BUSINESS ENVIRONMENT AND LAW BY E.KUSUMA

BUSINESS ENVIRONMENT BUSINESS DEFINITION: Business may be defined as “an activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit”.   “Any activity of individual or group of people with the aim of earning money for satisfying their requirements by the Way of satisfying needs and wants of the customers is known as business.”

CHARACTERISTICS OF BUSINESS: Deals in goods and services Sale or exchange of goods and services Regular exchange of goods and services Requires investment Aims at earning profit Involves risk and uncertainty of income Business skills for economic success

COMPONENTS OF ENVIRONMENT

Nature of Business Environment: The various characteristics of business environment are: Complex Dynamic Affect other firm's differently Long and short term impact Effect of external factors Uncertainty Interdependency

Business Environment –combination of both internal and external factors Factors Affecting Business Environment: Internal environmental factors for business: Capital Human resources Objective Management policies Commitment of the employees Image of the company Internal work environment Labour relationship management Research and development Promotional strategies

Business Environment –combination of both internal and external factors Factors Affecting Business Environment: Internal environmental factors for business: Capital Human resources Objective Management policies Commitment of the employees Image of the company Internal work environment Labour relationship management Research and development Promotional strategies

Political Social & cultural Economic INTERDEPENDENCY

Micro External environment Factors: customers Suppliers Marketing intermediaries Competitors General public

Scope /Importance of Business Environment: Identification of strength Identification of weakness: Identification of opportunities Identification of threat: Optimum use of resources: Survival and growth

INDUSTRIAL POLICY Introduction: Industrial policy is an important document, which lays a wide canvas and sets the tone for implementing promotional and regulatory roles of the government. Objectives: Achieving socialistic pattern of society Achieving industrial development Achieving economic growth Reduce disparities in regional development Developing heavy and capital goods industries Provide opportunities for gainful employment Expanding the public sector for achieving socialism Alleviating poverty Protecting and developing healthy small scale industries Liberalization and globalization of economy

Industrial Policy, 1991 Objectives of 1991 Policy Removing the regulatory system and other weaknesses. Increasing the competitiveness of industries for the benefit of the common man. Incentives for the industriali7ation of the backward area. Enhanced support to the small-scale sector. Ensure running of public sector undertakings (PSUs) on business lines and cut their losses.

Salient Features IP 1991: Industrial Licensing Diminishing the role of public sector Foreign direct investment Policy relating to MRTP act An exclusive small sector policy Removal of compulsory convertibility clause  

LPG POLICIES Reasons for implementing L P G : Excess of consumption and expenditure over revenue resulting in heavy govt. borrowings. Growing inefficiency on the use of resources. Over protection to industries. Mismanagement of the firm and the economy. Increase in losses for public sector enterprises.

Components in liberalization Reforms taken during Liberalization Financial Sector Industrial Sector Trade Sector Fiscal Sector

Privatisation Modes of Privatization Initial public offer Strategic Sale Sales to foreigners Management employee buy outs Managerial Privatization