Business environment BBA(CAM) 201

This PPT has covers the concept of Business environment BBA(CAM) 201.

1. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Semester : THIRDSEMESTER(CAM) Name of the Subject: BUSINESS ENVIRONMENT Unit-1-4

2. What is business environment? Business environment includes the ‘climate’ or set of conditions: economic, social, political or institutional which have a direct or indirect bearing on the functioning of business It signifies external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise.

3. Features of business environment Business environment is the sum total of all factors internal & external to the business firm that greatly influence their functioning It covers factors and forces like customers, competitors, suppliers, government , and the social, cultural, political, technological and legal conditions . The changes in business environment are unpredictable. Business Environment differs from place to place, region to region and country to country. Ex: Political conditions in India differ from those in Pakistan. Taste and values cherished by people in India and China vary considerably.

4. NATURE AGGREGATIVE INTER RELATED RELATIVE INTER-TEMPORAL UNCERTAIN

5. Importance of business environment Business environment is complicated and active in nature and has a far-reaching impact on the survival and growth of the business. FIRST MOVER ADVANTAGE Giving Direction for Growth Continuous Learning Image Building Meeting Competition Identifying Firm’s Strength and Weakness: Business environment helps to identify

6. Types of environment Internal environment External environment Micro environment Macro environment

7. Internal environment Important internal factors which have a bearing on the decisions of a business firm and which are generally controllable because the company has control over these factors : Value system Vision, mission and objectives Management structure and nature Internal power relationship Human resources Company image The internal environment is the environment that has a direct impact on the business.

8. Value system The value system of the founders and those at the top has important bearing on the choice of business, the mission and objectives of the organization, business policies and practices and is an important factor contributing to success.

9. Vision , Mission & Objective Ranbaxy’s mission: “ to become a research based international pharmaceutical company ”- has driven it to enter the foreign markets and development. Thus the business domain of the company, priorities, direction of development, business philosophy, business policy etc, are guided by the vision, mission and objectives of the company.

10. Management structure & nature Organizational structure, composition of board of directors, extent of professionalisation of management sometime delay decision making while some others facilitate quick decision making. Board of directors is the highest decision making body and it overseas performance of the organization and so its quality is very important. The share holding pattern can also have important managerial implications.

11. Internal Power Relationship The amount of support the top management enjoys from different levels of employees, shareholders and board of directors have important influence on the decisions and their implementation. For example: relationship between the members of the board of director and between CEO.

12. Human resources The characteristics of human resources like skill, quality, morale, commitment, attitude etc. could contribute to the strength and weakness of an organization Ex: Some organizations find it difficult to carry out restructuring or modernization because of resistance by employees whereas they are smoothly done in some others.

13. Company Image While raising finance, forming joint ventures or other alliances, soliciting marketing intermediaries, entering purchase or sale contracts, launching new products etc. the image of the company matters the most.

14. External environment Micro environment consists of the actors in the company’s immediate environment that affect the performance of the company. They are more intimately linked with the company. Macro environment consists of larger societal forces that affect all the actors in the company’s micro environment.

15. Micro environment Suppliers Customers Competitors Marketing intermedia ries Financiers Public

16. Suppliers: An important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company. The importance of reliable source/sources of supply to the smooth functioning of the business is obvious.

17. Customers : The major task of a business is to create and sustain customers. A business exists only because of its customers. The choice of customer segments should be made by considering a number of factors including the relative profitability, dependability, stability of demand, growth prospects and the extent of competition. The business firm should not be dependent on a single customer

18. Competitors : Competition not only include the other firms that produce same product but also those firms which compete for the income of the consumers the competition here among these products may be said as desire competition as the primary task here is to fulfill the desire of the customers.

19. Marketing Intermediaries The marketing intermediaries include middlemen such as agents and merchants that help the company find customers or close sales with them. The marketing intermediaries are vital links between the company and the final consumers .

20. Financiers: The financiers are also important factors of internal environment. Along with financing capabilities of the company their policies and strategies, attitudes towards risk , ability to provide non-financial assistance etc. are very important.

21. Public : A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its interests. Ex-media, citizens, local public etc. NGOs have been protesting against child labour, cruelty against animals, environmental problems, deindustrialization resulting from imports etc .

22. Input suppliers Workers & their unions Public Competitors Marketing intermediaries Customers BUSINESS Micro environment

23. Macro environment Economic environment Political environment Technological environment Social environment Global environment

24. Economic environment Economic environment refers to the aggregate of the nature of economic system of the country, business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, anticipating prospective market situations and makes suitable to get the maximum with minimize cost.

25. Economic environment Economic conditions like GDP, per capita income, markets for goods and services, growth of foreign trade etc. Economic policies like Fiscal and monetary EXIM Industrial policy Economic system like capitalist, socialist and mixed

26. Non economic environment Social environment includes social factors like customs, traditions, values and beliefs, poverty, literacy rate , life expectancy rate etc. Political environment includes the political system, the government policies and attitude towards the business community and unionism.ex : coke

27. Legal environment refers to set of laws, regulations which influence the business organizations and their operations.Every business organization has to obey and work within the framework of the law. The important legislations which concern business are: Companies Act 1956 FEMA 1999 THJe factories act 1948 Industrail dispute 1972 MRTP 1969 THE Consumer Protection Act 1986

28. Technologyical environment include the methods , techniques and approaches for production of goods and services and its distribution. Ex: USA Electrical appliances 110 volts but in India 220 volts. 2g , 3g ,4g It offers both oportunity and threats.

29. Political environment It includes factors such as characteristics and policies of the political parties, nature of Constitution and government system relating to business policies and regulations. Important economic policies such as industrial policy, policy towards foreign capital and technology, fiscal policy and foreign trade policy are often political decisions.

30. Technological environment The business in a country is greatly influenced by the technological development. The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used. Technological environment influences the business in terms of investment in technology,consistent application of technology and the effects of technology on markets.

31. Social Environment The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as costs structure, customs and conventions, mobility of labour etc. have farreaching impact on the business. These factors determine the work culture and mobility of labour, work groups etc.

32. Global environment The global environment refers to those factors which are relevant to business such as: WTO principles and agreements International conventions Treaties, agreements, declarations, protocols, economic Sentiments in other countries, hike in crude oil prices etc.

33. MEANING OF ENVIRONMENTAL ANALYSIS Environmental analysis is the process through which an organisation monitors and comprehends various environmental forces so as to determine the oppourtunities and threats that lie ahead. This process is also known as ENVIRONMENTAL SCANNING OR ENVIRONMENTAL ANALYSIS. It has two broad aspects: environmental diagnosis or identifying opportunities and threats. Environmental search or monitoring the environment. Environmental search leads to the identification of various forces that may influence the enterprise. Environmental diagnosis judges these forces for their positive and negative impact.

34. PROCESS OF ENVIRONMENTAL ANALYSIS ENVIRONMENTAL SCANNING SCANNING MEANS THE PROCESS of analysing the environment for identifying the factors which may influence the business. Its main purpose is to identify the emerging trends or early warning signals. There are so many environmental factors that influence the business but all these factors may not be relevant for the enterprise. Therefore, critical and high priority factors must be identified. Example of factors are: Managerial philosphy Age,size,power Graphical dimmensions Type of the business organisation

35. ENVIRONMENTAL MONITORING Monitoring is a follow up and deeper analysis of relevant environmental forces identified through scanning. Once the relevant factors are identified, adequate data about these factors are gathered so as to ascertain emerging pattern and trends. Several techniques used to collect the relevant factors about environmental factors are: Company records Publications Verbal talks with the employees, customers, dealers, suppliers and competitiors.

36. Environmental forecasting Forecasting is the process of estimating the relevant future events based on present and past behaviour. It is necessary to anticipate future events before any strategic plans are formulated. Therefore, forecasting is done for all the elements of external environment including political, social, economic and technological etc. Techniques used for forcasting are: Depli method Time Series analysis Econometric analysis

37. DIAGNOSIS(ASSESSMENT ) Environmental factors are assessed in terms of their impact on the organization. Some factors in the environment may entail an opportunity while others may pose a threat to the organization. The degree of impact may vary from one factor to another. Techniques used for environmental analysis: SWOT ANALYSIS ETOP ANALYSIS

38. IMPORTANCE OF ENVIRONMENTAL ANALYSIS Environmental analysis makes manager aware of the linkage between an organisation and its environment and keeps them alert and informed. It helps the company to identify the threats and opportunities before it. Through environmental analysis an organization can gain understanding of how the industrys environment is being transformed. With the help pf environmental analysis the organisation can know the causes of disequilibrium. It is essential for the formulation of right strategies and for modification of existing strategies as and when necessary.

39. LIMITATIONS OF ENVIRONMENTAL ANALYSIS BASED ON ASSUMPTIONS NOT ABSOLUTE TRUTH TIME CONSUMING AND EXPENSIVE

40. TECHNIQUES OF ENVIRONMENTAL ANALYSIS SWOT ANALYSIS ETOP

41. APPROACHES TO ENVIRONMENTAL ANALYSIS SYSTEMATIC APPROACH: Information is collected systematically and regularly. ADHOC APPROACH: Under this special survey and studies understand trends in environment from time to time. PROCESSED FORM APPROACH: The organization uses information in a processed form available from various sources inside and outside the organization.

42. ENVIRONMENTAL ANALYSIS AND STRATEGIC MANAGEMENT Strategic management involves formulation, implementation, review and control of strategies for achieving company’s objectives and mission. Strategies cannot be formulated without the thorough knowledge of the company’s internal and external environment. Therefore, environmental analysis plays an important role in the process of strategic management and consists of following five steps:

43. ENVIRONMENTAL ANALYSIS AND STRATEGIC MANAGEMENT Strategic management involves formulation, implementation, review and control of strategies for achieving company’s objectives and mission. Strategies cannot be formulated without the thorough knowledge of the company’s internal and external environment. Therefore, environmental analysis plays an important role in the process of strategic management and consists of following five steps:

44. Strategies For Managing Diversity Training and education programs Organizational policies Outreach programs Career development programs

45. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Semester : Third Semester(CAM) Name of the Subject: BUSINESS ENVIRONMENT Unit-2(ECONOMIC ENVIRONMENT)

46. Foreign Exchange Foreign exchange is the system or process of converting one national currency into another, and of transferring money from one country to another

47. FOREIGN CURRENCY Foreign currency means any currency other than Indian currency. FOREIGN SECURITY Foreign security means any security, in the form of shares, stocks, bonds, debentures or any other instrumental denominated or expressed in foreign currency and includes securities expressed in foreign currency but where redemption or any form of return such as interest or dividends is payable in Indian currency.

48. OBJECTIVE’S prevent the outflow of Indian currency To regulate dealings in foreign exchange and securities To regulate the transaction indirectly affecting foreign exchange To regulate import and export of currency and bullion

49. To regulate employment of foreign nationals To regulate foreign companies To regulate acquisition, holding etc of immovable property in India by non-residents To regulate certain payments . To regulate dealings in foreign exchange and securities. To regulate the transactions indirectly affecting foreign exchange. .

50. PROVISIONS Regulation of dealing in foreign exchange. Restrictions on payments. Restrictions regarding assets held by non residents and import & export of certain currency & bullion . Duty on persons entitled to receive foreign exchange and payment for exported goods.

51. FERA TO FEMA The main objective of FERA framed against the background of severe foreign exchange problem and controlled economic regime , was conservation and proper utilisation of the foreign exchange resources of the country. FERA created flourishing black market in foreign exchange. It brought into the economic lexicon the word “HAWALA”. There was a demand for a substantial modification of FERA in the light of ongoing Economic liberalization and improving foreign exchange reserves position. Accordingly, a new act ,FEMA( Foreign Exchange Management Act ) 1999 replaced the FERA.

52. Need for FEMA The demand for new legislation was basically on two main counts 1. The FERA was introduced in 1974 when India’s foreign exchange reserves position was not satisfactory. It required stringent controls to conserve foreign exchange and to utilize in the best interest of the country. Very strict restrictions have outlived their utility in the current changed scenario. 2. there was a need to remove the draconian provisions of FERA and have a forward-looking legislation covering foreign exchange matters .

53. Milder FEMA replaces FERA The older version had very strict laws (for example, a person was assumed guilty unless proven otherwise.) All the unnecessary restrictions were removed. The rules regarding foreign investments were simplified to encourage more foreign investment in India and consequently ensure better foreign cash flow. However, FERA was not in accordance with the pro-liberalization policies of the Indian Government. Finally, in 1999 the FEMA was passed which replaced the FERA, though certain provisions of FERA 1973 still exist under FEMA 1999. FEMA came into effect from 1st June, 2000. Some structural changes were made. The FEMA combines and improves the laws relating to foreign exchange It makes the procedure for foreign investment easy and consequently encourages foreign exchange in India.

54. Similarities between FERA and FEMA The RBI and central government would continue to be the regulatory bodies. Presumption of extra territorial jurisdiction as envisaged in section (1) of FERA has been retained. The Directorate of Enforcement continues to be the agency for enforcement of the provisions of the law such as conducting search and seizure.

55. MEANING OF FISCAL POLICY Fiscal policy refers to the entire budgetary policy of the government. The fiscal Policy is concerned with the raising of government revenue and incurring of government expenditure. To generate revenue and to incur expenditure, the government frames a policy called budgetary policy or fiscal policy. So, the fiscal policy is concerned with government expenditure and government revenue. According to smith,” fiscal policy refers to a policy under which the government uses its expenditure and revenue programme during a year to produce favorable distribution effect and avoiding undesirable effect on national income, production and employment.”

56. OBJECTIVES To mobilize resources for economic growth for the public sector. To promote efficient allocation of financial resources. To ensure equitable distribution of income and wealth so that the fruits of the economic development are fairly distributed among the public. To restrain inflationary pressure in the economy in order to ensure economic stability and to prevent business cycles. To promote export and encourage import substitution. To reduce income inequalities among different sections of the society. To achieve balanced regional development. To increase employment in the country through effective fiscal measure. To ensure optimum utilization of the country’s economic resources.

57. MEANING OF MONETARY POLICY Monetary policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth In India, the central monetary authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the economy.. It is announced twice a year. Slack season policy-April- September Busy Season Policy-October- March

58. TYPES Monetary policy is referred to as either being an  expansionary policy , or a   contractionary policy Expansionary policy increases the total supply of money in the economy rapidly.Expansionary policy is used to combat unemployment in a recession by lowering interest rates Contractionary policy decreases the total money supply, or increases it slowly.   Contractionary policy involves raising interest rates to combat inflation.

59. OBJECTIVES Price Stability Controlled Expansion Of Bank Credit Restriction of Inventories Promotion of Exports and Food Procurement Operations Desired Distribution of Credit Equitable Distribution of Credit

60. TYPES

61. Quantitative Instruments Quantitative Instruments ARE THOSE INSTRUMENTS which affect overall money supply in the economy – do not direct or restrict the flow of credit to some specific sectors of the economy. Bank Rate Open Market Operations Cash Reserve Ratio (CRR) Margin requirements Statutory Liquidity Ratio (SLR) Repo rate and reverse repo rate

62. BANK RATE Bank rate is the minimum rate at which the central bank provides loans to the commercial banks. It is also called the discount rate. Dear money policy: Increase in bank rate means increase in the rate of interest charged by the central bank on the loans and advances to the commercial banks which in turn compels commercial bank to raise the rate of interest charged by them to their customers i .e CONTRACTION OF CREDIT Bank rate inc interest rate inc borrowing will be less profitable results contraction of credit. Near money policy: : Decrease in bank rate means decrease in the rate of interest charged by the central bank on the loans and advances to the commercial banks which in turn compels commercial bank to decrease the rate of interest charged by them to their customers which results in Expansion OF CREDIT Bank rate dec interest rate low borrowing will be more profitable results expansion of credit.

63. Open market operations It refers to the purchase or sale by the central bank of any securities in which it deals, such as the government securities, banker’s acceptances or foreign exchange. When central bank offers securities for sale, it intends to contract money supply and credit. When the central bank pursuing the expansionary monetary policy will buy securities in the market, so that supply and credit capacity will be increased.

64. Statutory liquid ratio: Bank has to keep portion of total deposits with itself in liquid assets with the RBI in the form of liquid assets like cash , gold . HIGH SLR – less credit availability –will reduce the money supply. Low SLR– more credit availability will increase the money supply.

65. CASH RESERVE RATIO It refers to the minimum percentage of a bank’s total deposits required to be kept with the Central Bank in the form of cash reserves. HIGH CRR – less credit availability –will reduce the money supply. Low CRR – more credit availability will increase the money supply.

66. Repo rate Repo rate is the rate at which RBI lends to commercial banks generally against government securities. Reduction in Repo rate helps the commercial banks to get money at a cheaper rate and increase in Repo rate discourages the commercial banks to get money as the rate increases and becomes expensive

67. Reverse Repo rate Reverse Repo rate is the rate at which RBI borrows money from the commercial banks. The increase in the Repo rate will increase the cost of borrowing and lending of the banks which will discourage the public to borrow money and will encourage them to deposit. As the rates are high the availability of credit and demand decreases resulting to decrease in inflation.

68. QualitativeInstruments - which focus on the alternative uses of credit in the economy –direct or restrict the flow of credit to some specific sectors of the economy. The qualitative measures do not regulate the total amount of credit created by the commercial banks. These measures make distinction between good credit and bad credit and regulate only such credit, which creates economic instability. Therefore, qualitative measures are known as the selective measures of credit control. Qualitative credit control measures include: ( i ) Prescription of margin requirements (ii) Consumer credit regulation (iii) Moral suasion (iv) Direct action

69. Prescription of margins requirements: Generally, commercial banks give loan against ‘stocks or ‘securities’. While giving loans against stocks or securities they keep margin. Margin is the difference between the market value of a security and its maximum loan value. Let us assume, a commercial bank grants a loan of Rs. 8000 against a security worth Rs. 10,000. Here, margin is Rs. 2000 or 20%. If central bank feels that prices of some goods are rising due to the speculative activities of businessmen and traders of such goods, it wants to discourage the flow of credit to such speculative activities. Therefore, it increases the margin requirement in case of borrowing for speculative business and thereby discourages borrowing. This leads to reduction is money supply for undertaking speculative activities and thus inflationary situation is arrested.

70. On other contrary, central bank can encourage borrowing from the commercial banks by reducing the margin requirement. When there is a grater flow of credit to different business activities, investment is increased. Income of the people rises. Demand for goods expands and deflationary situation is controlled. Thus, margin requirement is a significant tool in the hands of central bank to counter-act inflation and deflation.

71. Consumer credit regulation: Now-a-days, most of the consumer durables like T.V., Refrigerator, Motorcar, etc. are available on installment basis financed through bank credit. Such credit made available by commercial banks for the purchase of consumer durables is known as consumer credit. If there is excess demand for certain consumer durables leading to their high prices, central bank can reduce consumer credit by (a) increasing down payment, and (b) reducing the number of installments of repayment of such credit. On the other hand, if there is deficient demand for certain specific commodities causing deflationary situation, central bank can increase consumer credit by (a) reducing down payment and (b) increasing the number of installments of repayment of such credit.

72. MORAL SUASION Moral suasion means persuasion and request. To arrest inflationary situation central bank pursuades and request the commercial banks to refrain from giving loans for speculative and non-essential purposes. On the other hand, to counteract deflation central bank pursuades the commercial banks to extend credit for different purposes.

73. DIRECT ACTION This method is adopted when a commercial bank does not co-operate the central bank in achieving its desirable objectives. Direct action may take any of the following forms: Central banks may charge a penal rate of interest over and above the bank rate upon the defaulting banks;

74. Economic policy-makers are said to have two kinds of tools to influence a country's economy:  fiscal  and monetary . Fiscal policy  relates to government spending and revenue collection. For example, when demand is low in the economy, the government can step in and increase its spending to stimulate demand. Or it can lower taxes to increase disposable income for people as well as corporations. Monetary policy  relates to the supply of money, which is controlled by factors such as interest rates and reserve requirements (CRR) for banks. For example, to control high inflation, central bank can raise interest rates thereby reducing money supply.

75. Economic policies of a country are directed towards four objectives- price stability, economic growth, full employment and equilibrium in the balance of payments. Monetary policy and fiscal policy also aim at these goals. Fiscal policy operates as a tool of economic stabilization through income and expenditure of the government. On the other hand, monetary policy through changes in the supply of money which influence the level of aggregate demand. Fiscal policy and monetary policy are closely interrelated and should be pursued in coordination with each other .fiscal policy brings about changes in money supply through budgetary deficit.an excessive fiscal deficit requires control of inflation through monetary policy.on the other hand, a fiscal policy of very low deficit enables a liberal monetary policy.  

76. DIFFERENCE BETWEEN FISCAL POLICY AND MONETARY POLICY

77. BASIS Fiscal Policy Monetary Policy Definition: Fiscal policy is the use of government expenditure and revenue collection to influence the economy. Monetary policy is the process by which the monetary authority of a country controls the supply of money,. Principle: Manipulating the level of aggregate demand in the economy to achieve economic objectives of price stability, full employment, and economic growth. Manipulating the supply of money to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Policy-maker: Government Central Bank (RBI) Policy Tools: Taxes, government expenditure, public debt, deficit financing Quantitative instruments:Interest rates; CRR,SLR,open market operations,repo rate Qualitative : marginal requirements,moral suasion, consumer credir regulationn

78. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Semester : THIRD Semester(CAM) Name of the Subject: Business Environment Unit-3 Socio-Culture & Political Environment

79. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Culture Culture is the coherent, learned, shared view of a group of people about life’s concerns that ranks what is important, furnishes attitudes about what things are appropriate, and dictates behavior. Culture is therefore: A shared system of meanings. Relative. Learned. About Groups.

80. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Impact Of Culture On Business Relations Impact on Relationships with Overseas Clients. Impact on Relationships with Customers. Impact on Relationships with Employees. Impact on Relationships with Partners.

81. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Cultural Globalization Cultural globalization refers to the transmission of ideas, meanings, and values around the world. This process is marked by the common consumption of cultures that have been diffused by the Internet, popular culture media, and international travel. The circulation of cultures enables individuals to partake in extended social relations that cross national and regional borders. It involves the formation of shared norms and knowledge with which people associate their individual and collective cultural identities. It brings increasing interconnectedness among different populations and cultures .

82. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Social Responsibility Of Businesses Social responsibility of business refers to the obligation of business enterprises to adopt policies and plans of actions that are desirable in terms of the expectation, values and interest of the society. It ensures that the interests of different groups of the public are not adversely affected by the decisions and policies of the business.

83. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Social Responsibilities Toward Different Groups Responsibility towards the shareholders or owners. Responsibility towards the Employees. Responsibility towards the Consumers. Responsibility towards the Government. Responsibility towards the Community.

84. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Social Audit A social audit is a formal review of a company's endeavors in social responsibility. A social audit looks at factors such as a company's record of charitable giving, volunteer activity, energy use, transparency, work environment, and worker pay and benefits, to evaluate what kind of social and environmental impact a company is having in the locations where it operates.

85. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Business Ethics The word ‘Ethics’ originated from the Greek word ‘ethos’ meaning: Character, Conduct, and activities of the people based on moral principles. It is concerned with what is right and what is wrong in human behavior on the basis of standard behavior or conduct accepted by the society. Honesty, truthfulness, compassion, sympathy, feeling of brotherhood etc. are considered ethical. Ethics from business point of view or business ethics are the moral principles, which guide the behavior of businessmen or business activities in relation to the society. It provides certain code of conduct to carry on the business in a morally justified manner.

86. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Corporate Governance Corporate governance  is the mechanisms, processes and relations by which corporations are controlled and directed. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and includes the rules and procedures for making decisions in corporate affairs. Governance mechanisms include monitoring the actions, policies, practices, and decisions of corporations, their agents, and affected stakeholders.

87. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Political Environment This includes the political system, the government policies and attitude towards the business community and the unionism. All these aspects have a bearing on the strategies adopted by the business firms. Political factors which have impact on business. The stability of the government also influences business and related activities to a great extent. It sends a signal of strength, confidence to various interest groups and investors. Ideology of the political party also influences the business organisation and its operations. The trade union activities also influence the operation of business enterprises amd most of the labour unions in India are affiliated to various political parties. Strikes, lockouts and labour disputes etc. also adversely affect the business operations.

88. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Legal Environment This refers to set of laws, regulations, which influence the business organisations and their operations. Every business organisation has to obey, and work within the framework of the law. Legal factors in a business environment include: government regulations, contracts and agreements with business partners and employee labor laws. 

89. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) The important legislations that concern the business enterprises include: ( i ) Companies Act, 1956 (ii) Foreign Exchange Management Act, 1999 (iii) The Factories Act, 1948 (iv) Industrial Disputes Act, 1972 (v) Payment of Gratuity Act, 1972 (vi) Industries (Development and Regulation) Act, 1951 (vii) Prevention of Food Adulteration Act, 1954 (viii) Essential Commodities Act, 2002 (ix) The Standards of Weights and Measures Act, 1956 (x) Monopolies and Restrictive Trade Practices Act, 1969 (xi) Trade Marks Act, 1999 (xii) Bureau of Indian Standards Act, 1986 (xiii) Consumer Protection Act, 1986 (xiv) Environment Protection Act (xv) Competition Act, 2002

90. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Besides, the above legislations, the following are also form part of the legal environment of Business: Provisions of the Constitution: The provisions of the Articles of the Indian Constitution, particularly directive principles, rights and duties of citizens, legislative powers of the central and state government also influence the operation of business enterprises. Judicial Decisions: The judiciary has to ensure that the legislature and the government function in the interest of the public and act within the boundaries of the constitution. The various judgments given by the court in different matters relating to trade and industry also influence the business activities.

91. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Rational & Extent of State Intervention Minimal Functions:- Providing pure public goods. Defense. Law and order. Property rights. Public health. Protecting the poor. Disaster relief.

92. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Rational & Extent of State Intervention (Contd.) 2. Intermediate Functions:- Addressing externalities. Basic education. Environmental protection. Consumer protection. Insurance (health, life, pensions) Unemployment. 3. Activist Functions:- Coordinating private activities. Cluster initiatives. Assets redistribution.

93. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) THANK YOU

94. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Semester : Third Semester(cam) Name of the Subject : Business Environment Unit-4 Natural & Technological Environment

95. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Natural Environment The natural environment includes geographical and ecological factors that influence the business operations. These factors include the availability of:- natural resources, weather and climatic condition, location aspect, topographical factors, etc.

96. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Impact of Natural Environment Business is greatly influenced by the nature of natural environment. For example, sugar factories are set up only at those places where sugarcane can be grown. It is always considered better to establish manufacturing unit near the sources of input. Government’s policies to maintain ecological balance, conservation of natural resources etc. put additional responsibility on the business sector.

97. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Technological Environment Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. The varying technological environments of different countries affect the designing of products. In the modern competitive age, the pace of technological changes is very fast. Hence, in order to survive and grow in the market, a business has to adopt the technological changes from time to time.

98. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Innovation Innovation can be defined simply as a "new idea, device or method". However, innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs.

99. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Innovation Innovation takes place through the provision of more effective products, processes, services, technologies, or business models that are made available to markets, government and society.  

100. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Technology Leadership Three components: Assessment Forecasting Management Transfer A technological leader fosters technological innovation, and understands the technology life cycle. Such a leader initiates and steers commercialization of technological advances, links business and technology strategies, manages technology R&D and understands technological revolutions.

101. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Technology Management Components Technology Management Developing and using appropriate technologies To lead the technology, employ it in the best way, and to profit from technology use. Technology Transfer Helping others learn the benefits and uses of appropriate technologies Making technologies available to others

102. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Status of Technological Environment or Technology in India After Independence, India had basic problems like poverty , unemployment and development of India . Indian Govt. has taken many following steps for technological development :- . .

103. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Establishment of technological and research institute Indian govt. has established 500 technological institutes for providing education to Indian students. It has also established 1080 research institutes. In these institutes major names like space research centre, medical research centre and agricultural research centre have developed India technically.  2. Positive Technical policy   India has strong and positive technical policy for technological development. This policy opens door to import technology from foreign countries for increasing agricultural and industrial developments. 

104. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)   3. High Growth Rate of Information Technology in India   In India, IT sector is developing with 35% growth rate, India is second country after China who is using internet at large scale for e-commerce , e-education and e-accounting. 4. Incentive for promoting Technology in India   Indian Govt. has given 100% income tax exemption for expenses incurred in research of technology in India. State financial corporation is uplifting domestic technology by supporting finance to domestic Industries.

105. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Demographic Environment The importance of demographic factors to business is clear from the facts that “Management is men” & “Market is people.” Management in Men, Material, Machinery and Money. Market is people in the sense that the demand depends on the people and their characteristics – the number, income levels, tastes and preferences, beliefs, attitudes and sentiments.

106. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) Demographic Environment(Contd.) Demographic factors such as size of population, growth rate, age composition, ethnic, density of population, rural – urban distribution, nature of family have very significant implication for business Important demographic bases of market segmentation include the following: 1.Age structure 2.Gender  3.Income distribution

107. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) 4.Family size 5.Occupation 6.Education 7.Social class 8.Religion 9.Race 10.Nationality

108. Chanderprabhu Jain College of Higher Studies & School of Law Plot No. OCF, Sector A-8, Narela, New Delhi – 110040 (Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India) THANK YOU