Business environment Unit 1 business environment Concept, significance, factors, environmental awareness and scanning environmental influence on business,

Unit 2 social and cultural environment Demographic trend in India social structure caste and communal systems interplay of various systems Unit 3 entrepreneurial culture Emerging entrepreneurial class Ethos, business ethics and need enforcing agencies Unit 4 social responsibility Responsibility towards various interest groups and social cost benefit analysis Unit 5 consumerism Awareness, protection, consumer movement in India and consumer protection Act. Unit 6 political environment Fundamental rights, directive principles of state policy, centre state relations, impact of political environment on business Unit 7 economic environment I Business economic systems capitalism, socialism, communism, mixed economy, characteristic of Indian economic system Unit 8 economic environment II Sectors of economy & their significance agriculture, industry, service, MNC meaning, importance, advantages and weakness Unit 9 financial institutions Money and capital market, structures commercial banks, role in developing business & industry, recent trends. Developing banks roles in developing entrepreneurship, business and industry Unit 10 state policies I monetary policy and fiscal policy Monetary policy control of money supply, credit control and impact on business Fiscal policy public debt, budget, direct & indirect taxation, impact on business Unit 11 state policies II industrial policy and foreign trade policies Industrial policy since independence and new industrial policy. Foreign trade policy, balance of payment position, export promotion, import curtailment

Unit 12 technological environment Choice of technology, problems in selecting appropriate technology implications of business.

Unit 1 Business environment Environment refers to the sum total of all physical and social conditions influencing an individual or a community. Business environment means those external forces which have a bearing on the functioning of a particular business unit - not a single factors but bundle of factors - factors tend to change constantly - one cannot control or influence the environment but is influenced by it. Significance of BE - successful conduct of business - opening of new avenue - dynamic in approach - change of growth - environmental management Environmental factors - Internal and external of business ie., endogenous factors (composition, structure, size, policy etc.,) and exogenous factors -Demographic (age, sex, family size, income etc.,) -Geographical and ecological (farm land, fisheries, forest, coal, mining, oil etc., - Social and cultural concept, beliefs and faiths - Political and legal - Legal environment business law (law of contract codified in Indian contract act, 1872, companies act 1956, MRTP act 2969, foreign exchange regulation 1973 - Technological environment - other factors gulf war 1991, Economic environment of business - monetary and fiscal policy - foreign trade policy and business - economic system and planning - tempo of economic development - infrastructural facilities - size of market Changes in the environment of business - technological changes - social and cultural changes - economic and population growth - legal and political changes - increasing competition in domestic and international markets

Unit 2 Social and cultural environment Social stratification may be defines as institutionalized system of social inequality that ranks individuals and groups according to their share of scarce and desirable resources such as wealth, prestige and power As a pattern of super imposed categories of differential privileges Types of social stratification 1. caste system religious order and consist of hierarchy, sub caste 2. the estate system defined by the laws of man in the society which defines the rights and duties of the members 3. the open class system the class to which one belongs depends up on his individual achievement and not in inheritance or estate Indian social system The emerging system in India Freedom of religion, citizenship, separation of state and religion Demographic trend Unit 3 Entrepreneurial culture One who is making use of his own environment for his benefit is called entrepreneur Entrepreneurial culture and ethos or qualities of entrepreneur 1. capacity to assume risk 2. technical knowledge and willingness to change 3. Ability to Marshall Resources minimum cost at max. quality production 4. ability of organisation and administration 5. capacity to work hard 6. vision and foresight 7. imagination 8. innovative or creative thinking 9. mobility and drive 10. ambition etc., Business ethics The system of some moral rules and principles of conduct applied to business. Primum non nocere (not knowingly do harm). = do not deceive, black marketing, destroy competition, ensure sincerity, fair payments, not cartel agreement, pay taxes etc., Role of trade associations 1. education and persuasion 2. code of ethics 3. moral sanctions = moral conduct is rewarded or misconduct id punished

Legal framework Standard of weights and measures act. The sales of goods act, the prevention of food adulteration act, the display of prices order, the consumer protection act, the cigarettes act, the drugs and magic remedies act, the essential commodities act, Unit 4 Social responsibility of business Social responsibility of business means the obligations of business to society, to take actions of improve the welfare of society as a whole along with their own interests. H.R.Bowen defines as obligation of businessmen to pursue the policies, to make those decisions, or to follow those sanctions which are desirable in terms of the objectives and values of our society H.S.Singhania classifies the nature of the social responsibility of business in to two 1. the manner in which a business carries out its own business activity 2. the welfare activity that it takes upon itself as an additional function. Rational of social responsibility of business 1. Arguments in favor of assuming social responsibility 1.1 long term self interest of business 1.2 response to social demand 1.3 it improves the public image of the company 1.4 it avoid government regulation 1.5 socio cultural norms of the society requires it 1.6 the general thinking is in favor of social reasonability 1.7 business has got requisite resources 2. argument against social responsibility 2.1 it violate the rule of profit maximizations 2.2 it is economically irrational 2.3 trends to dilute the basic objectives of business 2.4 social involvement of business is suspicious 2.5 lack of broad support 2.6 social overhead cost social responsibilities towards different groups 1. shareholders 2. employees 3. consumers 4. community social cost benefit analysis (SCBA) planning commission gives 5 years plan which benefits the society as a whole. methodology Economic, social and environmental which are likely to arise as a result of implementing the project i.e., input output project

i. ii. iii. iv.

measuring economic, social and environmental inputs and outputs of a project putting social goals social rate of interest computing social profitability of the project

first category benefits and cost can be quantified but can convert to money second type benefits and cost can be quantified but cannot convert to money third type - benefits and cost can neither be quantified nor convert to money shadow price estimate the cost and benefits of a project, inputs and output are translated into cost by the use of price mechanism. Monetary benefits with help of price. CIF cost insurance freight price for imported commodities and FOB free on board price for exported commodities. Conversion factors a short cut conversion factors used account the price. Some average rations of accounting prices to market prices, whether the reference is to a particular commodity or a sectoral average. Social weights a project that a yield benefits and cost which may carry different impact on various sections of the society Social rate of interest Decision criteria and SCBA balance sheet The use of a decision criteria whether NPV or benefits cost ratio has to applied to those benefits and cost which is converted into money term. Unit 5 Consumerism Philip kotler defines a social movement seeking to augment the rights and power of the buyer in relation to sellers Consumer rights 1. Rights to safety 2. Rights to be informed 3. Rights to choose 4. Rights to be heard 5. Rights to redress 6. Rights to consumer education 7. Rights to healthy environment Consumer awareness 1. implied conditions 2. mispresentation 3. services period should provided 4. duties of care 5. exclusion clause 6. trade description 7. guarantees 8. price reductions and comparison

9. price display 10. food 11. weights and measures 12. fair trading undertaking consumer protection act (COPRA) it is enacted by parliament in December 1986, district forum created with district consumer courts Right bestowed: 1. Rights to protected against goods which are hazardous to life 2. Rights to informed quality, quantity, potency, purity, standard and price 3. Rights to be assured competitive price 4. Rights to be heard 5. Rights to seek redress 6. Rights to consumer education. Complaints under COPRA - claim upto Rs.1 Lakh in district court.- refer page 61 - claim 1 lac 10 lac in president, state commission - some of the complaints disposed by the consumer court Benefits of COPRA Unit 6 Political environment The Indian constitution incorporates certain economic guidelines the social, economic and political guiding principles of state functioning are clearly laid down in the preamble of the constitution, the fundamental rights and the directive principles of the state policy. Fundamental rights 1. right to equality 2. Rights to sex freedoms freedom of speech & expression, freedom to assemble peacefully, freedom to form associations or unions, freedom to move freely throughout the territory of India, freedom to reside and settle in any part of territory of India and freedom to practice any profession 3. Rights to life and personal property 4. Rights to freedom of religion 5. Rights against exploitation 6. Rights to private property 7. cultural and educational Rights 8. Rights to constitutional rights Directive principles of state policy It is called instrument of instructions. It convenience under four heads 1. provisions dealing with welfare 2. provisions dealing with social justice

3. provisions promoting democracy and 4. miscellaneous provisions Article 38(1),(2), 39, 39(A), 40, 41, 42, 43A, 46, 47, 48, 48a, Divisions of power (i) union list, (ii) state list and (iii) concurrent list. Impact of political environment 1. impact of defense policy on industrial enterprises 2. impact of factors like civil war 3. ideology of party ruling 4. flexibility and adaptability of law 5. foreign policy industrial policy industrial policy resolution in 1948. in 1956 resolution was announced by govt. objective the attainment of the socialist pattern of society through the reduction of economic disparities, inequalities and concentration of economic power and monopolization. 1. regulation and control of prices 2. MRTP Act. 1970 3. companies Act. 1956 4. regulation of other activities - gambling in shares and commodities Unit 7 Economic environment 1 Basic economic systems The fundamental objective of economic system is to obtain the possible amount of human satisfaction to its members from the available resources 1. capitalist economic system 2. communist economic system 3. mixed economic system capitalist economic system instruments of production are owned by individuals and associations. Chief characteristics of capitalist economy 1. motive of max. profits 2. right to acquire, keep, use and dispose of tangible and intangible property 3. right to inheritance 4. freely in utilizing their energies and resources 5. producer, consumer and employees compete among themselves 6. price type of capitalism laissez fair capitalism and mixed capitalism

principles of capitalism 1. private ownership 2. free enterprise 3. consumers sovereignty 4. freedom of choice of occupation 5. freedom to save and invest 6. market mechanism 7. competition 8. absence of central plan merits freedom, increased efficiency, selection of goods and fast improvement in technology defect class conflict, govt. under capitalist control, unequal opportunities, no common welfare, investment allocation is guided by profitability and widening of interpersonal income disparities socialism means of production are either owned or controlled by the state and resource allocation are directed and regulated by the state features social ownership, central planning, restriction on occupation and consumption, wages and prices fixed by govt and equitable distribution of income communism socialism has got two branches called communism and democratic socialism basic principles of karl marx 1. dialectioal materialism 2. materialistic interpretation of history 3. the theory of surplus value 4. the theory of class war 5. the law of concentration of capital 6. the dictatorship of the proletaviat 7. the whethering of the state 8. Marxism is against religion Merit clear cut theory, hope to workers, religion, Drawbacks absolute power, no liberty, anti religious, violent and communist inpartialism Mixed economy features 1. Co-existence of public and private sector 2. planning and price 3. features of capitalism and socialism characteristics of the Indian economy

1. low per capita income 2. occupation pattern 3. heavily populated country 4. unemployment and underemployement 5. low rate of capital formation 6. maldistribuiton of wealth 7. poor quality of human capital 8. low level of technology 9. low level of living 10. high density of population 11. poor re-economic organisation democratic socialism principle 1. principle of equality 2. state control 3. cooperation in the place of competition merit upholds dignity, social good, eliminate evil of capitalism and service defect stepping stone to totalitarianism, little incentive to produce. Inefficiency and red tappism and corruption, materialism and hardship to consumer, degeneration of character. Unit 8 Economic environment II Sector of economy Indian economy consist of three sectors namely, agriculture, industry and service Agricultural sector: 1. providing increased food supply and raw materials 2. problem of inflation 3. possibility of earn foreign exchange 4. provides market for manufactures goods 5. supply of labour to industry 6. employment 7. transport 8. supply of fodder for cattle contribution of agriculture to India economic development 1. national income 2. agriculture and employment problem of agriculture

1. diversification of agricultural sector 2. multiplicity of crops 3. diversity in other spheres 4. semi commercialized farming 5. unequal distribution of land 6. poverty 7. absence of easy credit facilities 8. low productivity 9. unemployment 10. other problems causes for low productivity in agriculture 1. natural factor 2. technological factor 3. industry factor 4. social factor 5. economic factor industries argument in favour of industrialization 1. increasing the income 2. high income elasticity of demand 3. foreign exchange and BOP 4. utilization of surplus labour 5. providing strength to economic effect of industrialization 1. changes in internal structure 2. changes in pattern of foreign trade 3. social consequences MNC ILO report observes the essential nature of the multinational enterprises lies in the fact that is managerial headquarters are located in one country while the enterprise carries out operations in a number of other countries as well. Refers 108 Unit 9 Money market A place where short term funds are bought and sold