Economic forces are the factors that help to determine the competitiveness of the environment in which the firm operates.
These factors include:
- Unemployment level
- Inflation rate
- Fiscal policies
- Government changes
These factors determine an enterprise’s volume of demand for its product and affect its marketing strategies and activities. The economic system is made up of three main steps. The first one being production and then there is distribution of the produced goods and then the last step is consumption of the same. Now all this is possible because of two factors- Human resource and Natural resource.
Natural resources include the raw material which is generally used in the production process, and human resources help to convert the raw materials to finished products which are then ready for distribution.
Cost–benefit analysis
A cost–benefit analysis compares the benefit from the reduction in pollution to the cost that would be incurred to reduce the pollution level. Here benefits can be both environmental as well as health benefits.
Everyone, ideally, would love to live in a pollution-free environment. But technology used most times do emit pollutants. these pollutants affect human health as well as environment. Hence there is an urgent need to find the optimum economic level of pollution reduction.
But with changed circumstances, the optimum level also changes. Due to improved technology the pollution reduction cost will also go down.
During the period 1990-2000, 3M Corporation reduced its air pollution by 88%, water pollution by 82% and waste by 35% by using eco efficiency program.
Cost-Benefit Analysis takes into consideration only those benefits which can be measured in terms of money. It does not consider the aesthetic benefits which is and always has been a vital part of the environment like a beautiful clear running stream.