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Business Environment.


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Meaning of Business Environment : The term Business Environment refers to the aggregate of al forces ,factors and institutions which are external to and beyond the control of individual business enterprises and their management; but which influence their functioning .In other words, Business Envirionment may be defined as all those conditions and forces external to a business unit under which it operates.

Importance of Business Environment : There is a mutual interdependence between business and its environment. A business enterprises is an open system. It continously interacts with its environment. Business takes inputs {raw materials, capital, labour, energy etc. from its environment,and transform them into goods and services and then send them back to the environment.
Business and its external environment interact in the following ways.
. Exchange of information
. Exchange of resources.
. Exchange of influence and power.

Dimensions of Business Environment: The main dimensions \elements of business Environment are as follows:-
. Economics Environment: The economics environment comprises of the factors and forces concerned with means of production and distribution of wealth. It refers to the nature of economic system ,organisation of capital and money markets, income level ,price level, economic policies of the country etc.
. Social Environment: This environment includes social factors such as atitudes of people ,social customs and traditions ,education level, size of population ,trade unions, occupational structure etc.
. Political Environment: Political environment refers to the country's political system,type of goverment, goverment policies towards business ,goverment ,centre state relations ,public opinion, law and order etc.
. Legal/ Regulatory environment: Legal environment of business includes all the laws, legal system and judiciary system of the country. A business has to work within framework of country's laws and regulations.

Managerial Response to changes in Business Environment: The management of business enterprise respond to environmental forces in different ways depending upon their goals, values ,beliefs and competence. Various ways that managers may show the responses to changes in business environment are:-
. Wait and watch
. Anticipation and Adoption
. Innovative Approach
. Autonomous commanding Thrusts

Concept of Globalisation: Globalisation means " to make global ,that is world wide or effecting or taking into consideration the whole world or all people ".Globalisation is a proces of integration of business activities and growing economic interdependence between countries in the world economy.

Factors that lead to globalisation:
. Growing similarities of countries in terms of available infrastructure.
. Globalisation exposes firms to international competition.
. Employment opportunities wil be increase over a period of time.
. Widening of competition.

Concept of Privatisation: Privatisation means having private ownership. management and control into Public sector undertakings ,Goverment of India began the process of privatisationin july 1991. The purpose of privatisation is to improve the efficiency of public undertakings and to raise funds for public investment.

Impact of Goverment Policy changes on Business and Industry:

Positive Effects:
. Financial institutions have become more active.
. Working culture is improving and management is being professionalised.
. Many companies are improving their techmology with the help of goverment assistance.
. Investment behaviour of Indian entrepreneurs is improving.
. Now, company are aware of the significance of human capital.

Negative Effects:
. Curtailed groth in some industries.
. Reduced employment opportunities in the country by the adoption of capital intensive technology.
. Some companies could not face cut throat competition and were forced to sell out all or some of its part to multinational corporations eg, Parle soft drink and Kwality Ice -cream to have been taken over by foreign companies.
. Public sector undertaking is losing markets and their capacity utilisation has declined.


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