Entrepreneurship plays a very important role in the growth of a country and development of an economy. It can solve many problem like unemployment, concentration of economic power, imbalanced regional development. Entrepreneurial behavior is influenced by the internal and external environment. Internal environment is very easy to control the external environment. Only problem arises like: skilled labour employee, workers. When the entrepreneur is good then control power is also good. External environment is most floating. He can follow the various steps to measure or reduced the uncertainty factor that means govt. policy, situation of the policy, consumer taste and preference.
Factors effecting economic environment:
- Land
- labour
- capital
- raw material
- market demand
- bargaining power of buyers
- bargain power of suppliers
It can be explained in detail:
- Land: land is the most important factor of production. Without land no entrepreneur can't established the industry.
- Labour: when any person starts the person then skilled or unskilled both type of labour is necessary. Skilled labour is very helpful for the achieving of success. Easy availability of skilled labour also effects entrepreneurship. labour intensive rather than capital intensive technology will serve our interest in a better way.
- Capital: As blood is necessary for human being similarly finance is required in very business. Without finance no business can grow or survive. Capital is one of the most important factors of production for establishing an enterprise. No company can grow without the adequate funds.
- Raw material: raw material is also the main factor of production. The shortage of raw material cans adverse effect on the entrepreneurial development. No company can grow without the adequate supply of raw material in the industry.
- Market demand: every entrepreneur has power to know about the market condition. When person know about the taste and preference of the consumer then it is very helpful to run the business successfully. Because there is always a positive relation between taste of the consumer and demand. when goods are produced acc.to customer taste and preference than more demand of goods otherwise not. When production acc.to consumer then more profit.
- Bargaining power of buyers and suppliers: every entrepreneur has bargaining power. Weaker buyer provides opportunity to the firm to increase prices and earn better return. On the other hand weaker suppliers provide the company opportunity to force down price and resulting is profitability ratio is decreasing day by day.
