(a) Identify four environmental factors that affect business
(b) Explain how each of the factors mentioned in (a) above affects business operations
Explanation
(a) Environmental factors which affect business are:
(i) International environment
(ii) Economic Environment
(iii) cultural environment.
(iv) Demographic
(v) Industrial
(vi) Technological
(vii) Infrastructure!
(viii) Political and legal.
(b)(i) Demographic environment: The size and structure of the population determine what to produce and the quantity to be produced.
(ii) Infrastructural environment: For the objectives of a business to be achieved, there must be infrastructural facilities like, sea ports, road, railways, electricity etc.
(iii) Economic environment: This include income distribution, expenditure patterns and saving capacity. The type of economic system adopted whether capitalism, socialism and mixed economy will have significant influence on the firm.
(iv) Technological environment: This makes installed machinery and equipment obsolete, hence businesses adjust to changes in technology.
(v) Political environment: Government policies and actions determine business practices and investment climates in an economy.
(vi) Ecological environment: Physical and climatic changes such as erosion, pollution, desert encroachment etc., have effect on business organisation.