BE

Compiled and Edited by Dr.
Pavnesh Kumar DBM-IGNTU Amarkantak(MP)
Business Environment
MBA-First Semester IGNTU
Introduction to Business Environment
Business environment may be defined as the set of external and internal factors which affects the
decisions of business. We can divide business environment into two parts
A. The Micro Environment of Business
These are powers which are deeply related with company and company can control these type of
environment by improving its capacity and efficiency.
1. Suppliers
Suppliers are the persons who supply raw material to company.
2. Customers
Customers are the persons who buy goods from company.
3. Market Intermediaries
Market intermediaries are those person who helps company to sell its products.
4. Financial Intermediaries
Financial intermediaries are those institutions who provide loan, credit and advance to company.
5. Competitors
Competitors are those who also sell same product of company.
6. Public
Public is those group of people who can buy or who can show their interest to buy the products
of company.
B. The Macro Environment of Business
Macro environment of business means all external factors which affects company and its
business and there is no control of company on these factors.
Compiled and Edited by Dr.Pavnesh Kumar DBM-IGNTU Amarkantak(MP)
1. Economic Environment
In economic environment, we can include govt. budget, import and export policies, economic
system and economic conditions.
2. Political and Governmental Environment
In political and government environment, we can include legislature's decisions, executive's

decisions and judiciary decision which affect company's business.
3. Socio cultural Environment
Socio-cultural environment includes morality, religion, education, health of peoples and family
importance.
4. Natural Environment
In natural environment, we can include season, place elements, natural resources etc.
5. Demographic Environment
In demographic environment, we can include size of population, growth rate of population, age
composition, sex composition and family size.
6. Technological Environment
In technological environment, we can include ecommerce technology, online payment, Internet

technology, mobile banking and 3G technology and all other new technology which affect
company's business.
7. International Environment
In international environment, we can includes rules and regulation of WTO, WB and MNC's
affect on our company's business.
business environment
Meaning of Business
>> August 10, 2011
Business means all activities which generates wealth. In these activities, goods are produced or
purchased and then are sold on profits. Following are main features of business.
1. Objective of business is to earn profit.

2. There are lots of risks in it.
Following are main business objectives:
1. Economic objectives
a) To earn profit
b) To Grow the business
c) Innovation of new products
2. Social objectives
a) Service to society
b) Employee satisfaction and development
c) Quality products and services
d) Fair return to investors
e) Good corporate citizenship
Micro Environment of Business
Micro environment of business becomes from internal part of company. This environment
includes different factors which can be controlled by company. Following are the main factors of
micro environment
1. Suppliers
These people supply the goods to company. We can control them, if we pay them on the time.
We should also keep contacts with multiple sources because it is very less risky. If one supplier
stops to supply us, we can get raw material from other supplier.
2. Customers
Customers also affect on company's business. If we do not care our customers, our customers
will buy from other company. Due to this, our sale will decrease. We should make good relation
with our customers.
3. Market Intermediaries
Middlemen, physical distribution firms and marketing service agencies are main market
intermediaries. We should choose best market intermediaries for fast distribution of our products.
4. Competitions
Company also have to face competition. If company has to win competition, it has to sell good
quality product at lower price.
5. Public
Public is any group that has an actual or potential interest in or impact on an organisations ability
to achieve its interests. Examples are
a) Media
b) Citizen
c) Local public
If we have to make public happy, we have to protect our environment. We have to produce our
products in less polluted system.
Macro Environment of Business
Macro environment of business means that environment which can not be controlled by
company. In this environment economic, social, political and technical environments are
included. These environment powers affect not only our company or firm but these may affect
whole industry. So, we can not stop of its affect. It means changing in this environment may be
risky for our business.
I can explain this in simple world. For example a MNC is doing his business from 30 years in
India. It is generating high profit and providing high value to the peoples of India. It has
controlled its micro environment. But Govt. now has changed and Govt. has issued order to stop
the business of that MNC because it may decrease domestic business. So, it may be very risky.
So, MNC's officers should have to prepare for this. If they study macro environment of business.
They can also get good idea for protecting its risk.
Introduction to Economic Environment
We can introduce economic environment as all the factors which affect business due to changing
the economic policies, economic system and economic conditions. In big companies, there may
be large number of economist whose work is to make economic policies and economic planning.
They control the prices of product of company. They also control the production level and try to
best to reach it on optimum level. They monitor all external economic factors and to reduce
company's economic weaknesses and risks.
Economic Reforms
Economic reform means to change and adjustments in internal economic structure according to
the external economic changes. Following are main economic reforms :
1. First phase economic reforms
There were many changes in international markets, organisations and production areas. India
started to accept all these changes. First phase of economic reforms was started in 1985 when
Rajiv Gandhi was the prime minister of India. He announced new economic policy for increasing
productivity, new technology import and effective use of human resources.
2. Second phase of economic reforms
In 1991-92, govt. of narsimaharav started second phase of economic reforms for reducing fiscal
deficit which was 10891 crores of rupees. Govt had to take loan of Rs. 5 billion dollars from
IMF. For effective use of resources, govt. started to get foreign investment.
Before the process of reform began in 1991, the government attempted to close the Indian
economy to the outside world. The Indian currency, the rupee, was inconvertible and high tariffs
and import licensing prevented foreign goods reaching the market. India also operated a system
of central planning for the economy, in which firms required licenses to invest and develop. The
labyrinthine bureaucracy often led to absurd restrictions—up to 80 agencies had to be satisfied
before a firm could be granted a licence to produce and the state would decide what was
produced, how much, at what price and what sources of capital were used. The government also
prevented firms from laying off workers or closing factories. The central pillar of the policy was
import substitution, the belief that India needed to rely on internal markets for development, not
international trade—a belief generated by a mixture of socialism and the experience of colonial
exploitation. Planning and the state, rather than markets, would determine how much investment
was needed in which sectors.
3. Third phase of Economic Reforms
The Vajpayee administration continued with privatization, reduction of taxes, a sound fiscal
policy aimed at reducing deficits and debts and increased initiatives for public works.
business environment, economic policy
Economic Planning
Economic planning is made for reducing economic risks. Under this planning, we can select best
alternative for increasing the economic strength of company. Economic planning's other name is
central planning and central economic planning.
In economic planning, we have to make plan regarding optimum use of our resources in
producing of goods. We also have to make plan to produce optimum quantity of output. We can
use economic planning at small level and at large level like investment decisions of Govt.
MNC uses economic planning for effective division of their resources in their different
departments and branches. They also uses statistical techniques for calculating correlation of
company's sale and other sale and one this basis, they make plan to increase sale. –
Economic Policies
Definition of Economic Policies
All policies which are made for development of economy and its stability are called economic
policies. Last year economic crisis and after coming its main roots, economic
policies are become most important and every country makes its after deep research and
analysis.
Followings are the main economic policies:-
1. Industrial Policies :-
Industrial policies are the one of the important part of economic policies. For working of industry
in peace environment, these policies are made. These policies may be different according to the
size and location of industry.
2. Trade Policies:-
Trade policy is relating to import and export of goods. Govt. makes trade policy for protecting
domestic industry by levying of tax on import.
3. Foreign exchange policy:-
It is also the part of economic policy. For exchanging the currency and better movement of
international capital, these policies are made in international capital market.
Fisca
4. Foreign investment and technology policy:-
This policy is very helpful for getting large amount in form of foreign investment and high skill
in form of technology. Govt. makes this policy more liberalized to attract foreign investors.
5. Fiscal Policy:-
l
policy is very advance tool to promote economy. Govt. can reduce the rate of indirect tax for
removing recession from country under fiscal measurements .
6. Monetary policy:-
Monetary Policy is made by central bank of any country. RBI uses several tools of monetary
policy like bank rate, open market operations and direct regulations.
Critical Role of Economic Policies:-
In India, there are approximate six economic policies and policies are so important for
development of India economy. But there are also many shortcomings, we can see in these ,
which we can explain following way :-
→ Industrial policies affect on domestic industry adversely. Govt. promotes only big companies.
→ Economic policies can be criticized that these are affected from world economy which can
not be controlled by govt.
→ Govt. has no direct control on monetary policies due to the control of RBI. So, it is less
represented by public.
→ Liberalized foreign investment are decreasing the portion of public sector. - See more at:
http://business.svtuition.org/2009/11/what-are-main-economic-policies-
discuss.html#sthash.tUdSGeua.dpuf
Importance of Environment Scanning
Following are main importance of environment scanning :
1. Effective Utilization of Resources
In environment scanning, we find the company's strength and weakness. With these strength and
weakness, company can find future risk and opportunities. For reducing risk and getting the
opportunities, company can use its resources effectively.
2. Constant Monitoring of the Environment
For success in business, it is very necessary to keep eye on its changing environment. With
environment scanning, we can scan important updates of environment. Now, by studying these
environment changes, it is very easy to find the challenging way.
- See more at: http://business.svtuition.org/2011/09/importance-of-environment-

scanning.html#sthash.dSrh7ARG.dpuf
Factors of Environmental Scanning
Following are the main factors of environment scanning.
1. Events
Past events of business environment is the main factor of environment scanning. For example, if
Govt. has to control food prices, it has to scan every week prices of vegetables, fruits, milk and
other food items. For more simplification of price rise, Govt. will calculate wholesale price
index.
2. Trends
Not just to see the past events are effective but to establish the trends on the basis of events is
also very important because this is important factor of business environment scanning. Suppose,
you have to take decision relating to your vegetable prices, you have all the past market price
data of same vegetable. Now, you will make a trend graph. If there is an increasing trend, you
will fix your vegetable price according to this.
3. Issues
Issues are also important factor of business environment scanning. As a good businessman, you
have to scan both cold and burning issues on daily basis. For example, I can tell you following
business issue which I studied today newspaper.
a) European union wrote down a 50% of Greece's debts.
b) Sony Corp. buys Sony Erickson mobile phone joint venture for $ 1.45 billion.
c) Rajat Gupta is being charged for insider trading.
d) Bharti Airtel's urgent request failed.
4. PESTEL analysis
It means political , economical, social and technological analysis. We scan following updates in
it.
 Changes in Taxation Policy

 Changes in Trade regulations
 Changes in Governmental rules
 Changes in Unemployment Policy etc.
 Changes in Inflation rate
 Changes in Growth in spending power
 Changes in a pensionable age, suppose in Italy, pensionable age will be 67 years in 2026.
 Technological changes
 New or improved distribution channels
 Improved communication and knowledge transfer etc.
 moral factor
 Laws on
 Waste disposal
 Energy consumption
 Pollution monitoring etc.
 Unemployment law
 Health and safety
 Product safety
 Advertising regulations
 Product labelling etc.
- See more at: http://business.svtuition.org/2011/10/factors-of-environmental-

scanning.html#sthash.NvwoBGy4.dpuf
What is Environmental Appraisal? What are the Stages Involved in Appraisal?
For finding business's available opportunities and risks, environmental appraisal is needed.
Environmental appraisal means to analyze all the factors of business environments. Following
are the main stages involved in environment appraisal.
1st Stage : Factors Affecting Environmental Appraisal
Following are the main factors affecting environmental appraisal
a) Factors relating to environment
We can not evaluate equally two organisation in same environment. we have to study every
organisation's complexity and flexibility.
b) Factors relating to Organisation
Age of organisation will affect our environmental appraisal. We also see the organisation's size
for doing business and its market type. What are the services and products, it is providing?
c) Factors Relating to Strategies
Policy makers play important role in appraisal. Age, education and experience of policy
maker will affect the environmental appraisal.
2nd Stage : Identification of Environmental Factors
In second stage we have to identification of environmental factors on the basis of following issue
a) Critical Issues
b) High Priority Issues
c) Low Priority Issues
3rd Stage : Structuring the Environmental Appraisal
This is the third stage of environmental appraisal. In this stage, we create the structure of
environmental appraisal. One side of structure will be our strengths and other side will be our
weaknesses. By comparing both, we estimate our surviving power in the environment of
business.
SWOT analysis
Meaning of SWOT Analysis
SWOT analysis means strength, weakness, opportunities and threat analysis. In this analysis, first
of company identify its strength and weaknesses. On this identification, company finds its
opportunities and future threats. This analysis is very useful for planning and decision making. If
any organisation finds its all strengths and weaknesses correctly, it is very easy to make a plan
which will be helpful for getting opportunities and reducing future risks.
Example of SWOT Analysis

I can give SWOT Analysis example of my organisation. I started my organisation from Jan.
2008. Now, it is reaching its 4th year. Just 2 months after, it will be of 4 years. In this time, I find
many my strengths and weakness through SWOT analysis which I am sharing with you.
1. I write what I know. This is my strength. So, I can find more opportunity if I will start to know
more things and then write it myself. Yes, I am trying myself to know everything in my field.
2. My main weakness is that I do not know what are my weaknesses. So, when these weaknesses
happens, I also faces loss. But, I started new way to find my known weaknesses. One of best
way is for me to read and listen what are people are saying about me in my comment box or in
my inbox. I am personally thankful all of them.
SWOT Analysis Template
Following SWOT Analysis Template will be helpful for business organisation for making good
SWOT Analysis
Issues Strengths Opportunities Weaknesses Threats
Company can
Company can
Company has start new
face the
1. Fund enough projects or
No enough fund risk for
fund for develop new
repayment of
investment project with this
past loan.
fund
Company is
Company can Company's D Company may
gaining high
develop that C product has suffer loss on
2. ROI Return on C
Product. low return. D Product.
Product.
If company do not
If company Company can Company can
3. Innovation care
works with take the share lose the share
enough on
innovation of other of market due
innovation, it can
approach, it will company who is to lack of
become the major
be the strength not enough innovation.
weakness of
of company innovative.
company
4. Product Life Company can

If company's make it as If company's Company can
product life brand of product life lose its brand
is very high, it is company is very less, it is due to this
very one of best because it will the weakness of weakness in
strength of reduce the cost company. the market.
company. of customer for
buying
new product
soon.
If company's Company may

If its all
Company can employees face big cost
employees have
get more have no of training for
5. Confidence confidence, it is
efficiency from confidence, it is increasing
big strength of
this confidence. the weakness of confidence of
company.
company. employees.
- See more at: http://business.svtuition.org/2011/10/swot-analysis.html#sthash.eFPVoCfW.dpuf
PESTEL Analysis
If you are studying Business Environment in your class, you will learn a term PESTEL
Analysis. With PESTEL analysis, businessman makes his strategy. Suppose, you want to start
your new business in any other country. You have to analyze whole business environment. If we
have to show a small term of analysis of business environment, we will say, PESTEL Analysis.
Now, we explain this analysis.
P means Political Analysis
In political analysis, company sees whether there is corruption in the political system. If yes,
honest company will avoid to do the business with that country. Company will also see the tax
policy and international barrier. If Govt. policy is very clean for promoting his business,
company will start, otherwise, company will not come. Company will make the list of strength
and weakness list of political and govt. policies. If weaknesses are very low, then company will
do his business in that country.
E means Economic Analysis

Except, political environment, company has to check the economic environment analysis. If
there is big rate of GDP, there is chance for company to grow the market. If there is high
inflation cost, company’s product cost will also increase. Company also study economic policy,
economic system. Only after this, it will start his business in that area.
S means Social Analysis
We are social animal. We never live separate from our society. Our social morel, our social
value, our social culture and our religion is our power. Company will study the social
environment before starting his business in any area. Suppose, we all
Indian celebrate the Dewali festival. You see that all big MNC also celebrate because they
understand our culture and want to become its part.
T means Technological Analysis
Fast changing in the technology has made company alert. Every company’s engineers analyze
the technological environment. Company sees whether people would like to changes in the
technology or not. Whether people are against the technological changes. What is the trend of
technological environment changes. All these factors are helpful for company to survive.
E means environmental
Environment means physical environment. Today, you are seeing winter in Northern India. But,
the cities near sea are not affected from this. So, business corporate will watch this. Suppose, you
are starting your new tourism business in any area but there is the routine of raining. It will not
be suitable for your business industry. So, every type business has to study the climate of nature.
L means legal Environment Analysis
In legal environment analysis, company checks different laws. Some laws may be against the
freedom of business of company. So, company will check it before starting his business in such
legal environment.
Political Environment of Business
Political environment is the mixture of the environment of legislature, executive and judiciary. In
legislature and executive of Govt. decide the different work of nation. Judiciary sees whether it is
legal or illegal. It is continue changing. As a businessman you should watch it. You can see the
changes in the political environment with the help of media. Media shows the updates of politics.
These days, Indian corruption is on the top of politics. You can watch and also analyze its effect
on your business.
Political environment also affects business with different business laws. These laws controls all
the activities of business. In India, there are lots of laws which has been made by Indian Govt. In
these laws, we can add company law 1956 and Factory act 1948. For controlling stock
exchanges, Govt. has made SEBI. For controlling banking business, Govt. has made RBI.
FEMA 2000
Definition of FEMA 2000
FEMA 2000 means Foreign exchange management Act 2000. Foreign exchange management act
2000 is very helpful law for development of foreign exchange market in India. It was passed in
1999 and came into effect from June 1, 2000 to entire country. After this foreign exchange
regulation act ( FERA ) 1973 was closed . FEMA was most suitable for India corporate sector
instead of FERA because almost all strict regulations of FERA were removed in FEMA .
Objectives of FEMA
1. Main objective of apply FEMA is to reduce the restriction on foreign exchange . Now , any
offense in foreign exchange will be civil offense not criminal offense .
2. This law's main objective is to increase the flow of foreign exchange in India. Now , under this
law , you can bring foreign currency in India without any legal barrier .
Provision /Rules / Regulation of FEMA
1. Provision regarding dealing in foreign exchange :-
According to section 3 of FEMA 2000 ," only authorized person under the govt. terms can deal
in foreign exchange in India . "
2. Provision regarding holding of foreign exchange :-
According to section 4 of FEMA 2000, " All persons which are provided authority only can hold
or purchase foreign exchange in India or outside India."
3.Provision regarding current account transactions :-
According to section 5 of FEMA 2000 ," There is no restriction regarding sale or deal foreign
exchange , if it is a current account transaction ."
The following transaction are deemed current account transactions under FEMA :-
a) Expenses in connection with foreign travel , education and medical care of parents , spouse
and children ( Any body now can send the foreign currency in India for above expenses under
current account )
b) Payment due as interest on loan
c) Payment due under short term loan for business .

4. Provision regarding capital account transactions :-
Under section six ," RBI will fix the limit of foreign exchange transactions relating to capital
account after discussion with Indian govt. "
RBI can restrict following :-
a) transfer of foreign security by Indian resident .
b) transfer of foreign security by Indian resident which is now outside India .
c) transfer of immovable property .
5. Provision regarding export of goods and services :-
According to section 7 of FEMA 2000 , " It is the duty of exporter to declare the true and correct
detail of goods which , he have to sell the market outside India and must send complete report to
RBI .
RBI can make particular requirement for any exporter .
RBI can also make rules and regulations for realization of amount earned from foreign country.
6. Provision regarding authorised persons :-
RBI can authorize any body who can deal in money exchange or off shore transaction and
foreign exchange .
 He has to follow the rules and guidelines of RBI .

 RBI can revoke the authorisation granted to any person at any time in public interest .
 If authorized person will be done contravention the rules of RBI , he will be liable to pay
up to Rs. 10000 penalty and Rs. 2000 for every day during which such contravention
continue .
7. Provision regarding contravention and penalties :-
Section 13 to 15
If any body or person contravenes the rules and regulation of FEMA 2000 or RBI direction , he
will be liable to a penalty three times of sum involved in contravention .
If contravention will continue , then he will pay upto Rs. 5000 per day during the time of
contravention .
8. Provision regarding adjucation and appeal :-
According to section 18, " Central govt. can appoint adjudicating authority who can give the
punishment of civil imprisonment of maximum six months if case is less than one crore . If
demanded value is more than one crore then punishment of imprisonment may be of three years .
the person can appeal to special director against the decisions of adjudicating officer . He can
also appeal in appellate tribunal and also in high court with the sixty days of communication of
order .
- See more at: http://business.svtuition.org/2009/11/what-is-fema-2000-what-are-its-
main.html#sthash.PskjqXb2.dpuf
Monopoly and Restrictive Trade Practice (MRTP ) Act 1969 and its Provisions
After 1947 , many big firms had entered in Indian economy and they were trying to operate
business without any competitors . Govt. of India had understood the policy of big Corporate
firms and for safeguarding the
interest of consumers , Govt. of India has passed the bill of MRTP and made the monopoly and
restrictive trade practise Act 1969 . After activation of this law , no company can promote
monopoly and other restrictive trade activities . MRTP commission has power to stop all
business activity who are creating barrier in the way of competition in Indian economy.In this
law , RTP is defined deeply and many provisions explains what are activities are restrictive .
Now , this act is converted into Competition Act 2002 and MRTP commission is converted into
Competition commission.
Information Technology Act 2000
Introduction of Information Technology Act 2000
Information technology is one of the important law relating to Indian cyber laws. It had passed in
Indian parliament in 2000. This act is helpful to promote business with the help of internet. It
also set of rules and regulations which apply on any electronic business transaction.
Due to increasing crime in cyber space, Govt. of India understood the problems of internet user
and for safeguarding the interest of internet users, this act was made.
The following are its main objectives and scope:-
1. It is objective of I.T. Act 2000 to give legal recognition to any transaction which is done by
electronic way or use of internet.
2. To give legal recognition to digital signature for accepting any agreement via computer.
3. To provide facility of filling document online relating to school admission or registration in

employment exchange.
4. According to I.T. Act 2000, any company can store their data in electronic storage.
5. To stop computer crime and protect privacy of internet users.
6. To give legal recognition for keeping books of accounts by bankers and other companies in
electronic form.
7. To make more power to IPO, RBI and Indian Evidence act for restricting electronic crime.
Scope
Every electronic information is under the scope of I.T. Act 2000 but following electronic
transaction is not under I.T. Act 2000
1. Information technology act 2000 is not applicable on the attestation for creating trust via
electronic way. Physical attestation is must.
2. I.T. Act 2000 is not applicable on the attestation for making will of any body. Physical
attestation by two witnesses is must.
3. A contract of sale of any immovable property.
4. Attestation for giving power of attorney of property is not possible via electronic record.
Highlights the main chapters of I.T. Act 2000 or its main provisions:-
There are 13 chapters in law and all provision is included in this chapters.
1. Chapter II
Any contract which is done by subscriber. If he signs the electronic agreement by digital
signature. Then it will be valid.
In case bank, the verification of digital signature can be on the basis of key pair.
2. Chapter III
This chapter explains the detail that all electronic records of govt. are acceptable unless any other
law has any rules regarding written or printed record.
3. Chapter IV
This chapter deals with receipts or acknowledgement of any electronic record. Every electronic
record has any proof that is called receipt and it should be in the hand who records electronic
way.
4. Chapter V
This chapter powers to organization for securing the electronic records and secure digital
signature. They can secure by applying any new verification system.
5. Chapter VI
This chapter states that govt. of India will appoint controller of certifying authorities and he will
control all activities of certifying authorities.
“Certifying authority is that authority who issues digital signature certificate.”
6. Chapter VII
In this chapter powers and duties of certifying authority is given. Certifying authority will issue
digital signature certification after getting Rs. 25000. If it is against public interest, then C.A. can
suspend the digital signature certificate.
7. Chapter VIII
This chapter tells about the duties of subscribers regarding digital signature certificate . It is the
duty of subscriber to accept that all information in digital signature certificate that is within his
knowledge is true .
8. Chapter IX
If any body or group of body damages the computers , computer systems and computer networks
by electronic hacking , then they are responsible to pay penalty upto Rs. 1 crore . Fore judgment
this , govt. can appoint adjucating officer .
9. Chapter X
Under this chapter, cyber regulation appellate tribunal can be established. It will solve the cases
relating to orders of adjudicating officers.
10. Chapter XI
For controlling cyber Crime, Govt. can appoint cyber regulation advisory committee who will
check all cyber crime relating to publishing others information. If any fault is done by anybody,
he will be responsible for paying Rs. 2 lakhs or he can get punishment of 3 years living in jail or
both prison and penalty can be given to cyber criminal.
11. Chapter XII
Police officers have also power to investigate dangerous cyber crime under IPC 1860 , Indian
Evidence Act 1872 and RBI Act 1934 .
Advantages of I.T. Act 2000
1. Helpful to promote e-commerce
• Email is valid
• Digital signature is valid.
• Payment via credit card is valid.

• Online contract is valid
Above all things validity in eye of Indian law is very necessary. After making IT act 2000 , all
above things are valid and these things are very helpful to promote e-commerce in India .
2. Enhance the corporate business
After issuing digital signature, certificate by Certifying authority, now Indian corporate business
can enhance.
3. Filling online forms :-
After providing facility, filling online forms for different purposes has become so easy.
4. High penalty for cyber crime
Law has power to penalize for doing any cyber crime. After making of this law, nos. of cyber
crime has reduced.
Shortcoming of I.T. Act 2000
1. Infringement of copyright has not been included in this law.
2. No protection for domain names.
3. The act is not applicable on the power of attorney, trusts and will.
4. Act is silent on taxation.
5. No, provision of payment of stamp duty on electronic documents.
- See more at: http://business.svtuition.org/2009/11/what-is-information-technology-act-

2000.html#sthash.TgWybDuQ.dpuf
Main Provisions of Competition Act 2002
In 1969 Govt. has passed an act and it had given the name monopoly and restrictive trade
practices (MRTP). It became popular with the name of MRTP 1969. This act has many
provisions to control the
monopoly and to promote the competition. It has defined RTP and also explained the powers of
MRTP commission. But its scope was very narrow and Govt. of India has made new act called
competition act 2002. On the place of MRTP ACT 1969 after this MRTP act 1969 was fully
repealed.
Explanation of Competition Act 2002
Competition Act 2002 states that Indian traders must not do any activity for promoting
monopoly. If they will do any activity in the form of production, distribution, price fixation for
increasing monopoly and this will be against this act and will be void. This act is very helpful for
increasing good competition in Indian economy.
Under this act following are restricted practice and these practices are stopped by this act.
1. Price fixing:-
If two or more supplier fixes the same price for supply the goods then it will be restricted
practice.
2. Bid ragging:-
If two or more supplier exchange sensitive information of bid, then it will also be restricted
practice and against competition.
3. Re-sale price fixation:-
If a producer sells the goods to the distributors on the condition that he will not sell any other
price which is not fixed by producer.
4. Exclusive dealing:-
This is also restricted practice. If a distributor purchases the goods on the condition that supplier
will not supply the goods any other distributor.
Above all activities promote monopoly so under competition act these are void and action of
competition commission will not entertain by civil court.
Establishment of Competition Commission Under this law

Govt. of India appoints the chairman and other member of competition commission. Competition
act 2002 gives the rules and regulation regarding establishment and functions of this
commission.
Qualification of chairperson of Competition commission:-
He or she should be Judge of high court + 15 years or more experience in the field of
international trade , commerce , economics , law , finance , business and industry .
Function of Competition commission:-
1. To stop activity and practice which are promoting monopoly.

2. To promote the competition.
3. To protect the interest of consumers.
Conclusion:-
India is doing all work for safeguarding the interest of consumer and this law is one of the
important pillar in this way.
Main Provisions of Competition Act 2002
In 1969 Govt. has passed an act and it had given the name monopoly and restrictive trade
practices (MRTP). It became popular with the name of MRTP 1969. This act has many
provisions to control the
monopoly and to promote the competition. It has defined RTP and also explained the powers of
MRTP commission. But its scope was very narrow and Govt. of India has made new act called
competition act 2002. On the place of MRTP ACT 1969 after this MRTP act 1969 was fully
repealed.
Explanation of Competition Act 2002
Competition Act 2002 states that Indian traders must not do any activity for promoting
monopoly. If they will do any activity in the form of production, distribution, price fixation for
increasing monopoly and this will be against this act and will be void. This act is very helpful for
increasing good competition in Indian economy.
Under this act following are restricted practice and these practices are stopped by this act.
1. Price fixing:-
If two or more supplier fixes the same price for supply the goods then it will be restricted
practice.
2. Bid ragging:-
If two or more supplier exchange sensitive information of bid, then it will also be restricted
practice and against competition.
3. Re-sale price fixation:-
If a producer sells the goods to the distributors on the condition that he will not sell any other
price which is not fixed by producer.
4. Exclusive dealing:-
This is also restricted practice. If a distributor purchases the goods on the condition that supplier
will not supply the goods any other distributor.
Above all activities promote monopoly so under competition act these are void and action of
competition commission will not entertain by civil court.
Establishment of Competition Commission Under this law
Govt. of India appoints the chairman and other member of competition commission. Competition
act 2002 gives the rules and regulation regarding establishment and functions of this
commission.
Qualification of chairperson of Competition commission:-
He or she should be Judge of high court + 15 years or more experience in the field of
international trade , commerce , economics , law , finance , business and industry .
Function of Competition commission:-
1. To stop activity and practice which are promoting monopoly.

2. To promote the competition.
3. To protect the interest of consumers.
Conclusion:-
India is doing all work for safeguarding the interest of consumer and this law is one of the
important pillar in this way.
FTDR Act 1992
Foreign trade development and regulation act was passed in 1992 . After this , old export control
act 1947 was closed . All export and import are done by FTDR Act 1992 . FTDR Act is helpful
to promote export
and import without any restrictions .
Main provisions
1. Reduce restrictions
This act's provisions are relating to reduce the restrictions on foreign trade .
2. EXIM Policy
This provision gives power to govt. of India to make policy of export and import under this act.
3. Appointment of Director general of Foreign trade
This act also powers to govt. of india to appoint director general of foreign trade . DFGT will
advise for making exim policy .
4.Importer exporter code no.
Under this law , any body can export or import only after getting I-M-C-N from director general
of foreign trade .
5. Issue of license
Export or import can be done under license issued by DGFT
6. Search and Seizure
Authorized person can search whether goods are imported or exported under term and conditions
of FTDR Act 1992.
7. Penalty for contravention
If anybody contravenes the rules and regulations of FTDR Act 1992 , then he has to give 1000
rupees or 5 times of value of goods involve whichever is more .
What is MNC
MNC means multinational corporation. If any company's head office in one country and its
business activities are in many countries, that company will be called multinational corporation.
Its other popular name is multinational enterprise. These corporation is also called transnational
corporation. Multinational corporation starts from their own country but they increase their
business level and they do business many countries as per the rules and regulations of different
countries.
Foreign Exchange Regulation Act 1973 applies on MNC. As per this, a corporation will be
MNC, if
1) Its subsidiary or branches are in two or more countries. All these countries will be host
countries for him.
2) Its head office is outside of India. His own country will be home country for him.
British East India company is first MNC who issued shares and created stock. More than 400
years history of big MNCs and its development. Every corporation starts his business as MNC
because it has to get tax benefits. It has to get low labor cost benefits. It has to get marketing
benefits. Large number of MNCs are from developed countries. There are big competition, so
these corporations go to developing countries for their own benefits. By opening branches or
subsidiaries in developing countries, they can produce their products at cheap material and labor
cost.
What is MMNC?
It means micro multinational corporation. It is just like multinational corporation but at micro
level. With the help of internet, anyone can make MMNC by creating or using e-commerce
website or providing international service.
Features of MNC
1. Board of directors will be of home country.
2. MNCs do business with direct investment. It means these MNC will have right to buy land
and make plant. It also have right to produce the products and sell the products in other country.
3. MNCs's advertising lobby is very advance. They want to sell every thing on the basis of high
advertising whether it is quality product or not.
Benefits of MNCs
If any MNC works with honesty and high moral ethics, at that time there are lots of following
benefits:
1. If MNC wants to benefit of human resource of the country in which it is operating, it can play
important role to generate new employment. For example, there are lots of IT companies who
hired Indians for their work, so with this employment of Indians has increased.
2. If MNC takes social responsibility, at that time, it can invest his profit for development of
parks, education of employees' children and other welfare schemes instead of sending this profit
to his home country.
3. MNC creates a place where different countries employees can collaborate. With this, they can
increase world unity. They can think to solve world problems like poverty, killing of animals and
pollution problems.
4. If MNC works with more honestly, at that time, it can share his technology with host country.
But it is very rare case.
5. After coming of MNC, advertising company can earn more.
- See more at: http://business.svtuition.org/2011/11/benefits-of-

mncs.html#sthash.6EX61JqE.dpuf
Drawbacks of MNCs
There are lots of drawbacks of MNCs. All these drawbacks are being written on the basis of past
experience of MNCs.
1. Interference in the Economic Sovereignty of the Host Country
MNCs affects the independence of any country. For example, one East India company came in
India for business but it made India slave for 200 years. So, it is the biggest drawback of MNCs
that these are the risky for freedom of any country.
2. Drainage of Resources
MNC's main aim is to earn the profit by any way. So, it exploits developing country's natural
resources. These MNCs increase pollution of air and water.
3. Strain on Foreign Exchange Reserves
MNCs are very risky for foreign exchange reserves. India, there are lots of MNCs which transfer
Indian currencies to their home country in the form of profit and dividends of foreign
shareholders. With this, our foreign exchange reserve level is decreasing.
4. Minimum Transfer of Technology
No MNC bring any new technology in India. They only produces zero technology products in
the form of cold drinks and other which can easily make in each village of India.
5. Exploitation of Labour
These MNCs do not create any employment in the host country because these MNCs are only
interested to exploit laborers by paying them less. All top posts are filled by their home countries
employees.
6. Cultural Loss
This is the one of biggest drawback of MNCs that it is risky for our cultural loss. Our culture
makes us vegetarian but many MNCs employees eat meat and chicken. So, all these things are
against our culture. Bad Indians copies MNCs employees and start to wear leather shoes. Due to
this, animals of India are being killed . So, this activities are so bad.
7. Creation of Monopolies
MNCs create also monopolies. With high advertising and other ways, these MNCs do not live
domestic companies. After this, these MNCs increase prices and then get high profit by
exploiting consumers of India.
8. Evasion of Taxes
These MNCs do not disclose its all true account. So, with this, these MNCs save their tax
liabilities.
9. Economic Power
This is also one of the important drawback of MNCs that these MNCs misuse of their economic
power. With economic power, these MNCs tries to change the economic policies. With this, they
have to pay zero tax in host country.
10. Depletion of Natural Resources
After increasing of MNCs in India, you can see that our all natural resources are decreasing very
fastly. These MNCS are selling urea fertilizers. With this, our land is becoming useless.

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Compiled and Edited by Dr.

Pavnesh Kumar DBM-IGNTU Amarkantak(MP)

MBA-First Semester IGNTU

Introduction to Business Environment

A. The Micro Environment of Business

Suppliers are the persons who supply raw material to company.

Customers are the persons who buy goods from company.

Competitors are those who also sell same product of company.

B. The Macro Environment of Business

2. Political and Governmental Environment

In political and government environment, we can include legislature's decisions, executive's

3. Socio cultural Environment

In technological environment, we can include ecommerce technology, online payment, Internet

>> August 10, 2011

1. Objective of business is to earn profit.

2. There are lots of risks in it.

Following are main business objectives:

b) To Grow the business

c) Innovation of new products

b) Employee satisfaction and development

c) Quality products and services

d) Fair return to investors

e) Good corporate citizenship

Micro Environment of Business

Macro Environment of Business

Introduction to Economic Environment

1. First phase economic reforms

2. Second phase of economic reforms

3. Third phase of Economic Reforms

Followings are the main economic policies:-

3. Foreign exchange policy:-

Critical Role of Economic Policies:-

Importance of Environment Scanning

Following are main importance of environment scanning :

1. Effective Utilization of Resources

2. Constant Monitoring of the Environment

- See more at: http://business.svtuition.org/2011/09/importance-of-environment-

Factors of Environmental Scanning

Following are the main factors of environment scanning.

a) European union wrote down a 50% of Greece's debts.

c) Rajat Gupta is being charged for insider trading.

d) Bharti Airtel's urgent request failed.

 Changes in Taxation Policy

- See more at: http://business.svtuition.org/2011/10/factors-of-environmental-

What is Environmental Appraisal? What are the Stages Involved in Appraisal?

1st Stage : Factors Affecting Environmental Appraisal

Following are the main factors affecting environmental appraisal

a) Factors relating to environment

organisation's complexity and flexibility.

b) Factors relating to Organisation

c) Factors Relating to Strategies

2nd Stage : Identification of Environmental Factors

b) High Priority Issues

c) Low Priority Issues

3rd Stage : Structuring the Environmental Appraisal

Meaning of SWOT Analysis

Example of SWOT Analysis

SWOT Analysis Template

Issues Strengths Opportunities Weaknesses Threats

4. Product Life Company can

If company's Company may

- See more at: http://business.svtuition.org/2011/10/swot-analysis.html#sthash.eFPVoCfW.dpuf

P means Political Analysis

E means Economic Analysis