2. TOPICS COVERED
Business Environment
Concept
Importance
Dimensions of Business Environment
Economic
Social
Technological
Political
Legal
Impact of Government Policy changes on
Business with special reference to liberalisation,
privatisation and globalisation in India
4. BUSINESS ENVIRONMENT
“The business environment is the aggregate of all
conditions, events, and influences that surround and affect
a business firm. Business environment generally refers to
the external factors affecting, either positively or
negatively, the operation of a firm”
6. IMPORTANCE OF BUSINESS ENVIRONMENT
First Mover Advantage
Learning about thePossibleOpportunities availableinthe
Environment
Warning Signals
GettingKnowledgeof PossibleThreats intheEnvironment
Tapping Useful Resources
Knowing theRequirement of Environment
7. IMPORTANCE OF BUSINESS ENVIRONMENT
Coping with Rapid Changes
By Constant vigil over the Business Environment
we can easily face the Rapidity of Change
Assisting in Planning and Policy
Anyone can Defeat their Competitors by
formulating their Plans with the Knowledge of
Environment
Improvement in Performance
An Organization can Improve it’s Present as well
as Future with it.
9. INTERNAL ENVIRONMENT
Factors which are present within
the Business itself and are under
the direct control of the Business.
These are:
Objectives
Policies
ProductionCapacity
ProductionMethod
Management InformationSystem
ParticipationinMgt.
Compositionof Directors
Managerial Attitude
Organizational Structure
Features of HumanResource
13. 1.ECONOMIC ENVIRONMENT
It refers to the combination of economic systems,
economic policies and economic conditions of a country.
ECONOMIC SYSTEM
It influence the freedom and openness of the business.
Socialist Economic System. e.g.: China
Businesses are Directed and Controlled by Government
Capitalistic Economic System. e.g.: USA
Importance is given to Private Ownership of Business
Mixed Economic System. e.g.: India
Businesses are Owned by both, Government and
Individuals
14. ECONOMIC POLICIES
Policies which are laid down to direct the Economic
Activities which are as follows:
Public ExpenditurePolicy
Public Debt Policy
AgriculturePolicy
Export Import Policy
Foreign Investment Policy
Employment Policy
Taxation Policy
Industrial Policy
15. (iii) ECONOMIC CONDITIONS
Conditionswhich arerelatedwith theEconomic
Development of theCountry.
Theseare
Flowof Foreign Capital
Supplyof Natural Resources
General PriceLevel
Foreign Trade
PrevailingInterest rates
Per CapitaIncome
Industrial Development
Level of Economic Development
Impact of Economic Environment onBusiness
Changes Impacts
IncreaseinInterest rate
DecreaseinInterest rate
IncreaseinIncome
DecreaseinIncome
DecreaseinDemand of Goods
IncreaseinDemandof Goods
IncreaseinDemandof Goods
DecreaseinDemand of Goods
16. 2. SOCIAL ENVIRONMENT
It refers to the combination of all characteristics of the
society in which the orgnisation exists.
Major Elements –
Traditions : Diwali, Id, Christmas and Guru Purv
Values: Freedom, Social Justice, Equality
Social trends: Health and Fitness trend among urban
dwellers.
Impact of Social Environment on Business -
Festivals
Values
Trend
Opportunities for business Social responsibility
of business
Demand of some special items (mineral water and gym)
17. 3.TECHNOLOGICAL ENVIRONMENT
It referstoinnovations relatingtovarious business activities
Major Elements –
Discovering newways of producing goods andservices
Discovering newways of operating abusiness
Impact of Technological Environment onBusiness
Changes Impacts
Innovationof TV
Innovationof PhotoCopier
Innovationof Synthetic Thread
Innovationof digital watches
Adverse effect on Cinema and Radio
Adverse effect on Carbon Paper Industry
Adverse effect in Cotton Cloth Industry
Adverse effect on Mechanical Watch Industry
18. 4. POLITICAL ENVIRONMENT
It refers to political conditions in the country and attitude of
the government towards business
Major Elements
Political stability in the country
Peace in the country
Attitude of Government towards business
Type of Government (Single Party/Coalition Government)
Ideologies of various political parties
Changes Impacts
Attitudeof oneGovt.
Attitudeof another Govt.
Keeninterest of Govt.
Against MNC’s
In favour of MNC’s
Hyderabad – Cyberabad Bangalore –
Silicon Valley of India
19. 5. LEGAL ENVIRONMENT
It refers to the sum total of all the
Acts passed by the government,
Judgements of the courts, and Decisions rendered by
various Commissions and Agencies
in the country.
Major Elements
Acts passed by the government,
Judgments of the courts, and
Decisions rendered by various Commissions and
Agencies
Changes
Removal of control fromcapital mkt.
Relaxation inFDI
Impacts
Easy collectionof funds
Entry of MNC’s
20. ECONOMIC REFORMS SINCE 1991
To take the Country out of Economic Difficulties and to
Speed up the pace of Economic Development the
following vital reforms were introduced:
Liberalization
Privatization
Globalization
21. ECONOMIC REFORMS SINCE 1991
1.Liberalization
It refers to unshackle economy from bureaucratic
cobweb to make it more competitive.
It includes:
•Freedom in determining the scale of business
activities
•Freedom to fix the prices of goods & services
•Reduction in rate of taxes
•Simplifying import export procedure
22. ECONOMIC REFORMS SINCE 1991
2.PRIVATISATION
An economic process through which some public
sector undertaking is brought either partially or
completely under private ownership.
It includes:
•Reducing fiscal burden of the government
•Reducing the size of government machinery
•Speeding up economic development
•Improving management of enterprises
23. ECONOMIC REFORMS SINCE 1991
3. Globalization
It refers tointegratingtheeconomy with therest of theworld.
It includes:
• Freeflowof goods &services inall countries
• Freeflowof capital inall thecountries
• Freeflowof information&technology inall thecountries
• Sameconflict solvingtechniques inall countries
24. MAJOR STEPS FOR ECONOMIC REFORMS
NewIndustrial Policy
NewTradePolicy
Fiscal Reforms
Monetary Reforms
Capital Market Reforms
Phasing out Subsidies
DismantlingPriceControls
25. IncreasingCompetition
MoreDemanding Customers
Rapidly Changing Technological Environment
Necessityfor Change
Needfor Development of HumanResources
Market Orientation
Lossof Budgetary Support tothePublic Sector
IMPACT OF GOVERNMENT POLICY ON BUSINESS AND INDUSTRY
26. Please be free to write query at:
Dr.Ramesh C Sharma
rameshchandersharma@gmail.com
http://rameshchandersharma.blogsspot.in
+91-94180-45154