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Macro Environment

The macro environment consists of the economic and non-economic environment that provides opportunities and threats to business firms. This is large uncontrollable that provide opportunities and threats to business firms. This is largely uncontrollable and, therefore, firms adjust their operations to  these environmental factors. The macro- environment consists of the following:

1. Economic Environment:

The economic environment consists of economic forces that affect business activities. Industrial production, agriculture, infrastructure, national income, per capita income, money supply, price level, monetary and fiscal policies, population, business cycles, economic policies etc. constitute the economic environment. The economic environment influences the activates of business enterprises. In the capitalist economics, firms have the freedom to choose the occupation. The factors of production are privately owned and production activities are taken by the public sector which is guided more by social welfare than profit maximization. The economy is controlled by hr central master plan prepared by the State. In a mixed economy, public and private sectors co-exist and single or jointly own the factors of production.

Scarce economic resources are allocated over various business activities. Decisions regarding allocation of resources which respect to what to produce, how or produce and for whom to produce; the nature of technology and the technique of production, timing of production etc. differ in different economies. This constitutes the economic environment of that economy.

2.Non- economic Environment:

 The non-economic environment consists of socio-cultural, demographic, natural, physical, technological, political and legal environment that influence and are, influenced by her economic environment. A large number of variables affect the non-economic environment

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