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Business Environment The success of every business depends on adapting itself to the environment within 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. Similarly, a change in the technology may render the existing products obsolete, as we have seen that the colour television has made the black and white television out of fashion. Again a change in the fashion or customers taste may shift the demand in the market for a particular product. All these aspects are external factors that are beyond the control of the business. So the business units must have to adapt themselves to these changes in order to survive and succeed in business. Hence, it is very necessary to have a clear understanding of the concept of business environment and the nature of its various components. Concept of Business Environment The term business environment connotes external forces or factors that are beyond the control of the business and they affect the functioning of a business enterprise. These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. While some of these factors or forces may have direct influence over the business firm, others may operate indirectly. Thus, business environment may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business decisions of a firm. Features of Business Environment Totality of external forces Specific and general forces Dynamic nature Uncertainty Relativity (e.g. demand for sarees may be fairly high in India whereas it may be almost non-existent in France.) Elements of Environment: internal & external Internal Environment Objectives of Business Different departments of the organisation Management & Employees Labour Management Relationship Corporate Image Physical Resources Financial Resources Vision of Top Management R & D Capabilities So Internal Environment includes 5 Ms Men Material Money Machinery Management External environment Micro/Operating Environment

Suppliers Customers Market Intermediaries Competitors Public Macro/General Environment 1). Economic Environment survival and success of each and every business enterprise depend fully on its economic environment. The main factors that affect the economic environment are: (a) Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organisations and their operations. These include gross domestic product, per capita income, markets for goods and services, availability of capital, foreign exchange reserve, growth of foreign trade, strength of capital market etc. All these help in improving the pace of economic growth. (b) Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the important economic policies are i) Industrial policy: The Industrial policy of the government covers all those principles, policies, rules, regulations and procedures, which direct and control the industrial enterprises of the country and shape the pattern of industrial development. (ii) Fiscal policy: It includes government policy in respect of public expenditure, taxation and public debt. (iii) Monetary policy: It includes all those activities and interventions that aim at smooth supply of credit to the business and a boost to trade and industry. 2) Social Environment The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy, life expectancy rate etc. The social structure and the values that a society cherishes have a considerable influence on the functioning of business firms. For example, during festive seasons there is an increase in the demand for new clothes, sweets, fruits, flower, etc. Due to increase in literacy rate the consumers are becoming more conscious of the quality of the products. Due to change in family composition, more nuclear families with single child concepts have come up. This increases the demand for the different types of household goods. 3) 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. 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. 4) 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. The important legislations that concern the business enterprises include: 1. Companies Act, 1956

2. Foreign Exchange Management Act, 1999 3. The Factories Act, 1948 4. Industrial Disputes Act, 1972 5. Payment of Gratuity Act, 1972 6. Consumer Protection Act, 1986 7. Environment Protection Act 8. Competition Act, 2002 5) 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. Now a days infact, no firm can afford to persist with the outdated technologies. 6) Demographic Environment This refers to the size, density, distribution and growth rate of population. All these factors have a direct bearing on the demand for various goods and services. For example a country where population rate is high and children constitute a large section of population, then there is more demand for baby products. Similarly the demand of the people of cities and towns are different than the people of rural areas. 7) 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. 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.

Characteristics of Indian economy Developing economy in terms of growth rate but underdeveloped in terms of per capita income. Mixed economy. Predominance of agriculture. Presence of unorganized sector. Capital scarce economy. Overpopulated Problems of Indian economy Poverty (Low per capita income). Unemployment (including underemployment and disguised unemployment). Inequality of income and wealth.

Unbalanced regional development. Poor infrastructure. Corruption and parallel economy. Underemployment When a person is insufficiently employed in some way relative to a standard, he is called underemployed. This might be due to the part time work or the type of work he is doing is not utilizing his full skills. Over-qualification or possessing skills beyond the requirement could be one possible reason behind underemployment. Disguised unemployment When some work is done by more people than required number, then it is possible to withdraw some of them without decreasing the total output. Example- If 8 persons are doing the work of 5 persons, then 3 are disguisedly unemployed. This happens mostly in agriculture sector where many family members are working on their own farmland. Role of agriculture in Indian economy To feed the large and growing population. To provide employment especially for people who are unable to find work somewhere else. To provide basic input to many industries like cotton, sugar, rubber etc. To generate demand for the goods produced by the other sectors of the economy. Green Revolution Increase in the output and productivity of different agricultural crops due to the use of high yielding varieties of seed is called Green Revolution. Initially it was for wheat and in Punjab region only, later on it got spread for other crops and for other regions. The new variety of seed required more water and chemical fertilizers. Economic growth Increase in the GDP or the amount of goods and services produced by the economy is called economic growth. It could be due to more labor, more capital or better technology of production or any combination of these three factors. Economic growth might not be sufficient to increase the standard of living for majority of people in any country.

Economic development Economic growth along with the structural changes which results increases the standard of living for the majority of people is called economic development. Economic growth is one dimensional phenomena where as economic development is multi dimensional. Economic growth is possible without economic development but economic development is not possible without economic growth. Human Development Index It is published by UNDP in their annual report named human development report. It is a composite index based on life expectancy at birth, educational attainment and per capita income for different countries. Countries are given a value between 0 (for no development) to 1 (for perfect development). 2011 report placed India at 134th rank out of 185 countries, Norway is at 1st rank.

According to the economic survey 1973-1974 Problems Identified: Inflation Agriculture: 50% of the income of the nation comes from Agricultural Sector but poor production hinders the growth contributed by this particular sector. There is a decline of 0.8% as compared to previous year. Limited Availability of the Fertilizers: Proper availability of the fertilizers leads to larger production but problem of the limited availability of the fertilizers needs to be addressed Japan and European Economy: These two major economies have substantial influence on Indian economy so it affects the import. Public Distribution: Along with the problem of Agricultural production their a problem of proper channel of public distribution State: Bihar Points of development: Industrialization Development: Industry which were basic in nature has to develop, to make use of natural resources and further it gets ability to provide in the growth of economy of state which reflects on to the countrys economy. Agricultural Development: Agriculture plays a major role for the growth of state, moreover whole country. Agriculture development is must in this region as the consumption of food items are more than its production. Abolish License Raj: License has become a kind of hurdle in the growth of our country and thats reflecting in the systematic growth of states of country. For the development of state small vendors has to be welcomed by the state policies so that it generates a good amount of employment and make every citizen life relax. Forests: The sub Himalayan foothill of Someshwar and Dun ranges in Champaran

constitutes another belt of moist deciduous forests. These also consist of scrub, grass and reeds. Here the rainfall is above 1,600 mm and thus promotes forests Small scale industry: Development of this sector is must as it generates self employment plus it add in the system of growth of state in terms of its economies. Infrastructure: Poor infrastructure is major cause of backwardness of any of the state. State: Maharashtra: Points of development and Priority Sectors: Inflation: Inflation has always been a major problem of the economy that directly affects the states economical situation. Industrialization: Industrialization is the mainly focused area of the state. According to the economic survey imports are much more than exports those results into the negative record of Balance of Payment, therefore to become self reliant and to decrease the import this sector needs to be improved. There are few industries that should be promoted; steel, power, irrigation, transport, Fertilizers. Education: To increase the literacy in the, as the education is the only way to create skilled man power that is the key to the rapid growth. Infrastructure and Transport: Infrastructure of any state symbolizes the political and economical efficiency. It facilitates the convenient transport and easy connectivity. Agriculture (Cotton Production): Agriculture is always a major source of the income. So the sector is needed to be stressed upon for the proper availability of the food grain. Moreover the climate condition of the state is favorable to the cotton production. Reference: http://seminarprojects.com/Thread-businessenvironment#ixzz2YSRO5Fu7

environment pollution

Pollution is contamination by a chemical or other agent that renders part of the environment unfit for intended or desired use. These uses also and very importantly include all wildlife and ecological requirements to sustain life in all its natural forms. Pollution damages the Earth's land, water and air. It results in contamination of the earths environment with materials that interfere with human health, the quality of life, and the natural functioning of ecosystems (living organisms and their physical surroundings). It deserves emphasis that the environment also refers to the place where you live. Natural processes have released toxic chemicals into the environment throughout the history of the earth. Currently, the pollution generated by human activities presents the most serious problem.

Air pollution

An air pollutant is known as a substance in the air that can cause harm to humans and the environment. Pollutants can be in the form of solid particles, liquid droplets, or gases. In addition, they may be natural or man-made. Particulates of both natural and human origin also cause pollution. Smoke both natural from fires and human activities cause from industries and other sources are major and cause much damage. The chemicals that are most trouble-some in air pollution are formed in the atmosphere by gases. The pollutant introduced into the atmosphere in the largest quantities by human activity is carbon monoxide.

Industrial or gray smog is considered the most serious type of air pollution. Smoke and oxides of that are released by burning coal and oil containing minor amounts of sulfur is the cause.


Air Pollution - Each year industrially developed countries generate billions of tons of pollutants. Many pollutants come from directly identifiable sources; for example, comes from electric power plants burning coal or oil. Principal stationary pollution sources include chemical plants, coal-fired power plants, oil refineries, petrochemical plants, nuclear waste disposal activity, incinerators, PVC factories, metals production factories, plastics factories, and other heavy industry. The increasing number of vehicles has also lead to an increase in Air Pollution, due to the harmful gases like Carbon Monoxide emitted from these vehicles.


Throughout the world the damage cause by air pollution is enormous. In money alone it represents a loss of billions of dollars each year. Many flower and vegetable crops suffer ill effects from air pollution caused by exhaust gases. Trees have been killed by pollution. Cattle have been poisoned. Air pollution causes rubber tires on automobiles to crack and become porous. Pollutants in the air make it hard for people to breathe causing lung disease. When it rains the chemicals in the air cause acid rain hurting the animals and plants

Pollution Control

There are various air pollution control technologies and land use planning strategies available to reduce air pollution. At its most basic level land use planning is likely to involve zoning and transport infrastructure planning. In most developed countries, land use planning is an important part of social policy, ensuring that land is used efficiently for the benefit of the wider economy and population as well as to protect the environment. Efforts to reduce pollution from mobile sources includes primary regulation (many developing countries have permissive regulations), expanding regulation to new sources (such as cruise and transport ships, farm equipment, and small gas-powered equipment increased fuel efficiency conversion to cleaner fuels.

Water pollution

It covers 71% of the earth's surface and makes up 65 % of our bodies. Everyone wants clean water-- to drink, for recreation, and just to enjoy looking at. If water becomes polluted, its lost its value to us economically and aesthetically, and can become a threat to our health and to the survival of the fish living in it and the wildlife that depends on it. Although some kinds of water pollution can occur through natural processes, it is mostly a result of human activities. We use water daily in our homes and industries. The used water of a community is called wastewater, or sewage. If it is not treated before being discharged into waterways, serious pollution is the result. Water pollution also occurs when rain water runoff from urban and industrial areas and from agricultural land and mining

operations makes its way back to receiving waters (river, lake or ocean) and into the ground.


The wastewater and liquids from plants and factories are linked with nearby river water, which are polluted when they release disposal from these units. People in Developing/Undeveloped countries also pollute rivers by using the water in these rivers for washing clothes, utensils, bathing and other activities. Many companies dump their toxic waste in many rivers and lakes. Ships spill oil in oceans and rivers. People throw litter in water.

Pollution control

To keep our used water from spoiling our water resources, we have to remove the pollutants before the water gets back into the environment. Industries located in areas where they are not connected to a sewer can discharge directly into a waterway, but will need a permit, and will probably have to have their own treatment plants. Homes in non-urban areas that are not connected to a sewer are usually required by their town to have on-site treatment systems, which consist of a buried tank connected to a set of perforated pipes, embedded in gravel, which distribute the water into the soil.

Noise pollution

Noise is probably the most frequently forgotten of the environmental

pollutants, yet its effects can be many and far-reaching. Noise pollution is unwanted human-created sound that disrupts the environment. Millions of people on all continents are exposed to unhealthy levels of noise live in areas where the daily average noise levels exceed the safe noise level of an average of 55 decibels. What is a truly safe level of noise is controversial; levels of between 55 and 65 dB have been used for planning purposes have been called "acceptable".


The overarching cause of most noise worldwide is generated by transportation systems, principally motor vehicle noise, but also including aircraft noise and rail noise. Besides transportation noise, other prominent sources are office equipment, factory machinery, appliances, power tools, lighting hum and audio entertainment systems. Other sources include the noise in occupational settings or even the noise of simultaneous conversations. It also seems from a number of studies that intermittent noise is more of a problem than noise of a similar intensity which is constant. The machines used in factories make noise throughout the day, and this disturbs the peaceful atmosphere in the vicinity, as machines used without proper covering lead to sound pollution. This puts heavy mental strain on the people staying in the nearby areas. Noise is the most pervasive pollution in America.

Land pollution

Land pollution is where our land may be as far as being

contaminated. All of the bad toxic chemicals and waste, that is left or dumped on our land, causes it to become polluted. All types of waste can be found on land. Some is left behind after human activities and some is washed ashore from boats and sewage outlets. Also, acid rain can pollute our land.


We are creating too much waste due to in particular to much unnecessary packaging. In addition to this, we do not adequately recycle the waste we create. Many of the resources we use in our everyday lives are disposed of quickly. Food is wrapped in paper or plastic bags, drinks are in throw-away bottles or cans, batteries are disposed of after a short life Pollution sources include chemical plants, coal-fired power plants, oil refineries, nuclear waste disposal activity, large animal farms, metals production factories, plastics factories, and other heavy industry. Landfills are also the source of many chemical substances entering the soil environment. With the rising standards of living, we are throwing away more things and there is an increase in the quantity of solid waste.


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Background of India It is the Seventh largest country by area The Second most populous country (1.2billions) Capital :- Delhi GDP growth Rate:- 6.5%(2011-2012) GDP :-US $1.848 trillion 3rd largest in terms of purchasing power parity (PPP) Service based economy (contributes 55% to GDP) HDI :- Rank 134th/187 Introduction Bilateral trade relations The discovery of oil allowed the UAE to increase and diversify its trade relations with India UAE is home to more than 1.75 million Indian, expatriates making Indians the second largest ethnic group in the Arab nation. In 2008-09, India emerged as the largest trade partner of the UAE with bilateral trade between the two countries exceeding US$44.5 billion During the first half of 2010, non-oil trade between India and the UAE stood at US$20.4 billion Business Environment in UAE

U.A.E. possesses 10% of worlds crude oil reserves, which will last for more than 100 years. U.A.E. is a free trade zones are home to more than 6400 companies with an estimated trade of around US$ 8 billion. U.A.E. has easy access to 1.5 billion consumer markets situated in Africa, West Asia and East Europe as well as the areas around the Red Sea and the Gulf. INDIA UAE Bilateral relations The Indian community is the largest expatriate community in the UAE, numbering about 1.5 million. UAE emerging as the second largest market globally for Indian products. India imports 4.8% of U.A.E.s export. U.A.E imports 10% of India export. A large portion of Indias exports to the UAE is transshipped from Dubai to other countries JOINT VENTURES This joint venture with Rani International, the real estate development subsidiary of the Saudi-based Aujan Group, will consist of a 249-key luxury hotel operated by The Oberoi Group DLF and Nakheel, signed a 50:50 joint venture for two integrated townships spread across 40000 acres in India

Defense relations An Agreement on Joint Defense Cooperation was signed by the two sides during June 2003. There was agreement that the 'Strategic Dialogue' would be held annually. India has been training U.A.E. defense personnel in various disciplines at its specialized institutions At the first JDCC Meeting in April 2006, both sides agreed to support defense exhibitions in each country by deputing its platforms and personnel. As a follow up of the meeting of the JDCC in April 2006 several steps were taken Enhance participation in training programmes Exchange of visits by service Chiefs Visits of Naval Ships and Coast Guard Cooperation in defense production industries
Definitions of Business Environment: Business Environment has been defined by Bayard O. Wheeler as the total of all things external to firms and industries which affect their organization and operation. According to Arthur M. Weimer, business environment encompasses the climate or set of conditions, economic, social, political or institutional in which business operations are conducted. Concept of Business Environment A business firm is an open system. It gets resources from the environment and supplies its goods and services to the environment. There are different levels of environmental forces. Some are close and internal forces whereas others are external forces. External forces may be related to national level, regional level or international level. These environmental forces provide opportunities or threats to the business community. Every business organization tries to grasp the available opportunities and face the threats that emerge from the business environment. Business organizations cannot change the external environment but they just react. They change their internal business components (internal environment) to grasp the external opportunities and face the external environmental threats. It is, therefore, very important to analyze business environment to survive and to get success for a business in its industry. It is, therefore, a vital role of managers to analyze business environment so that they could pursue effective business strategy. A business firm gets human resources, capital, technology, information, energy, and raw materials from society. It follows government rules and regulations, social norms and cultural values, regional treaty and global alignment, economic rules and tax policies of the government. Thus, a business organization is a dynamic entity because it operates in a dynamic business environment. Demographic Factors: Demography is a study of human population with reference to its size, density,

distribution and other connected vital statistics. This information is very essential in modern days for planning and development and also for framing laws relating to society and business. The density of population, the extent of their standard of living, the level of their education and the nature of their occupation etc., greatly influence the type of business the entrepreneurs could undertake. The business units require customers for its survival and growth; naturally business can thrive in populace regions, though now-a days transportation helps a lot in bringing the commodities to the scarcely populated areas. Economic Factors: The business enterprise is affected by various economic forces which cannot be controlled by the business. These economic forces, can be divided into two categories, ie. Demand Force and Competitive Force. For a business firm to survive and thrive, it should have adequate demand for its products. At the same time, the firm has to complete with the rival firm producing similar products or substitute products. Economic forces affecting demand: For customers to buy the commodity of the firm, they should have the ability to buy and willingness to buy. The ability to buy a commodity depends on the income of the customer, to be very precise, the disposable income of the customer. Out of the total income, the individual has to pay taxes due to the government and the disposable income will be less if the taxes are high. Secondly, if the individual wants to save more, the amount for spending will be less. Thus, the ability to buy a commodity depends on the a) Total income earned out of the employment of the individual b) The taxes of the government and c) The savings of the individual. Social Responsibility and Community Development