another major economic input is the availability of high-quality entrepreneurs and managers. This input is of course likely to have correlation with the social environment, particularly in the area of education, individual freedoms and cultural development in the area of education. Furthermore, the nature of government fiscal and tax policies affect the economic inputs even though these are more correctly, aspects of political environment.