How Does the External Environment Which Consists of Economic Environment, Technological Environment, Socio-Cultural Environment, Domestic Business Environment, Global Business Environment and Political-Legal Environment

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2. How does the external environment which consists of economic environment, technological environment, socio-cultural environment, domestic business environment, global business environment and political-legal environment affect the success and failure of today’s businesses? Provide suitable examples and detailed explanation. ( 40 marks) Economic Environment are one of the economic factors that have an effects on the working of the business. It includes system, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth. It is very dynamic and complex in nature and does not remain the same. The economic environment refers to economic factors, such as employment, income, inflation, interest rates, productivity, and wealth, would influence the buying behaviour of consumers and institutions. Economic environment has affect business nowadays contributing to both business success and failure. In success, economic environment such as the increase in the rate of employment has led to maximise the amount of revenue by a company. The higher rate of employment lead to the more money business sector can make, as, people who is employed have more money to spend rather than unemployed people who do not have money to spend. This lead to higher buying power that would increase the economic status of a business. For example, John wants to buy a can of Nescafe but , he do not have money as he is currently dismissed from his job . John situation to the company which is producing Nescafe going through a small loses because of John unemployment. But, if John is employed and have money to buy a can of Nescafe, he might buy a dozen of it which lead to a higher revenue by the company producing Nescafe. Technological environment is the external factors of technology which would affect business operations. The

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