Environment plays a crucial role in setting up of an enterprise because of the influence of various environmental factors as described below.
1. Developmental and institutional factors:The encouragement and guidance of various governmental and non-governmental institutions plays a vital role in the setting up of an enterprise.
2. Economic Factors: The vital economic factors like demand and supply will determine the size of the enterprize. The health of the economy will also determine the various means of financing the business.
3. Financial Factors: The fnnds required for starting up an enterprise depends on the availability financial institutions and other sources of funding and the policies followed by them.
4. Social and cultural factors: Evaluating the social and cultural factors plays a vital role and requires that the enterprise is compatible with the needs of the population living in a specific region.
5. Legal factors: Starting an enterprise involves fulfilment of various legal requirements. Thus these factors have a crucial role in setting up of an enterprise.
6. Political Factors: Various govermental policies prevailing in the society will affect the setting up of the enterprise. Thus political factors needs consideration for setting up of an enterprise.