CONCEPT OF BUSINESS

ENVIRONMENT
 POLITICAL ENVIRONMENT
THE POLITICAL ENVIRONMENT MEANS THE POLITICAL RISK, THE
GOVERNMENT’S RELATIONSHIP WITH A BUSINESS, AND THE TYPE OF
GOVERNMENT IN THE COUNTRY. CONDUCTING BUSINESS INTERNATIONALLY
IMPLIES DEALING WITH DIFFERENT KINDS OF GOVERNMENTS, LEVELS OF RISK
AND RELATIONSHIPS.

TYPES OF POLITICAL SYSTEM 1.TWO PARTY

SYSTEM:-ONLY TWO PARTIES TAKE TURN OF CONTROLLING THE GOVERNMENT.(EX-USA) 2.MULTI-
PARTY SYSTEM:-IN THIS SYSTEM,THERE ARE MANY PARTIES ACROSS THE POLITICAL SPECTRUM THAT
COMPETE FOR NATIONAL ELECTION AND ALL HAVE EQUAL CAPACITY TO GAIN CONTROL OVER THE
GOVERNMENT.(EX-INDIA) 3.SINGLE PARTY SYSTEM:-IN THIS SYSTEM ONLY ONE PARTY RULES THE
GOVERNMENT,EVEN THOUGH THERE ARE MANY OTHER PARTIES.WE CAN COMPARE THIS WITH
DICTATORSHIP,WHERE THERE IS RULE OF ONLY ONE PARTY(PERSON). FOR
EXAMPLE,BANGLADESH,CHINA,AFGHANISTAN,WADIYA ETC.
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 POLITICAL FACTORS EFFECTING BUSINESS
ORGANIZATIONS:
1.Corruption Level:- Emerging market economies tend to have much higher
corruption level compared to developed countries.It leads to an uneven
distribution of wealth as small businesses face unfair competition.
2.𝗖𝗵𝗮𝗻𝗴𝗲𝘀 𝗶𝗻 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀:-Government could alter their rules and
regulations.This could in turn have an affect on business. 3.𝗣𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹
Ins𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆:- Political risk may also result from events outside of
government’s control such as war,terrorsim and etc. 4.Data Protection Law:-
The purpose behind the data protection law is to set rules for processing of
personal data by government,companies incorporated in India and foreign
companies dealing with personal data of individuals.
 GLOBALIZATION
Meaning:- The process of integrating the country with worlds economy is
called Globalization Definition:- “Globalization is the word used to
describe the growing interdependence of the world’s economies,cultures and
populations brought about by cross border trade in goods and
services,technology and flows of investment,people and information”.

Features:- 1.There are no Geographical Limits 2.Movement of capital,

technology and human resources Etc. 3.Increased collaborations
4.International Business and International Trade
 IMPACT OF GLOBALIZATION
1.Pressure from powerful nations 2.A threat to sovergnity 3.Cultural
attack 4.They are slaves to the life style 5.Debt cancellation 6.Political
instability 7.Impact on mass media
 CHARACTERISTICS OF
GLOBALIZATION
1.Free trade 2.Liberalization 3.Increase in employment 4.Increase connectivity
between nations 5.Urbanization 6.Standard of living 7.Production cost
8.Outsourcing
 OBJECTIVES OF GLOBALIZATION
1.Create job 2.Efficient use of resources 3.Increase in International trade
4.Increased industrialization 5.Growth of Economy 6.Increased investment
ADVANTAGES OF GLOBALIZATION
1.Communication technology and language 2.Deficiency of culture 3.Tourism
promotion 4.Emergence of human rights 5.Scientific advances 6.The
emergence of globalization businesses
 DISADVANTAGES OF
GLOBALIZATION
1.Increased competition 2.Exploitation of labour and resources 3.Unbalanced
business 4.Domestic job loss
 PHASES OF GLOBALIZATION

1.Domestic company 2.International company

3.Multinational company
4.Global company
5.Transnational company
 MULTINATIONAL
CORPORATIONS(MNC’S)
Definition:- According to Neil.H.Jacoby, “Multinational corporation

owns and manages business in two or more countries” Meaning:- Any

company or enterprise,which operates in more than one country is known as
Multinational corporation.The headquarters of MNC’s are located in one
country and conducts business activities in more than one country.
REASONS TO ENCOURAGE MNC’S
IN INDIA
1.Introducing higher level of industries 2.Reducing technology gap 3.The
proper utilization of natural resources 4.The foreign exchange gap is reduced
5.Boost up the basic economic structure
 ADVANTAGES OF MNC’S
1.Economic development 2.Technology gap 3.Industrial growth 4.Marketing
opportunities 5.Work culture 6.Export promotion 7.Research and development
 DISADVANTAGES OF MNC'S
1.Danger for domestic industries 2.Transfer of out data 3.No benefit to poor
people 4.Danger to independence 5.Missuse of mighty status
 RECENT STEPS TAKEN BY GOVERNMENT
FOR DEVELOPMENT OF MNC’S

1.Establishment of joint ventures by Indian companies with other countries

2.Encourages export 3.Removal of quantitative restrictions 4.Encourages
Foreign Direct Investment(FDI) 5.Removal of export subsidiaries