In natural environment we include Geographical and ecological factors. Both these factors are relevant to business, natural environment in business.
Exclusive – Natural Environment
These factors include the following:
(1) Natural resources endowments
(ii) Weather & climate conditions
(iii) Topographical factors
(iv) Location aspects
(v) Port facilities etc.
Almost every aspect of business depends upon natural environment. For example:
(1) Manufacturing depends on physical inputs
(14) Mining and drilling depend on natural deposits
(iii) Agriculture depends on nature
(iv) Trade between two regions depends on geographical factors
(v) Transport and communication depend on geographical factors
(vi) Difference in geographical conditions between markets may sometimes call for changes in the marketing mix.
(vii) Geographical and ecological factors influence the location of certain industries.
(viii) Topographical factors may affect the demand pattern e.g. in hilly areas with a difficult terrain, Maruti Gypsy may be in greater demand than a Maruti car.
Ecological factors have recently assumed great importance. Government policies aimed at the preservation of environmental purity and ecological balance, conservation of non-replenish able resources etc. have resulted in additional responsibilities and problems for business and some of these will increase the cost of production and marketing.
5. DEMOGRAPHIC ENVIRONMENT
factors include:
(f) Size, growth rate, age composition, sex composition etc. of population
(ii) Family size
(iv) Educational level
(iii) Economic stratification of population
(v) Caste, religion etc.
All these demographic factors are relevant to business. These factors affect the demand for goods and services. Markets with growing population and income are growth markets because a rapidly increasing population indicates a growing demand for many products.
High population growth rate indicates an enormous increase in labour supply. Cheap labour and growing markets have encouraged many multinationals to invest in developing countries.
If labour is easily mobile between different occupations and regions, its supply will be relatively smooth and this will affect the wage rate.
Personnel management will become a very complex task if labour is highly heterogeneous in respect of language, caste and religion etc.
Population with varied tastes, preferences, beliefs, temperaments oto, gives rise to differing demand patterns and calls for different marketing strategies.
6. TECHNOLOGICAL ENVIRONMENT
In order to survive in today’s competitive world, a business has to adopt technological changes from time to time, Constant innovation is essential because the purpose of overy business is to create a customer, and therefore every business enterprise has two basic functions.
(a) Marketing and In technological environment, the
(6) Innovation product or service remains the same but the method of
performing the function is always new. Technological environment also includes research base of decisions. Research identifies the consumer needs and provides information for target setting and programming the complete marketing effort.
One of the ways in which product innovation may be stimulated is by the establishment of research and development department in the enterprise. The research and development are now directed into computer, sales energy, material science & laser technology.
The fast changes in technology also create problems for enterprises as these render plants and products obsolete quickly. Product market technology matrix has a much shorter life today than in the past. A firm which is unable to cope with the technological changes may not survive.
7. INTERNATIONAL ENVIRONMENT
Another environmental factor which is fast emerging as the force to reckon with is the international environment. Implications of global or international environment are as follows:
(1) Due to liberalization, Indian companies are forced to view business issues from the global perspective,
(ii) Safe and protected markets are not longer there. World is becoming small in size due to
advanced means of transport and communication facilities.
(iii) Learning of foreign languages is a must for every business manager.
(iv) Acquiring familiarity with foreign currencies is also a must.
(v) Facing political and legal uncertainties is inevitable.
(4) To survive amidst intense competition every businessman should try to adapt his products to different customer needs and tastes.
(vii) Mobilization of resources, particularly financial is an essential starting point in the process of international environment. In order to mobilise public savings many Indian Companies are issuing new share capital in the international market.
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