Unit 1 Economic Environment of Business

Despite this India is still a complicated place for foreign investors. A weak parliamentary government has very little purview over the provincial and local ministers who were elected entirely separate from federal elections. The fragmented nature of the country’s political system has and will continue to prevent major

As written by Malenbaum (1971), it is not surprising therefore that the conclusions on the public-private interplay in Indian economic life correspond with Nayar’s. Mostly business in politics is a record conflict. There are temporary adaptations but these are scarcely additive in their influence. They sum to limited achievement toward an

There are many different scales of business. Local businesses serve just a small community, for example a small independent nail shop. National business is just in one county, for example the NHS. Regional businesses are found in just one county and European/international is found in several countries such as h&m or topshop. Global is when a business is found in usually every country for example ebay or McDonalds.

Tropical countries such as India, endowed with rich biodiversity and natural resources. People consider environment as a part of their lives. Therefore, the natural environment should not be affected by the business activities. In India, natural resources such as water considered sacred. Also there are many powerful NGOs act upon environmental issues. For example, Coca Cola had to face many hardships in India because of the environmental issues. Therefore, it is very important to be careful with environment in the said country.

Location - where regional divisions of the business take responsibility for a specific function or particular products, whether locally, nationally or internationally

The Indian economy following the 1991 crisis swiftly moved away from central planning economy towards market-based economy with the government having less intervention and control. As a result, companies were operating in what is called emerging

However, both the Country Profile (2005) and Business Asia (2010:10) highlight that although the fundamental political keeps stable, the efficiency of political is low. The cause of this existed problem is that the national parties weakened gradually while the regional parties which influenced by the coalition government strongly (Business Asia, 2010:10). Current President is Pratibha Patil. (BBC News, 2011). As a result, India began to conduct a relatively free liberal market reform. Nonetheless, because of the interests of coalition government members are dissimilar, the speed of market reform is limited (Business Asia, 2010:10).

The BRIC emerging economies are some of the most successful market liberalisers with India having particular prosperity in liberalising its inward capital flows and currency convertibility from 1991 to foreign investors. Post liberalisation India is regarded as one of the fastest growing economies with an annual growth rate of 6.86% compared to 4.07% pre liberalisation (World Bank, 2014). Economists such as Saikia (2012) regards this success down to India’s rise in investment. In the decade after reforms FDI inflows to India has grown by a staggering sixty fold increase to $6 billion (Kletzer, 2004) showing how the India economy has become a major destination for FDI and is reaping the economic benefits.

India has a highly dynamic and entrepreneurial business environment (Ford, 2011). The freedom of democracy in India supports the country’s private enterprise greatly. India’s characteristics of sovereignty could very well succeed China’s Communist led, authoritarian growth model (Schuman, 2012).

On the other hand, India has spent a majority of its history as a colony of England. It was not until 1947 that India became an independent nation state, after a grassroots nationalist movement started by Gandhi, and even then they were a one party congress. They are also an interesting case of democracy because of how many unfavorable aspects towards it they had, such as high inequality, many peasants, and many different languages and religions (Lecture). In 1956, India was broken up into states by the States Reorganization Act, that made state lines based on linguistic group. India’s founding leaders mirrored the ideas of America, in balancing states rights with a central government (Sil, 2014). They have also more recently gone through a liberalization of their economy. India is unique in the way that their social hierarchy is constructed because of the fact that they have a caste system. The caste system is a combination of religious practice and community organization that is a part of Hinduism (Sil, 2014). This system was officially demolished in the country, but in the country it is still very prevalent, and the focus on helping those who were in lower castes succeed has made people more aware of the way they institute social policies.

There are several specific aspects of the political environment, such as the principle of “indigenous availability”. Which was very difficult to trade and also establish the rules and the regulation. Secondly, it was forbidden the use of foreign brands in India.

Then we have the Reservation which is pretty much the opposite of the other society. The reservation is dirty, everyone there is poor and they are as technologically advanced as the other world. There is instability; babies are born with ‘viviparous mothers’. Everything in this society has their own thoughts and beliefs. There is individualism.

In this term of our discussion we’re talking about business environment. It’s like an overview of the whole business environment. Simply environment of a business means the external forces including the business decisions. They can be forces of economic, social, political and technological factors.

India is the biggest democracy in the world, with a government type of federal republic. The country’s form of government mimics the United States with its federal structure. The federal government consists of executive, legislative, and judicial branches. In addition, India has adopted the a British style parliamentary system that allows for it its central government to have great power in relation to its states, according to US Department of State- Background Notes website (The Office of Electronic

In today's world, no business operates in isolation without interacting with the environment where it operates. Irrespective of the nature of business whether public or private organization; manufacturing; service industry; local or international firm, its operations are inhibited by the environment in which it operates.