BB 0034 Business Environment

Contents

Unit 1

Business Environment: An introduction 1

Unit 2

Economic Environment 23

Unit 3

Socio Cultural Environment 45

Unit 4

Political Environment 63

Unit 5

Economic Systems 83

Unit 6

Financial Environment 100

Unit 7

Legal Environment 120

Unit 8

Economic Role of Government 137

Unit 9

New Economic Policy 156

Edition: Fall 2011

BKID B1499 6

th July 2011

Unit 10

Privatization 177

Unit 11

Globalization 194

Unit 12

India, WTO and Trading Blocs 210

Unit 13

Corporate Social Responsibility 230

Unit 14

Public, Private, Joint and Co-operative Sectors 247

Unit 15

Indian Economy 266

Dean Directorate of Distance Education Sikkim Manipal University (SMU DDE)

Board of Studies

Chairman HOD Management & Commerce SMU DDE

Mr. Pankaj Khanna Director, HR Fidelity Mutual Fund

Additional Registrar SMU DDE, Manipal

Addl. Registrar (S.E.)

Office of Student Evaluation SMU DDE, Manipal

Dr. T.V. Narasimha Rao Adjunct Faculty & Advisor SMU DDE

Dr. K.V. Varambally Manipal Inst. of Management, Manipal

Mr. Shankar Jagannathan Former Group Treasurer Wipro Technologies Limited Mr. Abraham Mathew Chief Financial Officer Infosys BPO, Bangalore

Ms. Sadhna Dash Ex Senior Manager HR Microsoft India Corporation (Pvt.) Ltd.

Content Preparation Team: Prof. Dr. Ajeya Jha HOD, Management, SMIT

Ms. Manjusree Mishra Assistant Professor I, Sikkim Manipal Institute of Technology Majitar, Rangpo, East Sikkim.

Ms. Amrita Sengupta Assistant Professor Sikkim Manipal Institute of Technology Majitar, Rangpo, East Sikkim

Major Raman Nair Sikkim Manipal Institute of Technology, Majitar, Rangpo, East Sikkim Mr. Manjit Singh Associate Professor, Sikkim Manipal Institute of Technology Majitar, Rangpo, East Sikkim.

Content Editing and Review: Prof C. Shanath Kumar Head of the Department, Management and Commerce, SMU DDE, First Floor Manipal Towers, 14, Airport Road Bangalore 560 008

Ms. Monica Dighe Senior Lecturer SMU DDE Department of Management & Commerce, First Floor, Manipal Towers 14, Airport Road, Bangalore 560 008

Peer Review done by: Dr. K. V. Varambally Manipal Institute of Management Manipal

Edition: Fall 2011

Printed: July 2011

This book is a distance education module comprising a collection of learning materials for our students. All rights reserved. No part of this work may be reproduced in any form by any means without permission in writing from Sikkim Manipal University, Gangtok, Sikkim. Printed and Published on behalf of Sikkim Manipal University, Gangtok, Sikkim by Mr. Rajkumar Mascreen, GM, Manipal Universal Learning Pvt. Ltd. Manipal 576 104. Printed at Manipal Press Limited, Manipal.

SUBJECT INTRODUCTION

Business Environment (BB 0034) is a four credit subject of Semester I of

BBA programme. Business is an economic activity and no business

operates in isolation. It is affected by the environment in which it works and

has to adapt to the environment to operate successfully. The forces that act

on a business organisation are in the form of the Government regulations,

the society, the global environment and so on. Just as these forces affect

the business, there are also the business operations that affect the society

we live in.

This Self-Learning Material (SLM) of the subject is divided into 15 units, the

overview of which is given below:

Unit 1: Business Environment: An introduction

This unit describes the environment in which a business operates and

explains the internal and external factors that affect business.

Unit 2: Economic Environment

The economic framework is the level of income in the country, the external

conditions that affect the economy, the economic policies that affect the

economy. The economic environment affects business.

Unit 3: Socio Cultural Environment

This unit discusses the Socio Cultural Environment of business. Business

operates in the social system and is influenced by the elements of society.

The society in turn is also affected by business. The elements of the social

system define the socio cultural environment.

Unit 4: Political Environment

This unit describes the Political environment that has a direct influence on

business organizations. It describes the framework of governmental

economic ideology, policies, regulations and legislation that affect business.

Unit 5: Economic Systems

The resources of an economy are either owned privately or in public

ownership. This distinguishes the economic system that operates and the

role of the Government. In this unit, the basic economic systems are

described.

Unit 6: Financial Environment

In this unit the various components of a financial system, financial

institutions and their role in sustaining business ventures and the impact of

foreign direct investment on business is explained.

Unit 7: Legal Environment

Within this environment, the organisation has to abide by certain rules, and

regulations. These rules and regulations are laid down by the Government.

This relates to the legal environment of business.

Unit 8: Economic Role of Government

In this unit the role governmental policies play in economic development is

described. You will also read about the economic crisis the Indian economy

faced in 1991 and the onset of subsequent economic reforms that ushered

in an era of more open and liberal economic regime.

Unit 9: New Economic Policy

Industrial policy means rules, regulations, principles, and procedures laid

down by the government for regulating, developing, and controlling industrial

undertakings in the country. These policies have substantially regulated the

business environment in the country till date. It is essential to understand

these Policies before studying the new economic policy of 1991. This unit

sets the background for the New Economic policy of 1991.

Unit 10: Privatization

In this unit we shall discuss the major issues that are involved in the current

phase of the disinvestment programme as a part of privatization.

Unit 11: Globalization

Going global means, becoming a transnational corporation which looks at

the whole world as one market. The company manufactures, conducts

research, raises capital and buys supplies wherever it finds the best

bargain.This unit discusses the impact of globalization.

Unit 12: India, WTO ad Trading Blocs

In this unit, we will study details of trading blocs meant for promotion of

globalisation and we shall study more details about the WTO which provides

the legal ground rules for international commerce.

Unit 13: Corporate Social Responsibility

To operate and grow in the society business organizations have to

undertake certain social responsibility which are termed as corporate social

responsibility. This unit discusses the growing importance of Corporate

Social Responsibility.

Unit 14: Public, Private, Joint and Co-operative sectors

In this unit we will learn about the various forms of enterprises. There are

various types of businesses. e.g. Public sector enterprises, Private sector

enterprises, Joint sector enterprises and co-operative sectors.

Unit 15: Indian Economy

In this unit we will look into the Indian economy and try to analyze both its

strengths and its weaknesses. The trends in the different sectors will show

us the way to a better future by bringing in more innovative strategies that

can overcome all obstacles.