BUSINESS ENVIRONEMENT

BUSINESS ENVIRONEMENTIntroduction to BusinessObjectives of BusinessFeatures and ImportanceClassification of BusinessIntroduction to Business EnvironmentFeatures and ImportanceComponentsTrading BlocsBusiness EthicsEthics in Different Business aspectsConsumerismObjectivesBusiness means any lawful economic activity which is conducted to earn profit through satisfaction of human wants.An enterprise which makes, distributes or provides any article or service which the other members of community need and are able and willing to pay for it.Business may be defined as human activity directed towards providing or acquiring wealth through buying and selling.`Introduction to Business1. EconomicProfit earningInnovationExploring new markets and creation of more customersGrowth and expansion of business operationMaking use of available resources in the best possible manner.2. Humanwelfare of employeesproviding employment to the backward classes of the society and people who are physically and mentally challengedSatisfaction of customersSatisfaction of stakeholdersObjectives of Businesswelfare of employees remunerations and working conditions, job satisfactions and growth opportunities.43. SocialTo Supply good Quality Goods and ServicesTo Supply Quality Goods at reasonable pricesCo-operation with the GovernmentTo avoid anti-social practicesTo avoid slums and pollutionconserving natural resources and wild life and protecting the environment.4. National & GlobalProduce and supply goods in accordance with the national interest and priorities.Payment of taxes and other dues honestly and regularly.Contribution to the revenue of the country.Implementing governments economic and financial policies framed from time to time.To raise the general living standard of the Nation.Making available globally competitive goods and services.Reducing disparities among rich and poor nations by expanding its operations.Regular supply of goods and servicesMeaningful use of natural and other resourcesCreation of employment opportunitiesProviding revenue to governmentCreating a strong foundation for a developed countryMeeting consumer needs and promoting / enriching social welfare and personal lifeSupport to agricultural and allied sectorsIt promotes national integration.It also facilitates exchange of culture among the people of different nations and thus, maintains international harmony and peace.It helps in the development of science and technology.Need / Importance of BusinessENRICH PERSONAL LIFE BY USING OOD QUALITY PROSUCTS AND SERVICES2. Thus, it promotes national integration. - It promotes social interest by providing tourist services, sponsoring cultural programmes, trade shows etc. in the country, which enable people of different parts of the country to exchange their culture, traditions and practices.3. It helps in the development of science and technology. It spends large amount of money on research and development in search of new products and services. Hence a number of innovative products and services are developed through industrial research.7Buying and SellingContinuous activityProfit motiveUncertainties and Risks earnings and lossesWell Organized and Socially consciousCreative and DynamicRequires initial investmentCustomer SatisfactionFeatures of BusinessInvolves exchange of goods and servicesContinuos ongoing activityProfit motiveRisks involevedWell organisedDynamic ever changing and evolving8Scope of BusinessIndustry

It refers to a group of firms doing similar or related Business - Manufacturing: Raw Material into Finished Goods; Construction; Extraction: Mining, Fishing, Agriculture; Genetic: Hatcheries, Poultry Farming, Fish Farming, Nurseries etc10

The surroundings of business is called Business EnvironmentAggregate of all conditions, events and influences that surround and affect business activitiesBusiness Environment refers to the socio-economic surroundings within which business activities are to be conducted.Mainly divided into Internal & External FactorsSWOT analysisBusiness EnvironmentEnvironment consists of different factors like political, economic, social, ecological, international, human, technological etc

SWOT internal provides strength and weakness; External provides opportunities and threats. Business must conduct an intensive SWOT analysis to ascertain their position in the markets and ensure profitability.

Within an organization, a business is governed by the behaviour of its employees, management or decision makers. But externally a business is influenced by a score of factors, which range from customers to competitors and government. Therefore, a business cannot be independent of the influence of these external factors. It should also be noted that a business has absolute control over all the internal factors, it has no control over the external factors. So often it becomes necessary for business houses to modify their internal decisions and policies, on the basis of the pressure from external factors This highlights the need to be ever-cognizant of changes and influences of external factors so as to conduct business on healthy lines. 13ComplexMulti-facedDynamicClassified on various criteriaFar reaching impact on businessRequires minute studyNot influenced by Businessmen or power or moneyIts a challenge and opportunity for businessRequires adaptability to survive and succeedFeatures of Business EnvironmentComplex it develops by chance and not choiceMulti-faced a change in environment affects different sectors differently and hence perceived differently by all industries and countriesDynamic frequently changes and keeps evolvingClassified on various criteria time (past, present and future), space (local, urban, regional, national or global), forces (market or non-market like doctors), factors (economic or non economic like NGOs) etc14GlobalizationTelecommunicationTransitionBusiness opportunitiesCompetitive advantageEconomic affluenceProgressive government policiesBlooming entrepreneurshipFDIFeatures of Indian Business EnvironmentGlobalization has helped reached developing stageTelecomm R&D has improved efficiency and BE is rapidly evolving due to the technological upgradation Transition culture, operations and approach is transiting from old traditions to modern and global perspective. Western influence is reflected in todays attitudes and work cultures.Biz opportunities today there are many more opp for business to develop and flourish due to various governmental support schemes and demands across the industries. Technology, manpower, intellect, money inflow and demand has led to a great rise in opp. competitive advantage our products and services are competing on global standards and buyers are recognizing the potential of India as a market.Economic affluence due to all above factors, GDP is increasing and wealth generation is leading to better lifestyle and increased spending capacity. Also women these days are equally participating in income generation leading to quality standard of living.Progressive Govt policies various govt schemes and subsidies help business to florish and sustain thereby improving economy and BEEntrepreneurs are rising and creating better and innovative avenues for employment, business and economy. This leads to over quality enhancement of citizens.FDI increased FDI has boasted the business growth, potential and scope.15BE-Classification Overview

TimeSpace Market Forces Influencing Factors

PastLocal Demand Economic

PresentRegional Supply Non-economic

FutureNational

International

Macro/Micro

Internal/ExternalKeeps business flexible and dynamicProvides new opportunities for business to explore and flourishEnables optimum utilization of resourcesEnsure proper alternatives for non-renewable resourcesNeed / Importance to Study B.E.

Business Environment has two components:1. Internal Environment2. External Environment

Internal Environment: It includes 5 Ms i.e. man, material, money, machinery and management, usually within the control of business. Business can make changes in these factors according to the change in the functioning of enterprise.

External Environment: Those factors which are beyond the control of business enterprise are included in external environment. These factors are: Government and Legal factors, Geo-Physical Factors, Political Factors, Socio-Cultural Factors, Demo-Graphical factors etc.

It is of two Types:1. Micro/Operating Environment2. Macro/General Environment

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The Organization in its EnvironmentBusiness DecisionInternal EnvironmentMission / ObjectivesManagement StructureInternal Power RelationshipPhysical Assets & facilitiesCompany imageHuman resourcesFinancial CapabilitiesTechnological CapabilitiesMarketing CapabilitiesFinanciersSuppliersCustomersCompetitorsPublicMktg IntermediariesMicro EnvironmentEconomicTechnologicalGlobalDemographicSocio-CulturalPoliticalMacro EnvironmentBUSINESS ENVIRONMENT2020Vision and Philosophy of Organization Mission ObjectivesHRPhysical resources/facilitiesFinancial resourceCorporate imageR&D facilityOrganizational structureInternal Components:Vision and Philosophy of Organization foresight of founders and underline the core values and framework for the company. Also aid in framing the mission statement. If the Vision is clear and strong, the business activities remain simple and employees are aligned to work for the company goals onlyMission the ultimate goal for a company to achieve its vision and the path taken by company is stated through the mission. Eg TATA Group: its core values are Integrity, Understanding, Excellence, Unity and Responsibility. Hence all the activities and decisions of the group are governed by these factors. Also these factors are reflected in its initiatives.Objectives targets, results are the purpose for a business to operate. These are based on its vision and mission.HR the employee strength or labor force of an organization. Their talents, skills and attitudes greatly impact the business environment. Their relationship within the organization and hierarchy also affects the growth of company.Physical resources/facilities the infrastructure available and the machinery used greatly influence the business and its outputFinancial resource - if the company is financially sound, it encourages the managers to take certain bold decisions for growth and expansion. It also entrusts the employees with job security and better prospectsCorporate image companies enjoying a good corporate image or goodwill or reputation succeed better with their output. Also their actions and decisions are respected and taken seriously by investors, suppliers, creditors, customers, government and social communitiesR&D facility the liberty and guidance provided for R&D reflects the output for a company. Organizational structure it reveals the in employee manager relationships and also the unity and strength of the organization in working towards the common goal21Customers their needs and expectations have to be prioritized. CRM must be designed and efficiently managed to avoid customer dissatisfaction.Competitors their products essentials and strategies affect the business directly. Healthy relations with competitors enables a sound environment with fair trade practicesSuppliers the trust factor for quality and quantity must be maintained by business and its suppliers. Also payments and dues must be settled in time to avoid conflicts and delays or back outsPublic the social communities must be satisfied with the nature of operations and effect of decisions on the societal and environmental front.External - Micro ComponentsMicro/Operating Environment: The environment which is close to business and affects its capacity to work is known as Micro or Operating Environment. It consists of Suppliers, Customers, Market Intermediaries, Competitors and Public.(1) Suppliers: They are the persons who supply raw material and required components to the company. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier.(2) Customers: - Customers are regarded as the king of the market. Success of every business depends upon the level of their customers satisfaction. Types of Customers:(i) Wholesalers(ii) Retailers(iii) Industries(iv) Government and Other Institutions(v) Foreigners(3) Market Intermediaries: - They work as a link between business and final consumers. Types:-(i) Middleman(ii) Marketing Agencies (iii) Financial Intermediaries(iv) Physical Intermediaries(4) Competitors: - Every move of the competitors affects the business. Business has to adjust itself according to the strategies of the Competitors.(5) Public: - Any group who has actual interest in business enterprise is termed as public e.g. media and local public. They may be the users or non-users of the product.22

Economic conditions, policies and systems are the factors that constitute the economic environmentGovernment influences through economic planning, monetary and fiscal policies, industrial and budget policiesInfluencing factors economic reforms or policies directly influence the working and decisions of businessLimited influence of business on economic environmentRole of Government government plays a critical role through various schemes and policies like industrial, licensing, foreign exchange, labor, import duties, taxesEconomic EnvironmentExchange rates, interest rates, inflation ratesMacro/General Environment: It includes factors that create opportunities and threats to business units. Following are the elements of Macro Environment:

Economic Environment: - It is very complex and dynamic in nature that keeps on changing with the change in policies or political situations. It has three elements:(i) Economic Conditions of Public(ii) Economic Policies of the country(iii)Economic System(iv) Other Economic Factors: Infrastructural Facilities, Banking, Insurance companies, money markets, capital markets etc.25Preference for the Public SectorIntroduction to the Economic ReformsLinking Indian economy with Global economyContinuous process of economic reformsProblems of minority governmentCurrent positions:Fiscal policyInfrastructureRecapitalizing banks black moneyGlobal recessionFDICurrent Indian Economic EnvironmentPreference for the Public Sector - has reduced and so has its influence and impact on the economy post LPG.Introduction to the Economic Reforms industrial policy on 24.7.1991; brought abt major changes in economy like FDI, private sectors, Joint ventures, imports and exports etc thereby boosting the growth and development opportunities for indian economy.Linking Indian economy with Global economy - Due to LPG indian economy got connected with world economies and today there is high interdependence and correlation between the world and india esp due to exports and Financial investment and trading.Continuous process of economic reforms - All reforms like LPG, industrial act, FERA and FEMA etc were reviewed periodically and reformed with amendments to suit the developing phase of indian economy. Since these were new concepts and india was just opening up to the world markets and trade, there were certain trial-and-error practices observed and amendments made to enhance growth. All this lead to uncertainity of the economy and reflected upon the instability of indian investment in the initial stages of LPG / Industrialisation(union issue)/FDI(mnc) and import export policies.Problems of minority government - Minority govts inability to raise critical issues and lack of decision power has often lead to unfavorable economic environment for country. Eg the land acquisitions bill - Land acquisition in Indiarefers to the process by which theunionor astategovernment in India acquires private land for the purpose ofindustrialisation, development of infrastructural facilities orurbanisationof the private land, and provides compensation to the affected land owners and their rehabilitation and resettlemen, Insurance bill etc - Major Highlights of the Insurance Laws (Amendment) Bill, 2015 Passed by Parliament; Provides for Enhancement of the Foreign Investment Cap in an Indian Insurance Company from 26% to an Explicitly Composite Limit of 49% with the Safeguard of Indian Ownership and Control;Provides Insurance Regulatory and Development Authority of India (IRDAI) with Flexibility to Discharge its Functions More Effectively and Efficiently Among OthersCurrent positions:Fiscal policy - use of govt income(taxes) and expenditure(spending) and its influence on the economy.Infrastructure improved. Huge govt expenditure; Pvt-Public collaborations for betterment; but contrastingly POTHOLES, roads etc Recapitalizing banks helping the weak banks or distressed banks to use the ltd pot for recapitalising and reforming themselves intro profit earning ventures. In short giving money to the banks black money income illegallly obtained and not declared for taxation. 23 26% of income is in form of BM. 1400000000000US Dollarequals 88867030000000.00Indian RupeeGlobal recession recession across the globe affecting the indian economy and reducing its exports and scale of operations.FDI foreign investment. With Modis Make in India refers to other countries refraining from operating in negative intrest of india.26Refers to the 3 political institutions legislative, judiciary and executive. It is the result of the political stability and systems prevailing in the countryBusiness and politics are closely inter related and heavily dependent on each otherPolitical systems and framework may or may not be favorable to businessPolitical environment is usual sensitive, fluid and flexibleIt directly affects business and hence economy creating a chain reaction for either progression or recessionPolitical reforms and subsidies aid in developing business or may even hamper their growth and scopePolitical EnvironmentTaxes, duties, etc(2) Non-Economic Environment: - Following are included in non-economic environment:-(i) Political Environment: - It affects different business units extensively. Components:(a) Political Belief of Government(b) Political Strength of the Country(c) Relation with other countries(d) Defense and Military Policies(e) Centre State Relationship in the Country(f) Thinking Opposition Parties towards Business Unit27India observes democratic approach to governance and operates on multi party system.Largest democracy in the worldWe reflect cordial relations and smooth functioning between Federal-State operations.

Current Political EnvironmentTill 1984 favorable conditions prevailedThe following decade witnessed instability, party coalitions and hence no concrete or long term policies, reform or regulations were possible.Progress and stability during the BJP Atal Bihari Vajpayee governance. Fall of their party and emergence of congress lead to the recent stagnation of economies and lack of opportunity developments. Modi govt bring abt a fresh change and perspective to the economy and industrial sector. 28Refers to the customs and societal norms of the countryThe needs and expectations of such groups lead to the social and cultural environmentGrowing importance of social groups like investors, consumers, employees has lead to the emergence of this environmentCultural factors like beliefs, morals, habits define the type of products or services that can succeed in a country. Hence its study and relevance is importantSocio-cultural environment is considered as basis for future stability and community development at large, hence it is very criticalSocial and Cultural EnvironmentPopulation growth rate, career attitudes, safety, measures, customs etc29Society emerging as a powerful tool for business and its operations Social environment made mandatory for business and also reflects the goodwill or humanitarian aspect of businessRise of consumerismGrowing awareness among workersNew perspective of business towards societyCultural inclination and western influence on Indian business and its functioningBusiness today is greatly involved in CSR activities and has a professional approach towards uplifting the society and culture enhancement.Current Socio-Cultural business environmentSize of population, literacy, gender ratio, life expectancy, rural-urban divide, occupational patterns and age ranges.These factors affect the nature and operations for business. Any decision taken without this understanding leads to economic loss or social allegation.Demographic Environmentiv) Natural Environment: - It includes natural resources, weather, climatic conditions, port facilities, topographical factors such as soil, sea, rivers, rainfall etc. Every business unit must look for these factors before choosing the location for their business

Demographic Environment :- It is a study of perspective of population i.e. its size, standard of living, growth rate, age-sex composition, family size, income level (upper level, middle level and lower level), education level etc. Every business unit must see these features of population and recongnise their various need and produce accordingly.32Western influences and its impact in changing tastes and fashion lead to higher standards of competition.Populations growth, education, global awareness and better living standards has resulted in increased demand for higher lifestyle.Open mind sets, young generations and society norm encourages effective trade of product and services.Major portion (65%) of population is working category which displays countrys buying and spending power.Higher life expectancy also shows the significance of medical advancement and scope of R&DCurrent Demographic EnvironmentOther factors influence economy:Rise in working womenRise of Nuclear Family demands are higher and unrestricted. Lifestyle and approach is different.Increased literacy rate and exposure to the world affairsImproves purchasing power lifestyle and standard of living33The rate of technological development and its implications on business growth is technological environmentInterdependent nature: Business needs technology to grow and expand. Technology needs business to grow and reach out to people.R&D plays a major role in this environment. Stronger it is and more supported it is better the scope of business growth.Technology impacts and influences the business in many ways to achieve its goals, to simplify the process and prepare for unforeseen risks/situations.Technological EnvironmentTechnological environment hold new technological innovation, new products, the state of technology, the utilization of technology for maximum inputs and outputs, the obsolescence of technology and the dynamic changes that frequently occur in technologies which enable firms to get a competitive advantage

(iii) Technological Environment: - A systematic application of scientific knowledge to practical task is known as technology. Everyday there has been vast changes in products, services, lifestyles and living conditions, these changes must be analysed by every business unit and should adapt these changes.

34Constant Government support to R&D of technologyIncreasing relevance and dependence of industries on technologyTechnological impact on manpower and labor supplyTechnology as a base to compete with global brands, operations and productionsInformation Technology contributes 15% of exportsPros and Cons of technology in businessInvestments requiredTraining requiredLife span of a technology and its upgradation aspectsCurrent Technological EnvironmentConsists of physical factors like air, land, water and natural resourcesExcessive utilization of natural resourcesExploitation of non renewable resources by certain industries and sectorsTechnology harnessed for better alternatives and creation of other resourcesHeavy damage done to environment by manufacturing and chemical industries over the past few decadesRestrictions imposed on industries to alter their operations and production methods for controlling pollution and conserving environment.CSR initiatives undertaken to redevelop reserves and environmentCurrent Ecological EnvironmentDamage done = pollution:DeforestationSoil erosionOver grazingAir, water and land pollutionNoise pollution36Net result of the various laws, reforms, regulations made by the government in regard to the formation and operations of businessIndustries Act 1951MRTP Act 1969FEMA Act 2000The Indian Companies Act 1956Consumer Protection Act 1986Environment Protection Act 1986Framework for business to set up and set objectives Ensures protection of consumers, investors, employees and environmentStrict regulations lead to a conservative or restrictive environment affecting business growthLegal EnvironmentPre LPG environment was restrictive and monopolistic hence unfavorable for growth and better economy. Post LPG it has enhanced business growth and also initiated a lot of schemes, subsidies and reforms for India to be able to compete with international standards and markets effectively and efficiently.

The Industries Development and Regulation Act of India (1951)The Industries (Development and Regulation) Act, (IDRA), came into force from 8th May 1952 under a notification of the Central Government published in the Gazette of India.The Act extends to whole of India including the state of Jammu & Kashmir with a view to being under Central and regulation of a number of important industries, the activities of which affect the country as a whole and the development of which must be governed by economic factors of all India importance.Objectives of the Act:(i)To Implement the Industrial Policy:The Act provides the necessary means to the Central Government in order to implement its industrial policy.(ii)Regulation and Development of Important Industries:The Act brings under the control of the Central Government the development and regulation of a number of important industries listed m the first schedule attached to the Act as the activities of such industries will affect the country as a w e and, therefore, the development of such important industries must be governed by the economic factors of all India importance.(iii)Planning and Future Development of New Undertakings:A system of licensing is introduced under the Act to regulate planning and future development of new undertaking on sound and balance lines and may be deemed expedient in the opinion of the Central Government.The Act confers on the Central Government power to make rules for the registration of existing undertakings for regulating he production and development of the industries specified in the schedule attached to the Act The Ac a so provided for the constitution of the Central Advisory Council and Development Council.

FEMA - https://en.wikipedia.org/wiki/Foreign_Exchange_Management_Act

Consumer Protection Act, 1986is anActof theParliament of Indiaenacted in 1986 to protect interests of consumers inIndia. It makes provision for the establishment of consumer councils and other authorities for the settlement of consumers' disputes and for matters connected therewith.

Environment Protection Act, 1986is anActof theParliament of India. In the wake of theBhopal Tragedy, theGovernment of Indiaenacted the Environment Protection Act of 1986 under Article 253 of the Constitution. Passed in March 1986, it came into force on 19th November 1986. The purpose of the Act is to implement the decisions of theUnited Nations Conference on the Human Environmentsthey relate to the protection and improvement of the human environment and the prevention of hazards to human beings, other living creatures, plants and property. The Act is an umbrella legislation designed to provide a framework for central government coordination of the activities of various central and state authorities established under previous laws, such as the Water Act and the Air Act.Objectives of the Act:To co-ordinate the activities of the various regulatory agencies already in existence.Creation of an authority or authorities with adequate powers for environmental protection.Regulation of discharge of environmental pollutants and handling of hazardous substance.Speedy response in the event of accidents threatening environment and punishment to those who endanger human environment, safety and health.

Monopolistic and Restrictive Trade Practice under MRTP Act, 1969The Monopolistic and Restrictive Trade Practices Act, 1969, was enactedTo ensure that the operation of the economic system does not result in the concentration of economic power in hands of few,To provide for the control of monopolies, andTo prohibit monopolistic and restrictive trade practices.The MRTP Act extends to the whole ofIndiaexceptJammu and Kashmir.Unless the Central Government otherwise directs, this act shall not apply to:Any undertaking owned or controlled by the Government Company,Any undertaking owned or controlled by the Government,Any undertaking owned or controlled by a corporation (not being a company established by or under any Central, Provincial or State Act,Any trade union or other association of workmen or employees formed for their own reasonable protection as such workmen or employees,Any undertaking engaged in an industry, the management of which has been taken over by any person or body of persons under powers by the Central Government,Any undertaking owned by a co-operative society formed and registered under any Central, Provincial or state Act,Any financial institution.http://www.helplinelaw.com/immigration-appeal-and-others/MRTP/monopolistic-and-restrictive-trade-practice-under-mrtp-act-1969.html

37Strong policiesMajor international partnerships with EUIndia has signed pacts with Turkmenistan (Kyrgyzstan), China (Beijing) and othersCurrent International EnvironmentPolicies safeguards indian economy interests and also encourage and promote peaceful realtions with the international markets and economies. Eg India US Nuclear agreement of 2008. China India Major investments in and with EU. Its indias largest trading partner.India has signed significant agreements and deals with other countries for technical and economic co=operations like IRC INDIA RUSSIA AND CHINA; BRIC BRAZIL IRC; IBSA IBSOUTH AFRICA.

Deals / agreements between China India under Modi:Protocol for establishment of consulates in Chengdu and ChennaiCooperation in vocational education and skill development and setting up of Mahatma Gandhi institute on skill development in IndiaConsultative mechanism on cooperation in trade negotiationsCooperation between Foreign Ministry and and Central Committee of Communist Party of China (CCCPC)Action plan between national railway administration of China and Indian RailwaysMemorandum of Understanding on education exchange programmeCooperation in the fields of mining and mineralsSpace cooperation outlineSafety regulations on importing Indian rapeseed mealBroadcasting agreement between CCTV and DoordarshanAgreement for cooperation in the field of tourismMemorandum of Understanding on establishing India-China think tanks forumMemorandum of Understanding between NITI Aayog and Development Research CentreMemorandum of Understanding on cooperation in earthquake science and engineeringMemorandum of Understanding on cooperation in ocean sciences, climate change and cryosphereMemorandum of Understanding on cooperation in geo sciencesMemorandum of Understanding on establishment states/provincial leaders' forumCooperation between states and municipalities - establishment of India-China state leaders forumAgreement on the establishment of sister states Sichuan and KarnatakaAgreement on the establishment of sister cities between Chennai and ChongqingAgreement on the establishment of sister cities between Hyderabad and GingdaoAgreement on the establishment of sister cities Aurangabad and DunhuangMemorandum of Understanding between ICCR and Fudan University for establishment of centre for Gandhian studiesMemorandum of Understanding for the establishment of Yoga college in Kumning

India and Russia Sign Agreements on Defense, Energy december 2014India Israel ties: http://scroll.in/article/732983/why-israel-matters-to-india-and-modi

Foreign Relations of India - wikipedia38

LOCALNATIONALGLOBALPOLITICALProvision of services by local councilGovernment policy on subsidiesWorld trade agreements e.g. free trade agreementsECONOMICLocal incomeInterest ratesOverseas economic growthSOCIALLocal population growthDemographic change (e.g: ageing Population)Migration flowsTECHNO -LOGICALImprovements in local technologies e.g. availability of Digital TVCountry-wide technologyInternational technological breakthroughs e.g. internetENVIRON-MENTALLocal waste issuesEnvironmental Laws,weatherGlobal climate changeLEGALLocal licenses/planning permissionChanges in lawInternational agreements on human rights/IPRsTrading blocs are formed by countries for mutual benefitsVoluntary groupings of a specific regionThey indicate regional integrationSome groupings have economic background; some have politicalGroups operate till benefits can be reaped by member countriesNew members can only join with consent of existing countriesSometimes also referred to as pressure groupsInternational Economic GroupingGroups are purely voluntaryCountries facing identical issues or concerns come together to fight against it and form economic groupsEntry into groups is only by consent of existing members, exit is by desire.Generally countries specific to a geography come together to from groupsAll decisions are taken through mutual negotiations and group agreement. Decision must benefit majority members. Decision taken is binding for all member countries to honor as a moral responsibilityFeatures of GroupsSuch groups often have resulted in division of world economy and restricted world free trade. The member countries of each group benefit by the policies however harmful for non membersFormation of such groups is natural and cannot be curbed or bannedTheir existence is solely based on need and priorities. Once the benefits reaped fade or cease to exist, the groups can dissolve. Similar new groups form in needMain objective of groups is to benefit and aid member countries. This restricts world economy development.Degree of economic uniformity is different for each group making it difficult for non members to trade evenlyTo reduce trade barriers among member countriesTo promote regional growth and developmentPromote free trade among member countriesStrengthen political, economic, social and cultural relations between member countries and regional enrichmentFor collective bargains and unified front against non membersObjectives of Groups EU European Union NAFTA North American Free Trade AreaASEAN Association of South East Asian NationsSAARC South Asian Association for Regional Co-operationImportant Economic GroupsFormerly called European Common MarketOriginally consisted of 6 countries Belgium, France, Republic of Germany, Italy, Luxemburg and NetherlandsFormed in 1958 Treat of RomeHQ Brussels, BelgiumIn 1973 UK, Denmark and Ireland join1981 - Greece joins1986 Spain and Portugal join2004 10 east European countries joinPresently membership is 27 countriesEuropean UnionCriteria for country to be member European and democraticEU is customs and economic union type1999 common currency for members - EUROPowerful trade bloc of highly industrialized and rich nationsWorlds Largest ExportersMain objectives:Eliminate inter regional trade barriers and restrictionsImpose uniform restrictions on external countries or non members Enrich political, economic, social, cultural relationsEU introduces policies and reforms to development of member countriesMostly common agricultural, fishery, infrastructural, industrial and transport policies. EU accounts to 40% of world Trade India and EU:India has mutual bilateral relations with EU It is Indias largest trading partner 19%Germany and UK are strong partners of IndiaIndias exports to EU Rs. 3.13 cr; ie 16.44 %Indias imports to EU Rs. 3.01 cr; ie 11.1 %Most powerful economic union in the worldMembers USA, Canada and Mexico1994 came into operations and existenceIt is a custom union between membersNAFTA imports 25% of world trade and exports 19% India and NAFTA:Friendly and cordial relations with member countriesIndia has moved on to other groups for importing and exporting due to better policies and reformsNAFTAObjectives:Tariff reductions and barriersEasy access to financial aid for membersInvestment protection for membersFormation of US-Mexico border Environmental Commission for pollution and dump controlCreation of North America Development BankDevelop social and cultural relations between membersCollective bargainsRegional economic grouping of South East Asian countriesEstablished in 1967 in BangkokMembers Indonesia, Malaysia, Philippines, Singapore, Thailand and Brunei DarussalamHQ Jakarta, IndonesiaInitial focus was political stability and support; later extend to economic and socio-culturalObjectives:Accelerate economic growthPromote active collaboration and mutual assistanceCo-operation with other groups for mutual benefitsEnsure political, economic and socio-cultural stability within member countries ASEANASEAN countries have PTA (Preferential Trading Agreements) to reduce tariffs on member country productsIt gives great impetus to Tourism development and enrichmentIndia and ASEAN maintain close economic tiesIndia is full Dialogue partner for ASEANIndias exports to ASEAN in 2014 were Rs. 2 million or 10.51% of total exportsIndias imports to ASEAN in 2014 were Rs. 2.49 million or 9.19 % ASEAN and 3 other countries china, Korea and Japan are preparing to introduce a common currency ACU to facilitate trade like EUEconomic association of 8 members from Indian sub-continentMembers: India, Pakistan, Sri Lanka, Bangladesh, Afghanistan, Nepal, Bhutan and MaldivesFormed in 1985Secretariat is based in Kathmandu, NepalIt covers 1/5th of world population but spreads across only 3.3 % world landIn 1995 framed SAPTA SOUTH ASIAN PREFERENTIAL TRADE AGREEMENT; came in existence only in 2006SAARCSouth Asian Association for Regional CorporationThere are 9 observers Australia, China, EU, US, South Korea, Iran, Japan, Mauritius, Myanmar. 52Objectives:Develop co-operation in areas like agriculture, rural, telecommunication, transport, science, technology, tourism, sports etcAccelerate economic growthPromote active collaboration and mutual assistanceCo-operation with other groups for mutual benefitsEnsure political, economic and socio-cultural stability within member countriesThe combined economy of SAARC is the 3rd largest in the world in the terms of GDP(PPP) after the United States and China and 5th largest in the terms of nominal GDP. SAARC nations comprise 3% of the world's area and contain 21% (around 1.7 billion) of the world's total population and around 9.12% of Global economy as of 2015. SAARC also home to world's 3rd & 7th largest Economy of world in GPP(PPP) & GDP(Nominal) terms respectively as well as World's fastest growing major economy, that is India. India makes up over 70% of the area and population among these eight nations. All non-Indian member states shares borders with India. During 2005-10, the average GDP growth rate of SAARC stood at an impressive 8.8% p.a., but it slowed to 6.5% in 2011 largely because of economic slowdown in India, which accounts for nearly 80% of SAARC's economy. But driven by a strong expansion in India, coupled with favorable oil prices, from the last quarter of 2014 South Asia once again become the fastest-growing region in the world.As of 2015 foreign exchange reserves of SAARC nations stands at USD 411 billionCordial relations with all members India provides technological, financial and management services and aid to membersIndia is granted highest number of tariff concessions Indias exports to SAARC: 9 - 11 % of total exportsIndias imports to SAARC: 0.6 2 % Intra SAARC exports are very less compared to NAFTA or EUSAARC nations must utilize their resources and capabilities more efficiently to increase intra-region trade, commerce and development to compete with developed countriesIndia and SAARCBusiness and EthicsDerivation & Meaning(s)The term ethics is derived from the Greek word ETHOS which refers to character, ideals, beliefs or customs or accepted behavior.ETHICS is a branch of philosophy that addresses questions about concepts such as good and bad; noble and ignoble; right and wrong.Supreme oneness is the rationale of ethics.Its a set of standards or a code worked out from human reason and experience, by which free human actions are determined as ultimately right or wrong, good or evil. If an action agrees with these standards, it is ethical else its unethical.Business ethics can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organizations culture sets standards for determining the difference between good and bad decision making and behavior. It is the study of business situations, activities, and decisions where issues of right and wrong are addressed. Right or Wrong morally, commercially, strategically and financially.Business Ethics do not only include commercial business but also:Government organizationsPressure groupsNot for profit businessesCharities and other organizationsBusiness EthicsFeatures of Business EthicsIt is a code of conduct which business men should follow while conducting their normal activities.It is a relative term and changes from business to business and country to country.They are based on well accepted social and moral values.It protects customers, shareholders, employees and society at large.It provides framework within which business is to be conducted. It suggests legal, social, moral, economic and cultural limits within which business needs to be operated. It suggests what is right and good for the community at large through business actions.It is not against fair profit making, it is against profiteering by cheating and exploiting consumers, employees or investors.It supports expansion but by fair means and curbs illegal activities and corrupt practices.It aims at Benefit for all.Importance of Business EthicsEthics help us to have a ready understanding of how to react to a certain situation before it happens.Ethics act as our mediator when dealing with people. If we have wrong sense of ethics we will react to people in a negative manner.Business Ethics are needed:To make businessmen conscious of their roles and responsibilities towards the larger society.To protect the interest of all concerned like employees, investors, shareholders, customers, suppliers etc.To curb unfair practices and stop wealth accumulation at certain hands only.To create a good and long lasting reputation for a company. Public expects business to exhibit high levels of ethical performance and social responsibility. It re-instates their trust in the company.Promoting ethical behavior is to protect business from abuse by unethical employees or unethical competitors.Some Ethical IssuesConflicts of interest Quality control issuesDiscrimination in hiring and promotionChild laborMisuse of proprietary informationAbuse of company expense accountsMisuse of company assetsDrug and alcohol abuseEnvironmental pollution, environmental destructionCorruption and briberyDishonesty & deception (Lack of transparency, unfair, fraudulent trade practices)Exploitation of resourcesFraudulent tax paymentsWHY PEOPLE ACT UNETHICALLY???Pressure to meet sales, budget or profit goalsLack of recognitionPersonal financial worriesBalancing work & familyPoor communication61EmploymentEnvironmentFinanceMarketingAdvertisingEthics in Business AspectsEthical issues in HR:DiscriminationFavored recruitmentsSexual or racial harassmentImproper working conditionsChild laborCommunication gapBiased or unfair promotions, incentivesIntruding into employee privacyUnethical relationships with suppliers and partners based on personal benefitsUnethical relationships with customers based on dishonestyEthical guidelinesInternational Labor Organization (ILO):Established in 1919Promotes rights at workOrgans: Governing Body, ILC, ILOCore conventions of ILO:Forced laborAbolition of Forced LaborEqual RemunerationDiscrimination (Employment Occupation)Freedom of Association & Protection of Right to OrganisedRight to Organise and Collective BargainingMinimum AgeWorst Form of Child Labor

Ethics in Environment:Issues:Population explosionDeforestationOver exploiting of non renewable resourcesImproper waste managementSoil erosionWater pollutionAir pollutionNoise pollutionThreat to wildlifeOzone layer depletionAcid rainEnvironmental Audit

Ethics in Finance:Issues:Money launderingStealingBank account fraudsNet banking fraudsNeed of ethics in finance:They deal with public moneyThey reflect the countrys economyInternational trade is affected by their performanceHow:Honesty and integrity in transactions and adviseTransparency & AccuracyEffective regulations and monitoringIncome to better the institutionOverall growth and development of customers and economy

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Ethics in Marketing:Product DevelopmentPricingDistributionPackaging and labelling

Ethics in Ads:Deception or MisleadingStereotypingSexual themesUse of fearSurrogate AdsFalse ClaimsComparative Ads

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ConsumerismTechnological environment hold new technological innovation, new products, the state of technology, the utilization of technology for maximum inputs and outputs, the obsolescence of technology and the dynamic changes that frequently occur in technologies which enable firms to get a competitive advantage

(iii) Technological Environment: - A systematic application of scientific knowledge to practical task is known as technology. Everyday there has been vast changes in products, services, lifestyles and living conditions, these changes must be analysed by every business unit and should adapt these changes.

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