ASSIGNMENT-1(MBA-1 C) QUESTION NO-33

Subject- ACCOUNTING FOR MANAGEMENT

TOPIC-:
STABILITY AND GROWTH IN INDUSTRIAL ECONOMIES

• Industry: it refers to the people or companies engaged in a particular kind of commercial enterprise. It is described it as the manufacturing of a good or service within a category. It is the secondary sector in economics, also coming under both public and private sector.
  
  ~Both Internal and External Environmental Factors affect the Stability and Growth of an Industry of a particular firm:
  Internal Environmental Factors:



• MISSION



• VISSION



• FINANCIAL CAPABILITIES



• OWN TECHNOLOGY CAPABILITIES



• HUMAN RESOURCE



• ORGANIZATIONAL CULTURE

External Environmental Factors: External Environmental Factors are sub-divided into Micro (Operating) and Macro (General) Environmental Factors.
~Micro Environmental Factors:
Suppliers - the quality of Raw material and inputs supplied plays vital role with the amount of consistency they are supplied.
Customer - the bargaining power of customer in the form of Quantity demanded and level of income plays a vital role.
Market Intermediaries (wholesalers, Retailors) – the profit margin of wholesaler & retailor with their capacity of occupied marker share

~Macro Environmental Factors:
Political Factors: These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.
Economic Factors: These include interest rates, taxation changes, economic growth, inflation and exchange rates. All these economic change can have a major impact on a firm's behavior. For example:
- higher interest rates may decrease investment because it costs more to borrow
- a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency
- inflation may provoke higher wage demands from employees and raise costs
- higher national income growth may boost demand for a firm's products

Social Factors: Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. For example, the life expectancy of the people is increasing in the result the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staffs are living longer. It also means some firms have started to recruit older employees to tap into this growing labour pool. The ageing population also has impact on demand: for example, demand for sheltered accommodation and medicines has increased whereas demand for toys is falling.

Technological Factors: New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products.

Environmental Factors: Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.

Legal Factors: These factors are related to the legal environment in which firms operate. In recent years in the INDIA there have been many significant legal changes that have affected firms' behaviour. The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions. Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

#CONCLUSION:-
However, it is important not to just list thesefactors because this does not in itself tell about situation very much. What we need to do is to think about which factors are most likely to change and which ones will have the greatest impact on them i.e. each firm must identify the key factors in their own environment so they can maintain certain level of growth and stability essential for their profitability and survival.factors vary from industry/organization to industry/organization.

POSTED BY SAHIL GOYAL (MBA 1-C)