Business Environment

Business environment means the external forces influencing the business decisions. They can be forces of economic, social, political and technological factors.

Division of business environment

International environment
It is the environment of different countries,it is based on the present relations between the two or more countries.If the relation of country is good with the other countries,it gives positive effect to international environment and vice versa.

International business environment

The business,trade,import/export between different countries makes the international environment.The main source of international relations through business is the international investments.

Types of international investments

Foreign direct investment. Portfolio investment.

Any form of investment that earns interest in

FDI

enterprises which function outside of the domestic territory of the investor. Investor retains control over investment. It does not include investments in stock material

BENEFITS OF FDI
Good international relations. Technological development. Employment generation. Economic development. Transfer of technology. Boost manufacturing sector.

DISADVANTAGES
Entails high travel and communications expenses. A company may lose out on its ownership to an

overseas company. Less control of government over the functions. Inflationis increased. Local market is affected badly.

CASE STUDY ON FDI IN INDIA

India is always been known as a peace loving country.India has very cordial and friendly relations with other countries which has shown a positive effect on its business.Due to these reasons it has attracted a number of countries to invest in india.Countries like Mauritius,singapore,U.S.A,china,france,japan ,Germany has invested a huge capital in india as these foreign direct investment inflows is increasing day by day.

country

(in crores)2009 /2010 49,633

(in crores)2010 /2011 51855

%age total

1)

Mauritius

42%

2)

U.K

3094

3434

5%

3)

Japan

5670

7063

7%

4)

France

1437

3349

2%

5)

U.S.A

9230

5353

7%

SECTORS ATTRACTING HIGHEST FDI:

2010-2011(crores) Service Sector Computer Software/Hardware Telecommunication Housing Real Estate Automobiles Power 15,539 3571 7549 5146 5077 6008 %age total 21% 8% 8% 7% 5% 7%

GROWTH OF FDI INFLOW

Financial year Total FDI/inflow %age growth over previous year 2005-06 8961

2006-07

22826

146%

2007-08

34835

53%

2008-09

37,763

9%

2010-2011

38,268

3%

Mauritius Telecom. British Petroleum. Lenovo. Haier Appliances. Kawasaki Microelectronic. International environment by the source of FDI is bringing lot of changes in indian business: 1)bringing huge amount of domestic investment. 2)economic growth. 3)trade. 4)linkage and spillover to domestic firms.

5)Technological diffusion and knowledge transfer.

DISADVANTAGES OF FDI
1)Raises exchange rates,makes export unattractive,demand for money. 2)Technology brought may b too capital intensive,pollution intensive. 3)Creates more competition. 4)Foreign firm have more advertising power,ability to dominate market.

CONCLUSION
Due to indias good relations with other countries: 1)Existence of new technologies,more capital,more jobs. 2)Mauritius is biggest FDI investor in india,it has contributed 42% of total FDI. So india should maintain these relations in futureto attract more and more international investments which will make india to be in list of developed countries.

ANY