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1.)WHAT IS BUSINESS ENVIRONMENT? 2.) The success of every business depends on adapting itself to the environmentwithin which it functions.

For example, when there is a change in the government polices, the business has to make the necessary changes to adapt itself to the new policies. 3.) imilarly, a change in the technology may render the existing products obsolete, as we have seen that the introduction of computer has replaced the typewriters! the colour television has made the black and white television out of fashion. "gain a change in the fashion or customers# taste may shift the demand in the market for a particular product, e.g., the demand for $eans reduced the sale of other traditional wear. %.)"ll these aspects are external factors that are beyond the control of the business. o the business units must have to adapt themselves to these changes in order to survive and succeed in business.

)t may also be defined as the set of external factors. These include customers. such as economic factors. . which are uncontrollable in nature and affects the business decisions of a firm.&. competitors. technical factors etc. business environment may be defined as the total surroundings. social factors. suppliers.) The term 'business environment# connotes external forces. government. political and legal factors. factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise.. and the social. Thus. legal and technological factors etc. political. demographic factors. others may operate indirectly. (hile some of these factors or forces may have direct influence over the business firm. which have a direct or indirect bearing on the functioning of business.


 The business is also sub$ect to political decrees made by governments. . -)nternational law. taxation.) POLITICAL AND LEGAL ENVIRONMENT The legal. the government policies and attitude towards the business community and the unionism. "ll these aspects have a bearing on the strategies adopted by the business firms.overnments can apply pressure not to deal with disapproved parties.political aspect is very important in global marketing. These measures may take the refusal to grant an export licence.+. The stability of the government also influences business and related .  /.) Political En i!on"#nt This includes the political system. withdrawal of export guarantee cover.can be defined as rules and principles that states and nations consider binding upon themselves. ownership controls.

lockouts and labour disputes etc. . a cold drink widely used even now. with the competitive business environment. trade unions are now showing great maturity and started contributing positively to the success of the business organisation and its operations through workers participation in management. also adversely affect the business operations. "gain the trade union activities also influence the operation of business enterprises. )t sends a signal of strength. confidence to various interest groups and investors. 4owever. ideology of the political party also influences the business organisation and its operations. had to wind up operations in )ndia in late seventies. Further.activities to a great extent. trikes. 3ost of the labour unions in )ndia are affiliated to various political parties. 0ou may be aware that 1oca21ola.

9555  8iii) The Factories "ct. 95&9  8v) <revention of Food "dulteration "ct. 95/*  8x) 1onsumer <rotection "ct.egulation) "ct. regulations. 95*5  8ix) >ureau of )ndian tandards "ct. 95/*  8>esides. 95%/  8iv) )ndustries 8:evelopment and . The important legislations that concern the business enterprises include7  8i) 1ompanies "ct. 95&*  8viii) 3onopolies and . 95&%  8vi) 6ssential 1ommodities "ct. 6very business organisation has to obey. 95&*  8ii) Foreign 6xchange 3anagement "ct. 2==2  8vii) The tandards of (eights and 3easures "ct. the following are also form part of the legal environment of business  .) L#$al En i!on"#nt This refers to set of laws. which influence the business organisations and their  operations. and work within the framework of  the law.estrictive Trade <ractices "ct.5. the above legislations.

wholesale. operate. ?btaining a business license and closing a business can be very difficult. electricity.  .elatively unstable prices explain most of the monetary freedom score. The overall freedom to start. and close a business is significantly restricted by the national regulatory environment. "ll businesses must contend with extensive federal and state regulation as well as an infamously slow bureaucracy.) Go #!n"#nt R#$%lation&' Ta(#&' an) *o!"al T!a)# Ba!!i#!& Starting a business in India  tarting a business in )ndia takes an average of 3& days. The government subsidi@es agricultural. .9=. and pharmaceuticals.commodities. and retail) on -essential. some petroleum products and certain types of coal. gas. compared to the world average of %/ days. and kerosene production and applies price controls at three levels 8factory.

>oth the top income tax rate and the top corporate tax rate are 33 percent 8a top rate of 3= percent plus a 9= percent surcharge).:< was 9=. and a negative import list that bans or restricts many goods.) NON – TARIFF BARRIERS  Aon2tariff barriers include excessive bureaucracy. import taxes. onerous standards and certifications on many goods. ?ther taxes include a dividend tax. and a tax on insurance contracts. )ndiaCs tax rates are moderate. export subsidies. an additional 2= percent is deducted from )ndiaCs trade freedom score to account for these extensive non2tariff barriers.  1onseBuently. a property tax. restrictive licensing reBuirements. overall tax revenue as a percentage of . .99. discriminatory sanitary and phytosanitary measures.2 percent. )n the most recent year.

92. . either domestically or abroad.) FOREIGN INVESTMENT  )ndia controls foreign investment with limits on eBuity and voting rights and mandatory government approvals. which are sub$ect to significant restrictions. even prohibit it.ules established in 2==& maintain restrictions on most existing $oint ventures but allow new ones to negotiate their own terms on a commercial basis. 1apital transactions and some credit operations are sub$ect to certain restrictions and reBuirements. 1entral bank approval is reBuired for residents to open foreign currency accounts. . in some sectors. Aon2 residents may hold conditional foreign exchange and domestic currency accounts. 4ighly complex rules and laws limit F:) and.

the largest in outh "sia. Foreign investors face restrictions on ownership of )ndian banks and insurance companies. state.borrowers. . the government owns nearly all of approximately *== rural and cooperative banks! many national. the five state2owned insurers dominate the market. )n addition. (hile the insurance sector has been partially liberali@ed. )ndiaCs 2+ state2owned banks control about += percent of banking loans and deposits.) )ndiaCs financial system. but foreign participation faces some restrictions. and local development banks! financial institutions! and even venture capital funds. >anks are reBuired to extend a specified percent of their loans to -priority. 1apital markets are widespread. is characteri@ed by heavy government involvement.93.

estrictive Trade <ractice "ct)  F6.T< 83onopolies and .) Mana$in$ Political Ri&+  "voidance D either the avoidance or withdrawal of investment in a particular country  "daptation D ad$ust to the political environment  :ependency D keeping the host nation dependent on the parent corporation  4edging D minimi@ing the losses associated with political risk events 9&.egulation "ct) .9%.) UNDERSTANDING THE LEGAL ENVIRONMENT O* BUSINESS (e may list these legislation which define the legal environment of business in )ndia 7  1ompany laws  Eaws relating to capital market  3." 8Foreign 6xchange .

 ):. .egulation "ct) 9*. which directly reflects on what is happening within the government." 8)ndustrial :evelopment and . )t mainly forms the external factors which are part of the macro2 environment and whose control is beyond the ability of human beings. These factors touch on the way politics are conducted in a country.#ct In B%&in#&&? <olitical environment can affect a business either positively or negatively depending on the prevailing situation in a country. This means that a democratic country will accord freedom to its people to vote in a government that has their interests at heart thus business will thrive owing to the good policies implemented.) Ho.. Can T-# Political En i!on"#nt A.

) The >usiness deals totally depend only on <olitical 6nvironment let me tell you how 9) The politici@ation only are the personals who decides with which country the trade will take place and under which conditions. 2) The rules F regulation for trade are passed by politici@ation 3) )f the political relation are not good with neighboring country or any country with whom you want to do trade you will not be allowed to do by means of rules F regulations which have been made be the politici@ation .9+.

BIBLIOGRAPH/ • In)ian B%&in#&& En i!on"#nt0S#con) E)ition) 12 R. S!ini a&an • B%&in#&& Polic2 an) St!at#$ic Mana$#"#nt 12 G%3ta Golla+ota' Vi3in G%3ta an) R. S!ini a&an • St!at#$ic Mana$#"#nt 12 R. S!ini a&an • Goo$l# • /a-oo .

in S-#tt2  An%!%3 Rao  A"it B-%3tani  R%c-it 6ain  Ni-al H#11a!  S-a! al B-o%n&%l# .PREPARED B/45  A&-.


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