Explain sociological, educational, political, historical and physical factors as non-economic factors of business environment

 Explain sociological, educational, political, historical and physical factors as non-economic factors of business environment

    The sociological factors which give content & form to the system of value and culture. Among these factors, we can list : (i) view towards management-social attitude towards business and managers: business-moral or immoral things? Managers-Marx’s bourgeois or barefoot creatures? (ii) view towards authority responsibility delegation- authority respectable or condemnable? Workers’ participation-myth or reality? (iii) view towards achievement and work achievement recognized or not? Good work leading to promotion or a transfer? View towards wealth and income-earn like a king and live like-a-sage or earn money to spend and spend money to earn? Live poor to die rich or vise versa? (iv) view towards change and risk-taking businessmen, risk-takers or risk-averters? Resistance to change operate or not/ customs, tradition and conventions rigid or flexible? (v) view towards scientific method people believe in religion or reason though science? (vi) class structure and labor mobility- caste system, join family system, etc. (vii) inter-organizational and individual co-operation of conflict-extend to which private business enterprise, government, labor unions, consumers’ co-operative, etc., live in harmony and enrich each other, or counteract each other.

Educational- cultural factors :

In this category, we may list (i) attitude towards educational and acquisition of knowledge; (ii) types of education-formal and informal, liberal arts or technical? Quantity and quality of higher education. (iii) literacy level correlation between formal literacy and the level of culture. (iv) educational match with the skill requirements of industry and man power utilization-specified vocational and technical training role of business schools and (management) executive development programs : educational vs training, these and other similar factor which constitute the educational-cum-cultural environment exercise a strong influence on business activities and management skill.

Political factors : 

In the context of non-economic environment, we may bring in the political-legal factors : laissez faire is no longer an order and the role of the government, which is the apex institution of the state to regulate business activities, is no longer debatable. All nations endorse and enforce this policy. The social sanction for the government intervention means that on every turn a businessman now meets the law. There are various laws relating to business and industry. Some of these laws are clearly economic in content and economic in intent. And very often the contents of the law are confusing and the intentions of the laws are not clear. The government is that great political institution (not individual) which either can say things it does not mean or can mean things which it does not say. That is why even when it says things which it means businessman feel that it is not saying what it is meaning. Thus, communicational gap develops between business and government laws and the legal framework present a challenge for business. The political- legal environment of business depend on, (i) legal rule of the business-its formulation and implementation, its efficiency and effectiveness. (ii) defense and military policy impact of defense policy on industrial enterprises in terms of trading with potential enemies, purchasing policies, strategic industrial development etc. (iii) political stability-impact of factors like civil war, the declaration of president’s rule and emergency, changes in the form and structure of government administration. (iv) political organization ideology of the ruling government, philosophy of the political parties, (v) flexibility and adaptability of law-constitutional amendments. Their urgency and frequency, velocity of public policies. (vi) foreign policy-alignment or non-alignment, tariffs, customs’ unions, etc. image of the country and its leaders.

Historical factors : 

The historical heritage of the country also influences the current environment of business. The role of historical factor in the context of non-economic environment may not, therefore be minimized. Here we have to look at the sociological, cultural, educational, and related factors which example, the business environment in a number of newly independent nation states has been largely determined by the colonial status which those countries enjoyed earlier. The French revolution has much to do with the emergence of capitalist spirit of business and investment. World war-1 and the soviet revolution provided a perspective to realist the ambition of state-owned/controlled business system. The declaration of emergency induced a set of business ethics and practices in India. The formation of new government in the recent past has greatly influenced Indian business community and culture. Many such examples are there in the history. History is not be treated as dead past. Many historical events and ideologies leave a strong impact on the current state of business. In fact, history, is often the explanatory factors behind the prevalent business situation. Historical environment (perspective) produces the current environment.

Physical factors : 

Lastly, thought not the least important one, reference must be made to the physical environment, i.e., the role of physical and geological factors in the realm of non-economic environment. The application of modern technology in industry, it is now argued, leads to rapid economic growth at a huge social cost-deterioration of the physical environment around us, I.e., air pollution, noise pollution, so on and so forth. The nature of such costs is being assessed by biologists, ecologists, sociologist, consumers and conservationists (some of them in a manner as if it is a new discovery). In the light of this, much talk is there about the social responsibilities of business. Business now has to calculate the social net profitability (social benefit social cost) of its ventures. In this calculation, business must consider the physical environmental factors such as the quantity and quality of existing forest wealth, possibility of artificial rain, the exploitation of sea products like fish, the health hazards out of pollution, social costs of rapid urbanization and industrialization, etc. to sum up, the non-economic environment, implies a host of environment factors : sociological, educational-cultural, political-legal, historical and physical.