Business Environment

Prof. Swagat Kishore Mishra

Contents
Defination, Themes and Issues
Stabilizing the Economy
Economic, Technological, Political, Legal and Socio-Cultural

International Business Environment

Domestic and Global Business Environment

Changes
and
Environment

Challenges

in

Business

Macroeconomics
Gross Domestic Product

A Case Study on Odisha GDP Accounting

The Odisha Economic Survey 2012-13
Gross State/District Domestic Product
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Defination, Themes and Issues

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Stabilizing The Economy

Business Excellence: Business

Environment

Survival of enterprises with growing competition

Economic, Technological,
Environment

Political,

Legal

and

Socio-Cultural

Whole enterprise management

Constant improvement for individual stakeholders

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Employees, Shareholders, Customers and Society

But how to assess the achieved status of the Business Excellence
taking into account constant changes of the global business
environment ?
Favorable Business Environment
Ethics,
Economy,
Environment,
Business,
Location
and
Stakeholders, etc.

Business Environment, BIMTECH-BBSR

International Business Environment

International Business Environment
Globalization (OECD)*

Increasing the dependence of markets and national economies

Induced by high dynamics of the trade with goods, capital,
services, transfer of technologies, etc.
Know-how the conquest of the global economic space without
boundaries
Modified or standardized both micro and macro economically

*Organization for Economic Cooperation and Development

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Changes and Challenges in

Business Environment

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Macroeconomics
Separate from Microeconomics
Study of aggregates
National Income, Economic Growth, Unemployment,
Foreign Trade, Inflation, Fiscal and Monetary Policy, etc.

Explain economic events

Devise policies to improve economic performance
John Maynard Keynes, General Theory of Employment, Interest
and Money, 1936
Theory of output and employment: Macro and Theory of
individual industry or firm: Micro
Some Nobel Macroeconomists

Milton Friedman James Tobin Franco Modigliani Robert Solow Robert Lucas George Akerlof
Edward Prescott Paul Krugman Thomas J Sargent Christopher A Sims Edmund S Phelps
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Gross Domestic Product

GDP Nations total income and the total
expenditure on its output of goods and services.
Total income of everyone in the economy
Total expenditure on the economys output of
goods and services

Market value of all final goods and services

Produced within an economy
In a given period of time

Value of goods and services measured

at current prices (Nominal GDP)
at constant set of prices (Real GDP)
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 National Income
How much everyone in the economy has earned?
Does GDP per-capita reflect true economic wellbeing?

GDP is sum of four categories of expenditure

Consumption (C)
Investment (I)
Government Purchases (G)
Net Exports (NX)

Gross National Product (GNP) = GDP + Factor Payments

from Abroad Factor payments to Abroad

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Net National Product (NNP) = GNP Depreciation

National Income (NI) = NNP Indirect Business Taxes
Personal Income = NI Corporate Profits Social Insurance
Contribution Net Interest + Dividends + Government Transfers +
Personal Interest Income
Personal Disposable Income = PI Personal Tax and Non-tax
payments
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Trivia (True or Not)

Real GDP rises only when the amount of
goods and services has increased
Nominal GDP can rise either because
output has increased or because prices
have increased
Nominal GDP / Real GDP = GDP Deflator
CPI = Laspeyres Index (overstates inflation)
GDP Deflator = Paasche Index (understates
inflation)
GDP = Y = C + I + G + NX
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A case study on
Odisha GDP Accounting

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The Odisha Economic Survey 201213

9th largest state of India (1,55,707 sq.km.)
Contributes 2.50% of NI, Growth rate at 9.14%
Time period: 2012-13 A
Gross State/District Domestic Product
Real per-capita income at Rs. 24, 134 in 2011-12 at
2004-05 prices (was Rs. 14, 862 in 1999-2000)
GSDP growth in nominal term
Service sector dominates GSDP (58.3% in 2012-13)
Industry at 24.2% and Agriculture at 17.5% (real
terms at 2004-05 prices)
Gross District Domestic Product (GDDP) of Odisha:
Sundergarh highest and Net District Domestic
Product (NDDP) of Odisha: Jharsuguda highest
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Gross State Domestic Product

(GSDP)
300000
250000
200000
150000
100000
50000
0

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Fig 1: Odisha GSDP**

Source: Author

**Based on the data from Annual Budget 2013-14, Govt. of Od

2012-13 (A)
2011-12 (Q)

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2011-12 (Q)
2012-13 (A)

Sectoral contribution in GSDP

Fig 2: Odishas Sectoral contribution to GSDP***

Source: Author

GSDP (2012-13 A)

***Based on the data from The Odisha Economic Survey, 2012-13

Primary Sector
Secondary
Sector
Tertiary Sector
Finance and
Service Sector

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Weakness in GDP estimate

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Green GDP accounting is equally essential

Human development progress must be reflected
Distribution of income and wealth
Economic welfare
International economies

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Reconciliation
Stabilizing
The
Economy

Gross
Domestic
Product
(GDP)

Fig 3: Mapping the discussion

Source: Author
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Business
Environm
ent

Internatio
nal
Business
Environm
ent

Changes
and
Challenge
s in
Business
Environm
ent

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Current Status: Indian

Economy

Growth is forecast to accelerate to 8.1 percent in 2015 and 8.2 percent in

2016 (UN ESCAP report titled, 'Economic and Social Survey of Asia and
the Pacific 2015)

Indian economy to grow at 7.3% in 2015: Moody's Analytics

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Keywords

Business Environment
Business Excellence
Globalization
Macroeconomics
Gross Domestic Product
State Gross Domestic Product (Odisha)
Expenditure and Income Approaches
Laspeyres and Paasche Indices
Current and Constant Prices
National Income
Advance, Quick and Revised Estimates

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Readings

Text Books
The Business Environment: Themes and Issues, Paul Wetherly,Dorron
Otter, 2nd Edition, Oxford Publication
Macroeconomics, N. Gregory Mankiw, 7th Edition, Worth Publishers
The International Business Environment, Challenges and Changes, 2nd
Edition, Ian Brooks,Jamie Weatherston,Graham Wilkinson, Pearson
Publication

Research Studies, News Media, Annual Reports and White Papers

The Odisha Economic Survey, 2012-13, Planning and Coordination
Department, Government of Odisha
Miriam Jankalova, 2012, Business excellence evaluation as the
reaction on changes in global business environment, Procedia- Social
and Behavioral Sciences, Vol. No. 62, pp. 1056-1060
Annual Budget 2013-14, 2013, Odisha FRBM Rules 2005, Report,
Government of Odisha

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Thank You