Business Environment

Business Environment is sum total of those factors which influence the business enterprise. These factors are outside the control of a business enterprise. Features of business environment are that it is totality of external factors, consists of general and specific forces, has dynamic nature, is uncertain, etc. A good knowledge of business environment helps in first mover advantage, tapping useful resources, coping with rapid changes, improvising performance, etc. The dimensions of business environment are social, political, economical, legal and technological. Components of economic environment are GNP growth rate & per capita income, rates of savings and investment, money supply in the economy, public debt, balance of payments & foreign exchange reserves etc. Elements of social environment are presence of women in the workforce, birth and death rates, population shifts, educational system and Literacy rates, etc. Major elements of technological environment are scientific improvements, inventions of new products and services, innovations of existing products and services, etc. Major elements of political environment constitution of the country, prevailing political system, level of political morality, etc. Legal Environment consists of framework of laws and regulations in the country passed by the Government, court, etc, to govern the enterprises. Silent features of New Industrial Policy 1991 are reduction in the number of industries under compulsory licensing from 18 to 6, disinvestment of many PSUs, dereservation of public sector restricting to 4 industries of strategic importance, etc. Measures undertaken in NEP 1991 are Liberalisation that liberated Indian industries from the hassles of ‘Licensing System’, Privatisation that reduced the role of Public Sector and Globalisation that encouraged foreign private participation in India’s industrial development.

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