Economic Environment of Business

Overview and Constituents of

Economic Environment of Business

Veena Keshav Pailwar

Professor
IMT Nagpur

Veena Keshav Pailwar copyright@Prentice 1

Hall of India
 Economic Environment and Business Fluctuations

• Significance of the economic environment scanning

• Various constituents of economic environment of business
• Economic System
• Planning Process
• Trend in Macro-Economic Variables
• Economic Structure and the Stage of Development
• Business Fluctuations and Cycles
•International Economic Environment

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 Levels of Management and Economic Analysis
Levels of Types of Activities
Management
Lower Day to day operations of the firm:
Production scheduling, ordering input
supplies, scheduling overtime hours
Middle Current operations of the firm:
Demand forecasts
Cost estimation and analysis
Pricing of the product and discount to
be offered
Investment appraisal and risk analysis
Choice of suppliers
Lower level recruitments
Type of Economic Analysis
Not much of economic analysis
required
Micro-Economic Analysis:
Given overall economic
environment.
Demand Analysis and Forecasting
Production and Cost Analysis
Pricing Policies
Investment Appraisal and Risk
Analysis

Higher Long term plans and strategic Macroeconomic Analysis:

decisions: Government Policy and Impact
Diversification of product lines Analysis
Launching of new products Specific Industry Analysis
Expansion of production base Country Analysis
Competitive strategies such as Strategic Planning
advertising, research and development,
packaging and marketing
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 Business Organizations
Strategic Decisions

Diversification Launching New

Expansion
Products

Mergers & R&D

Acquisition Decisions
Affected by Changing Macroeconomic Policies
and Environment
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 Assessment of Economic Environment
National Exchange
Income Rate
Taxes,
Trade
Budget Prices
& Foreign Capital
Deficit & Inflation
Employment
Interest rate
Wages
Credit

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Course Objectives/ What Will You Learn?
•Understand the meaning of various economic
indicators, with focus on international economic
environment

•Analyze overall economic environment and

structure using various economic indicators

•Comprehend the role of the government and

various multilateral institutions in shaping and
stabilizing economic environment.

•Ascertain implications of emerging trends in

domestic and global economy for business units and
industry as a whole

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 Course Coverage
•Constituents of Business Environment
•National Income & Environment Scanning
•Balance of Payment
•Trade Flows and International Linkages
•Capital Flows, Growth and Macroeconomic Instability
•Exchange Rate Regimes & Currency Convertibility

Text Book:
Business Environment,
Veena K. Pailwar

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 Pattern of Evaluation
S. No. Components Weight Topics
I Internal Assessment 60%
1. Group Assignments: 20%
Group Presentation & Given Topic
Discussion

2. Class Preparedness & 20% Attendance,

Participation Punctuality,
Assignments, Class
Discussion, Class
Behaviour, etc.
II. Mid Term Exam 20% Topics covered till Mid
Term Exam
III End Term Exam 40% All the topics
Constituents of Economic Environment of Business

Economic System

Economic Policies Economic Structure

Trend in
Planning Process Economic Variables

International
Economic Business Fluctuations
Environment

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