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` Positive Approach

` Normative Approach

` Economic Problems

x What to produce?x Where to produce?

x How to produce?

x How much to produce?

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BusinessInternal External

Internal Environment: Inside the company

External Environment: Outside the company Broadly classified into Micro and Macro Environment.

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` Micro Environment affect the operations of the

business

Business

InputSuppliers

Publics

Competitors

MarketingIntermediaries

Consumers

Workers &Unions

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` Macro Environment of a company refers to all those

economic and non-economic factors that influences

business activity in general and thus determine the

opportunity that a company may have to promote itsbusiness

Business

GlobalNational

Political

ocio-Cultural

Demographic

Natural

Technological

Economic

Non Economic

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` There are 5 broad sectors of the economy Business ector

Household ector

Capital Market

Government and

External ector

These sectors are so interconnect that they together create

the structure of the economy

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Capitalism

MarketDriven

ocialism

GovernmentControlled

Mixed

B

oth

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` There are fluctuations in the business

` Characteristics ofBusiness Cycle

1. Recurring Fluctuations

2. Period ofBusiness Cycle is longer than a year (not shorter than a year)

3. Presence of alternative forces of expansion and

contraction

4. Phenomenon of the crisis (peak and trough areasymmetrical) that means peak can end abruptly

and recovery is a slow process.

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Time

Output

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` Growth is increase in countrys real output of

goods and services.

` Development is more comprehensive. It is

progressive changes in socio-economic structureof a country.