BUSINESS ENVIRONMENT

Presented by: Click to edit Master subtitle style Ms. Aswathy.R Assistant Professor, Dept of MBA

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What is Business Environment

It consist of all those internal and external

factors which impact the functioning of a firm /or its decision making particularly strategies

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TYPES OF ENVIRONMENT
Broadly two types of environment 1. Internal Environment: Factors internal to the

firm.

1. External Environment: Factors external to

the firm which have relevance to it.

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1. Internal Environment

Are generally regarded as controllable factors.

1. Value system 2. Management structure and Nature 3. Internal Power relationship 4. Human Resources 5. Company image and brand equity 6. Miscellaneous factors

Physical assets and facilities

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R&D and Technological capabilities

EXTERNAL ENVIRONMENT
1. Micro Environment

1. Macro Environment

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Micro Environment
Consists of the actors in the companies

immediate environment that affect the performance of the company.

1. Suppliers 2. Marketing Intermediaries 3. Customers 4. Competitors 5. Public

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1. Suppliers: Those who supply the inputs to

the company.

2. Customers: Business has to create and

sustain customers.
3. Competitors . Generic . Form . Brand
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5. Marketing Intermediaries 6. Financiers 7. Publics

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Macro Environment
1. Economic Environment 1. Political and Government Environment 1. Natural and Technological environment 1. Demographic Environment 1. Socio cultural Environment
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Economic Environment
Structure and Nature of the economy Economic policies Economic Conditions

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Nature of the Economy

Low Income economy: Economies with very low level of per capita income. With per capita GNI of $875 or less in 2005. High Income economy: Per capita GNP of $ 10726 or above in 2005 Middle income Economy- Falls in between.

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Structure of the Economy Contribution of different sectors. Developed economies are primarily service

economies

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Economic Policies Industrial and trade policy: Define the scope

and role of different sectors, location of industrial undertaking, choice of technology, scale of operation etc.

Foreign Exchange policy: Exchange rates and

cross boarder movement of capital.

Foreign investment and technology policy:

Eg: 51% FDI in Multi Brand Retail outlets

Fiscal policy and Monetary policy
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General Economic Conditions Stages of Business cycle

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Political and Government Environment

Functions of State 1. Minimal Functions 1. Intermediate Functions 1. Activist functions
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Providing pure Improving equity public goods

Defence Protecting the poor

1. Law and order Functions Minimal Anti poverty programmes

Property rights Disaster relief Public health Macro economic management

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2. Intermediate functions
Addressing Externalities Providing Social Insurance Family Allowances Basic education Unemployment Insurance Environmental protection Regulating Monopoly Overcoming imperfect Information
Insurance , Financial reguation, Consumer protection

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3. Activist Function
Coordinating Private Activity
Fostering markets Cluster Initiatives.

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Economic Roles of Government

1. Regulatory Role
Direct Control Indirect Control through various fiscal and

monetary incentives or disincentives or penalties.

2. Promotional Role 3. Entrepreneurial Role 4. Planning Role

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Quotes by Jawaharlal Nehru Whatever it may be in other countries, in under developed countries like ours, Which have to develop fairly rapidly, the time element is important and the question is how to use our resources to the best of advantage. If our resources are abundant it will not matter how they are used. They will go into a common pool of development. But where ones resources are limited, one has to see that they are directed to the right purpose so as to help to build up whatever one is aiming at.
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ECONOMIC ROLES OF GOVERNMENT IN INDIA

THE CONSTIYUITIONAL ENVIRONMENT The Indian constitution incorporates a number of matters that are economically very significant and have far reaching implications. The socio economic and political objectives of the Indian Republic and the basic guiding principles of the State functioning have been 3/9/13 clearly laid down in the

a. Preamble to the Constitution a. Fundamental Rights a. And the Directive Principles of State policy

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The Preamble
The Preamble to the Indian constitution states that The people of India have solemnly resolved to Constitute India into a SOVEREIGN SOCIALIST, SECULAR, DEMOCRATIC REPUBLIC to secure all its citizens: JUSTICE, social, economic and political LEBERTY of thought, expression, belief, faith and worship EQUALITY of status and Opportunity 3/9/13

The pre amble conveys the general object and

intention of the Constitution and would be a guide in the interpretation of a statute when it is vague.

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The Fundamental Rights

It has been claimed that the Indian

constitution offers all citizens , individually and collectively, the best fruits of democracy and those basic freedoms and conditions of life which alone make life significant and productive.

The theory of fundamental rights implies

limited government.
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But, these right s are not absolute; they are

subject to limitations imposed by the state in order to secure the rights of all individuals or to promote the greater interest of the community of the state, or to serve the ends of the planned society.

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The fundamental rights enumerated in part

three of the Constitution are

1. Right to equality 2. Right to freedom 3. Right against exploitation 4. Right to freedom of religion 5. Cultural and Educational Rights 6. Right to constitutional remedies
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The Directive Principles

Is a unique feature of Indias Contituition .

Directive principles are in the nature of directions to the legislature and executive that they should exercise their authority in such a manner as to ensure due respect for, and observances of, these principles

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Directive principles that are economically very significant are; a. The state shall strive to promote the welfare
of the people by securing and protecting as effectively as it may be a social order in which justice, social, economic and political, shall inform all the institutions of the national life.

b. The state shall, in particular , strive to

minimize the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only among individuals but also amongst groups of 3/9/13 people residing in different areas or engaged

c. The state shall in particular, direct its policy towards securing:

1. That the citizens, men and women equally ,

have the right to an adequate means of livelihood.

1. That the ownership and control of the

material resources of the community are so distributed as best to subserve the common good.

1. That the operation of the economic system

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not result in the concentration of wealth

4. There is equal pay for equal work for both men and women 5. That the health and strength of workers, men and women, and the tender of age of children are not abused and that citizens are not forced by economic necessity to enter a vocation unsuited to their age or strength. 6. The children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.
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Freedom of Trade, Commerce and Intercourse

According to Article 301 of the Constitution of India, trade, commerce and intercourse throughout the territory of India shall be free.

The freedom, is not without restriction

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Separation of Powers
Is an important feature of the Indian

Constitution.

The separation of power contemplates the

idea that the governmental functions must be based on a tripartite division of legislature, executive and judiciary. Each organ should be separate , distinct and sovereign in its own allocated sphere and it should not exercise the functions assigned to another
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Division of Power
India's constitution distributes the power

among Legislative Power and Administrative Power

The power of the states and the Centre are defined by the constitution and the legislative powers are divided into three lists.
1. UNION LIST 1.3/9/13 STATE LIST

Union list Union list consists of 100 items on which the

parliament has exclusive power to legislate with including: defence, armed forces, arms and ammunition, atomic energy, foreign affairs, war and peace, citizenship, extradition, railways, shipping and navigation, airways, posts and telegraphs, telephones, wireless and broadcasting, currency, foreign trade, interstate trade and commerce, banking, insurance, control of industries, regulation and development of mines, mineral and oil resources, elections, audit of Government accounts, constitution and organisation of the 3/9/13

State list
The state list consists of 66 items and

individual states have exclusive authority to legislate on items included in this list: Public order, police, administration of justice, prisons, local government, public health and sanitation, agriculture, animal husbandry, water supplies and irrigation, land rights, forests, fisheries, money lending, state public services and state Public Service Commission, land revenue, taxes on agricultural income, 3/9/13 taxes on lands on buildings, estate duty, taxes

Concurrent list Concurrent list consists of 47 items. Uniformity is desirable but not essential on

items in this list:

Marriage and divorce, transfer of property

other than agricultural land, education, contracts, bankruptcy and insolvency, trustees and trusts, civil procedure, and poisons, economic and social planning, trade unions, labour welfare, electricity, newspapers, books and printing press, stamp duties

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