AssignmentBusiness Environment Interaction Matrix Interaction between Economic and Environmental Factors The economy is ‘embedded’ in society. and very possibly quite strongly. analyzing these is part of the theory of growth and fluctuations. These interactions are likely to affect social and economic well-being. bankers. Keeping the analysis simple. after all. even reversed. political and population variables. the objective will be to show this in a measurable way. But we want to focus on a different kind of interaction. agriculture. When sectors and classes interact along the social dimensions. There are economic interactions between sectors and social classes. . and changes in social. services – and social classes – workers. also involving both sectors and classes. for better or worse. we shall argue. on the other. Economic Growth could be supported and enhanced –or it could be undermined. on the one hand. environmental.INTRODUCTION The objective here is to explore the interactions between economic growth and change. economies here will be assumed to be made up of sectors – industry. it is likely to change the patterns of development – and it may lead to stagnation and failure to develop. and to show as precisely as possible why and how this matters. landlords. but this time between economic advances and the resulting pressure or development of social variables. business owners. newspapers and books published. waste disposal air pollution – gases and particulate matter. Education : literacy rates. library book loans. apprenticeship and other training programs. Environmental issues – Environment: Pollution of soil. secondary. tertiary). waste heat and energy discharge and the effects on climate. measures of substance abuse. education spending as a percentage of government budget. water quality and availability. of GNP. research programs. for comparison with purely economic. contact between adolescents and non-parental adults. school enrollments. standard measures of sectoral growth. life expectancy. doctors per thousand population. . availability of medicines. access to hospitals. level and growth of employment. net school enrollment male and female (primary. morbidity and prevalence of disease. human development index. specialized training Interaction between economic and social variables 291 programs. hospitals.Factors Economic – Economic Growth: GNP levels and growth. indicators of public health. and college graduation rates. Social issues – Socialization of Adolescents: preparing adolescents for adult working life. school drop-out rates. primary. literacy. secondary. ratio of female to male literacy. Health: infant mortality. acid rain. mother’s condition in childbirth. harbours. garbage and waste management. military and defense spending. life expectancy at birth. . population using improved drinking water and sewage facilities. human rights and religious freedom. public administration. shared household income ratio between highest 20% and lowest 40%. radios and televisions per capita. median age.roads. age distribution. public infrastructure . percentage voting. effectiveness of the legal system and the courts. civil order. if available. Political– Social Infrastructure: transportation. growth. birth and death rates. natural reproduction rates. land management and zoning. communications. Demographics – Population : Size. crime rates by income distribution. size of middle class. airports. poverty rates for different poverty levels. sewers and water supply. but also its distribution – the degree of inequality. police and the criminal justice system. training of the police. fertility. Public goods. Effective and Democratic Government : Representative and responsive government.Household Standard of Living : not only the level of the average standard of living. bridges. % under 15. Sex ratios. Gini coefficients will give an overall picture. and measures of concentration of wealth and ownership of land will portray the extremes. % over 65. the working of a free press. Under 5 infant mortality. AdlSoc and Educ together give us people along with their skills. At this point we will present a full spectrum of non-economic variables. But in what follows we will keep the discussion of the purely economic side as simple as possible. It gives us a measure of the benefits being delivered and their distribution. We will stick to Straightforward cases of economic growth resulting from capital accumulation and technological advances. Health and HStndL show how what is being produced benefits the people. allowing us to define and examine a wide range of social. in both public and private dimensions. And finally EffGov tells us how order is maintained and disputes resolved. THE TRANSFORMATIONAL GROWTH MATRIX To examine these questions we must set up quite a general framework. and with what effects on the world in which the society is set. EconG and EnvH tell us what is being done. in what ways. in which we can study how different kinds of economic change can interact in various ways with many aspects of the social order. political and demographic variables. what is being produced. who is working. what they know and what they can do. though later we will simplify .RELEVANCE OF THESE FACTORS: PopP. SocInf measures what the state and the society as a whole provides as a framework to undergird and regulate social life and economic activity. political and demographic variables. made up of a number of different but related elements that tend to move together.this. and they will necessarily be approximations. Usually a variable will be a composite. These will appear in the row and column vectors. in which the coefficient will indicate the relationships.4 Measurement scales will have to be chosen or developed. . we will see that the interaction between the economic side of a country and the other aspects of its social order turns out to be complicated and important. However. and outline the kinds of relationships that we can see between economic advances and social. (Since we are examining growth. we will set them out as a matrix. too.) First we will list and describe the variables to be considered. To display the variables and their interactions in the most general way. Even so. we call this the Transformational Growth Matrix. so that it can be represented by ppropriate proxies. we will not deal with the empirical issues here. Our aim is to present the approach. if more and mroe of the active labour force joins professional management. The . On the other hand. If business gets social sanction as a respectable profession. it determines as well as it is determined by the noneconomic environment. rather than cooperation. a repressive economic system may be needed to cope with industrial disorder. Let us take another example : Social movements largely determine the economic system. On the other hand. both exogenous and indigenous.ECONOMIC AND NON-ECONOMIC ENVIRONMENT : THE INTERACTION MATRIX The economic environment of business exercise a strong influence on the noneconomic environment of business just as the non-economic environment influences the economic environment. If the workers cultivate an attitude of confrontation. thus. with management. The economic environment is. Social attitudes towards business and management determine how many people get attracted to private business as an activity and to management as a career. if the attainment of rapid economic growth is the target. The social environment affects and gets affected by the economic environment of business. the occupational structure of a country will reflect a sizable category of professional mangers. Let us consider a few specific interactions. To operate on productivity-based wages is cooperate on the system of incentives and positive attitudes of labour. the social attitude towards business and its management also changes. the management must bring about a labour productivity revolution and the wages may be base don productivity of labour rather than profitability of business. In fact. Thus. different legislations of the Government (like MRTP Act. entrepreneurs may not like to take up new business ventures. a business concern whitlow profits may not find resources of finance management training or executive development programme. For example. But if there is political instability. The educational cultural environment and the economic environment of business are also interdependent. The ruling party which believes in using socialism as a strategy and nationalization of enterprises as a tactic to strengthen the economy may not be favorably viewed by the private business sector. The state of business in Punjab during the period of terrorism is a recent example. This is borne out by Ana analysis of the content and intent . As a result. For example. the strategy of streamlining the administration and simplifying the procedure maybe adopted. business enterprises happen to be forthcoming and businessmen are willing to take more economic risk. there may be a shortage of highly qualified and trained management personnel. therefore. On the other hand. The ideology of the ruling party influxes the economic system. At the corporate level. and Urban Land Ceiling Act) are often politicoeconomic in character. the emphasis on education in the arts and a lack of vocational course may be held responsible for the economic problem of unemployment in many countries. The politico-legal environment and economic environment of business are also interlocked to such an extent that we sometimes think of political economy of business. may be responsible for a given economic environment. on the other hand. lack of trained competent managers may lead to business inefficiency. only a relatively high-income country can afford to impart costly higher education in science and technology. conditioned by a specific social attitude and discipline. For example. business uncertainties multiply and. To fight economic and industrial recession. the interdependence between educational and economic environmental factor may at times take the form of a vicious circle. In a situation of political stability. The system of education. The state of economic development acts as a decisive factor in the choice of a system of education. FERA. sometimes a series of political legislations may be necessary to cope with the economic environment. thus.attainment of a specific economic objectives is. The print (economic) environment of business can be treated as a legacy of its past (historical) environment. The colonies. the economic environment of business in the newly independent nation-states is the outcome of the colonial infrastructure which those countries had in the past.of different legislations and political announcements. The present economic environment of a country is partly determined by the available structure of industry in that country. In other words. in its turn. Thus environmental considerations limit the expansion activities of a business firm. The achievements of the Five-Year Plans in the past may provide a direction to the formulation and implementation of the current Five-Year Plan of an economy and the present performance of a plan will decide the future course of planning. we come to the interaction between the physical environment of a country and the economic environmental business in that country. the repent is a reflection of the past. and the repent can also be handled in terms of the experiences of the past. decides the pattern of economic legislations. thus. On the other hand. Every business has a history. and (b) dump the finished manufactured products in the colonial markets. Similarly. history is a record of events and a storehouse of lessons which can provide guidelines for present economy policy deisms. As such. A number of examples may be quoted. The British Empire was interested in the colonies so that it could easily (a) get the raw materials for its industries. and history always has a lesson to teach. the structure and action of industries may lie at the root of . It suggests that the environments factors are interrelated on the time scale too. the size of a plant. The historical environment and the economic environment of business are also interdependent. The state of the political environment. the organization of firms. These industries can be traced back to the colonial pattern of investment in the past. Also the state of economic environment decides the continuity or discontinuity of a particular political administrating. Finally. supplied the market as well as the raw materials. A number of legislations have been enacted in many countries to conserver natural resources and to preserve natural the physical environment. the scale of output. These environment allegations may impose a constraint on the expansion of a given business concern like a factory. laws rating to business and industry will increasingly turn out to be laws relating to the physical environment of business.either environmental improvement or environmental delay. From the standpoint. personnel and marketing). . To the extent this social responsibility is not discharged. When a given element of the economic environment influences a given element of the non-economic environment. you draw a short line horizontally. In Interaction Matrix below we have listed the critical elements of the noneconomic environment along the rows and the critical elements of the economic environment along the columns thus yielding a seven by five matrix. you draw a short line vertically. The Interaction Matrix serves as ready eference for understanding environmental relations and relations. Thus in case of interdependence among the environmental elements. Thus. and when an element of the non-economic environment influences a given element of the economic environment. we are soon going to have a few area of environment. the social responsibility of business today means taking care of the environmental impact of various economic and technological activities. one may feel that in that in addition to the existing functional Ares of management (prod finance. The point remains that the physical environment as a factor is becoming so significant day by day that it may be treated as a critical element within the economic environment of business. you end up with a plus sign which suggests a two-way interaction.