bst ppt-group project (3)

BUSINESS
ENVIRONMENT

Presentation By:
Akshatha, Srinidhi K, Vanshitha and Palak

TOPICS • Meaning and features of business
environment

• Importance of business
environment

• dimensions of business environment
• Economic reforms and new

industrial policy,1991
• Liberalization
• Privatization
• Globalization
• Demonetization
• Impact of Government Policy

Changes on Business and Industry

BUSINESS ENVIRONMENT AND ITS FEATURES

•It Refers to all individual, Relativity Totality of
institutions and forces which external factors
are external to a business
and beyond its control. General and
specific forces
•These forces affect the
working of the business and Complexity Interrelated
has to deal with these forces elements
effectively for the long run
success of the business.

•It’s features are listed beside.

Uncertainty Dynamic nature

❑Interrelated elements – FEATURES OF BUSINESS
All the forces of a business environment ENVIRONMENT
are closely interrelated. For example,
increased awareness of health care has ❑ Complexity –
raised the demand for organic food and Business environment is complex in
roasted snacks. nature as it consists of several forces
each of which has different effect on
❑Dynamic nature – the business during different
Business environment is called dynamic in situations.
nature because it keeps on changing since
continuous changes in the demand of the ❑ Relativity –
forces such as improvement in technology, Business environment is a relative
shift in customers preference, etc. concept. It generally differs from
nation to nation and even region to
❑ Uncertainty – region of the same nation.
Business environment is largely uncertain as it is
very difficult to predict future happenings.

•Totality of external factors

•The environment of a business enterprise is made up of all
forces external to the business. thus, it is important for the
management to analyze economic, social, political, technological
and global forces for taking technical decisions for the business .

•General environment
•General external environment forces exercise their
influence on a business unit in an indirect manner. These
include economic, social, political, legal, Technological
and global .

•Specific environment
•Specific external environment forces influence the
working of business firm directly. These include
customers, owners and investors, suppliers, creditors,
employees, trade union, etc.

IMPORTANCE OF BUSINESS
ENVIRONMENT

HELPS IN IDENTIFICATION OF OPPORTUNITIES to get first mover advantages:
HELPS IN TAPPING USEFUL RESOURCES:
HELPS IN COPING WITH DYNAMIC NATURE:
IMAGE BUILDING :

HELPS IN IMPROVING PERFORMANCES:

DIMENSIONS OF BUSINESS ENVIRONMENT

There are 5 dimensions of Business environment, they are:

•POLITICAL ENVIRONMENT
•ECONOMICAL ENVIRONMENT
•SOCIAL ENVIRONMENT
•TECHNOLOGICAL ENVIRONMENT
•LEGAL ENVIRONMENT

1.POLITICAL ENVIRONMENT

Political environment includes political conditions such as general stability and
peace in the country and specific attitudes that elected representatives and
officials hold towards business.

Examples of • The launch of MAKE IN INDIA programme by the
Impact of political government has given a boost to the manufacturing
sector.
environment on
business • The Andhra Government took keen interest in the
growth of IT industry at Hyderabad, because of the
which the city is now also known as CYBERABAD.

• Coca-Cola company stopped its operations in India in
the late 1970s after economic liberalization by the
government.

2.ECONOMICAL ENVIRONMENT

Economical environment refers to all those forces that have economical impact on the
activities of a business firm.

Some economic factors include: Interest rates , Inflation rates , Stock market indices &
value of rupee

The economical environment is greatly influenced by the government through fiscal
policies, industrial policies, and foreign trade policies.

Private airlines have been allowed to run services on domestic and international routes
& Industrial policy reforms have removed licensing in case of many industries.

Fiscal policy reforms have led to reduction in the rates of direct taxes and indirect taxes &
Indian companies can raise funds in the foreign markets by issuing GDR’s and ADR’s.

3. SOCIAL ENVIRONMENT

• Social environment of business includes the social forces like traditions & customs, values &
social trends, etc.

1. • Traditions and customs define social practices that have prevailed for decades or even
centuries.

• Social trends present various opportunities and threats for the business firms.

2 • Values refers to the concept that society holds in high esteem.

• EXAMPLES:
• Improvement in education facilities for girls has increased the demand for stationery products

3. • Rising aspirations of people have increased the demand for consumer durables like AC,
refrigerator , etc.

4. TECHNOLOGICAL ENVIRONMENT

It includes scientific and EXAMPLES;
technological improvements and
innovations which provide new ways Advancements in
of producing goods and services. computers, electronics
and information
Continuous changes in technological technology have provided
environment affect the working of new ways of advertising
business. Adoption of improved and selling products by
technology leads to cost efficiency , the computers
better products and services for the
customers. Railway, airlines, tour and
travel companies use

internet and web pages

where people can get the
required information and
book their tickets

5.LEGAL ENVIRONMENT

Legal environment of the S.NO LAW YEAR
business includes all laws 1. THE FACTORIES ACT 1948
and regulations passed by 2. THE TRADE UNIONS ACT 1926
the government, 3. THE EMPLOYEES’ COMPENSATION ACT 1923
administrative orders 4. THE CONSUMER PROTECTION ACT 1986
issued by the government 5. THE COMPETITION ACT 2002
authorities and judgments 6. THE INFORMATION TECHNOLOGY ACT 2002
delivered by the courts. 7. THE COMPANIES ACT 2013

Some of the laws which
apply to business firms are
listed:

Examples of Impact of changes in
legal environment on business

Advertisement of cigarettes has been banned,
but they must carry the statutory warning-
cigarette smoking is injurious to health.
Advertisement of any baby food must inform
the potential buyers that mother’s milk is the
best for small children.
Every eatable product must clearly bear a
green dot for vegetarian contents and red dot
for non-vegetarian contents.

Advertisement of alcoholic products has been
banned.

ECONOMIC REFORMS AND
NEW INDUSTRIAL
POLICY,1991

Liberalisation of establishment and growth of industrial units.
Industrial licensing has been abolished for all industrial projects
except for a few industries.

Automatic clearance for foreign technology agreements in high
priority industries.

Easy approval of foreign direct investment (FDI) in high priority
industries.

Opening the power, oil, banking, insurance and communication
sectors to private enterprises. These areas were earlier
reserved for the public sector.

Disinvestment in public sector units
through the sale of their equity shares
to the private sector.

Removal of restrictions on import and
export of goods and services.

Tax concessions and cheaper bank
loans to export-oriented units.

Special package of incentives for small
scale industrial (SSI) units

LIBERALISATION

The term liberalization means freeing the Indian business and
industry from all unnecessary controls and restrictions. It implies
removal of entry and growth restrictions on the private sector
enterprises.

Abolishing licensing Simplifying procedures for Making it easier to attract foreign
requirement in most of the imports and exports capital and technology to India.

industries, except a few

MEASURES TAKEN BY THE GOVERNMENT
FOR LIBERALISATION:

Abolition of industrial licensing for all industries, except six
industries notified by the Central Government.

Freedom is deciding the scale of business activities.
Restrictions on expansion of enterprises were withdrawn.

Removal of restrictions on the movement of goods and
services throughout the country.

Freedom in fixing the prices of goods and services.

Reduction of tax rates and lifting of unnecessary controls.

PRIVATISATION

Privatisation is the process of transfer of ownership,
management and control of public sector enterprises to
the entrepreneurs in the private sector. It implies giving
greater role of the private sector in the economic
activities of the country.

Planned disinvestment of Revival of sick public sector
the public sector i.e., units. The government set up

Dilution of government's the board of industrial and
stake in public sector financial reconstruction (BIFR)
companies to less than
51%. to revive sick units in the
public sector.

GLOBALISATION AND ITS

IMPACT

• Globalization is the process of
interaction and integration among
people, companies, and governments
worldwide.

• MNCs have increased their investments
over the past 15 years.

• Till 1991, the Government of India had
followed a policy of strictly regulating
imports in value and volume terms.

• These regulations were with respect to
(a) licensing of imports, (b) tariff
restrictions and (c) quantitative
restrictions.

DEMONITIZATION

Government of India, made an announcement on November 8,
6 with profound implications for the Indian economy. The two
est denomination notes, `500 `1,000, were ‘demonetised’with
ediate effect, ceasing to be legal tender except for a few
cified purposes such as paying utility bills.

FEATURES OF Demonetization

• Demonetization is viewed as a tax • It aims to create a less-cash or cash-
administration measure. lite economy, i.e., channeling more
savings through the formal financial
• Demonetization also led to tax system and improving tax
administration channelizing savings compliance.
into the formal financial system.

Impact of Government Policy Changes on
Business and Industry

(i) Increasing competition: (ii) More demanding (iii) Rapidly changing (iv) Necessity for change:
customers: technological environment:
• As a result of changes in the • After 1991, the market forces
rules of industrial licensing • Increased competition in the • New technologies increase have become turbulent as a
and entry of foreign firms, market gives the customers competition which forces the result of which the
competition for Indian firms wider choice in purchasing firms to develop new ways to enterprises have to
has increased especially in better quality of goods and survive and grow in the continuously modify their
service industries. services. market. operations.

(v) Need for developing human (vi) Market orientation: (vii) Loss of budgetary support to
resource: the public sector:
• Earlier firms had a production
• Indian enterprises have suffered oriented marketing operations. • The public sector undertakings
for long with inadequately In a fast changing world, there is have realised that, in order to
trained personnel but the new a shift to market orientation in survive and grow, they will have
market conditions require as much as the firms have to to be more efficient and
people with higher competence study and analyze the market generate their own resources
and greater commitment. first and produce goods for the purpose.
accordingly.

THANK You
JAI GURU DEV