NAME : LAKSHAY SHARMA

PROGRAM: MBAOL JAN 2022 SESSION

SUBJECT: MMPC 003(Business Environment)
ENROLLMENT NUMBER: 2201063128
MOBILE: 6395502995,7710092073,9769325766
EMAIL:LAKSHAYSHARMA617@GMAIL.COM,SHARMA_LAKSHAY
@ONGC.CO.IN
REGIONAL CENTER:BHOPAL
 1. the nature and scope of business environment. what are the
various types of business environment? discuss giving
examples.
Business environment: A combination of external/internal factors that influence operations of a
business. These factors can be both opportunities as well as a threat.
Nature of business environment:
• Dynamic: Keeps on changing for example changing customer preference, new competitors,
novel technology, new marketing channels, government policies, changing demography.
• Uncertain: Difficult to confirm the influence of these factors as the continue to fluctuate
quickly.
• Complex: The impact of these factors on business decisions is complex and difficult to
estimate.
• Relativity: Business environment is associated with societal norms and local conditions
hence varies from region to region.
• Interrelation: All the factors of the business environment are related to each other for
example preference of youth towards western culture, the demand for fast food is also
rising, change in political parties will result in change in government policies, market
conditions, technology etc.
Scope of business environment:
Internal factors / micro factors are controllable that is they are the one by business. While external
factors / macro factors they are uncontrollable and beyond the control of business. for example,
recent corona pandemic has impacted business and they have to adjust their strategies and
operations.

2. What are the important elements of political environment?

How does a government regulate business. discuss in details.
Political-legal factors are external factors which are considered out of business’s control but can
affect business environment to a great extent. In a political system the role of government as a
political institution is to formulate social policies Aimed to deliver higher social benefits at lowest
social costs. Thus, government in a democracy or a market economy facilitates business decisions
and support economic activity in sector such as health, infrastructure, education, law and order etc.
However other political factors which play a major role in affecting any business environment like
bureaucracy levels, corruption, freedom of media and press, tariffs and related measures of trade
control.

Elements of political environment:

Political ideology: Communist party in China, Russia and market economics live USA and democratic
socialism in India while others like dictatorships in North Korea creates an aversion to a healthy
business environment.
Civil liberties: countries with high level of civil Liberty are considered to be free and more preferred
by companies for investment.
International political relations: political friendship among different nations create a favorable
environment or international trade and commerce e.g., bilateral ties between India and US, India -
Australia, SAARC boosts trade relations and create more business opportunities.
Political stability: political stability is crucial and any instability can affect foreign investment
severely. e.g., Russia Ukraine war, Pakistan no confidence vote against PM, Sri-lanka emergency.
Government policy: stable policies are better for planning corporate strategies and build up
confidence in the industry.

3. Describe the structure and working of the money market and

capital market.
Money market: Refers to trading in short term debt instruments (maturity less than 1 year)

Structure of money market: major participants are scheduled commercial banks (excluding RRBs
regional rural banks) cooperative banks (except land development banks) and primary dealers.

Main instruments in money market:

• Call market / notice market:
Short term funds that are payable at call. Maturity varies from one day to 14 days. No
requirement of a collateral. Interest rates payable on call loans are known as call rate.
• Commercial papers market: Issued by companies, primary dealers or financial institutions FI
to raise short term debt. Maturity is between 7 to 1 year. All eligible participants are to issue
minimum credit rating A2 as per SEBI they are offered on discount to face value.
• Treasury bills (T bills): Promissory note issued by RBI. Government use T bills to raise short
term funds for any deficit which we may arise temporary or due to seasonal gap. Issued with
maturity of 91 days, 182 days or 364 days.
• Certificate of deposit: Negotiable money market instrument issued against funds deposited
in a bank or other financial institution by scheduled commercial banks (except RRB). Issued
in multiples of minimum 1 lakh for 7 days to 1 year maturity. Issued at discount on face
value in dematerialized form.
• Money market mutual funds: Mutual funds are investment schemes run by AMC's (asset
management company) money is collected from a large number of investors and this pool of
money is invested into stocks bounds and securities. They are issued by banks, FI,
corporates.

Structure of capital market:

It comprises of two markets.
1. Primary market new issue market (NIM) : Issuer sells the (shares and bonds) securities
without any intermediaries.
Example IPO’S: whenever companies issue the security for the first time it is called an IPO (initial
public offer) they raise funds through IPO’s by selling their shares held from owner equity through
this route.
2. Secondary market or stock market:
It’s a place where shares bonds which were sold earlier are traded secondary market is of two types:
• Auction market
Trading is done through stock exchange for example BSE NSE.
• Over the counter
The trading is conducted without using platform of stock exchange. It is done electronically.
4. How does technological advancement impact international
business environment. Discuss.
Initially businesses were more dependent on labor but recent advancements in technology
especially computers, internet, IOT, automation have impacted business globally. It is essential for
any business to have competitive advantage through the use of technology.

Impact of technology on international business environment:

• Technology has resulted in increasing sales revenues through the use of internet most
business have gone online and business actions have gone automated.
• Through the use of social media business are able to increase client base and use of tools
like Google analytics has enabled specific targeting of customers through the database and
shows the potential customers their preferred content example recent search of products
will show ads based on that product.
• Organizations are using technology for setting their staff appraisal information and increase
employee productivity.
• Technology has enabled business to transfer certain non-core business functions like
technical support and customer service through outsourcing from least expensive areas of
the world this has enabled businesses to have more focus on their core activities and save
costs.

5. Write short notes:

a) Balance of payments (BOP):
Systematic record of all transactions between economic units of a country (e.g., households,
Government, companies) and the rest of the world in a given period of time.
It's an indicator of state of health of an economy and its relations globally.
BOP determines if the value of a currency is appreciating or depreciating.
BOP guides government to frame its international trade policies and fiscal policies.
Before 1991 Indian economy used to be in world looking due to a system of license Raj
nationalization that occurred earlier but due to Bob crisis India followed a more liberalized policy in
form of privatization decentralization this investment this is also referred as liberalization
privatization and globalization LPG reforms.

b) CSR or corporate social responsibility:

CSR has become a standard business practice that AIIMS to create a positive impact on society by
creating a shared value for honors employees’ shareholders and society.
It helps to integrated social environment aspects with operations of business creating a positive
impact for society in general while at the same time addressing the business operations.
CSR examples:
CSR -Employees
Better working conditions health safety and environment considerations are being prioritized along
with business operations.
Labor welfare and hygiene are also taken care of for employees and surrounding neighbor areas.
Employee recognition and career growth.
Skill enhancement and participation.
CSR-Community participation
Environment pollution control.
R&D for less harmful and polluting products.
ESG norms for rating companies by the investors.
CSR-consumer
Better quality of products that are sustainable
Focus on R &D for innovative products
Ensures equitable prices and better after sales services.

c) corporate tax reforms:

The government of India has appointed many committees to suggest measures in both the
direct and indirect taxation system of the country. To examine the structure of both direct and
indirect taxes, a Tax Reform Committee under the chairmanship of Dr Raja J. Chelliah was
constituted in 1991. The main task of the committee was to give suggestions on ways to improve the
elasticity of direct and indirect taxes, making the taxation system broad-based and fair.

Kelkar Committee

In 2002, a task force under the chairmanship of Dr Vijay Kelkar was constituted to recommend
measures for simplification and rationalisation of direct and indirect taxes. The committee
recommended formulating a simple, effective and better tax system.

Kelkar Committee on Fiscal Consolidation

In August 2012 a Committee was constituted under the chairmanship of Dr. Vijay Kelkar to outline a
roadmap for fiscal consolidation. The main reason behind constituting the Committee was that in
2012-13, the fiscal deficit was soaring high and it was estimated to reach 6.1% of GDP and a higher
fiscal deficit is a cause of worry for the economy which could lead to higher inflation, the external
balance could widen, investment, growth and employment tend to weaken and the overall
confidence of investor is shaken.

Direct Tax Reforms

Direct Taxes are those taxes in which the impact and incidence of the tax fall on the same person.
Examples like Income Tax, Corporation Tax, etc. A series of reforms have been introduced in the
direct taxes

d) Farm Laws

On 27th September 2020, Ram Nath Kovind, the President of India gave his acceptance to the 3 farm
bills that were earlier passed by the Indian Parliament. These Farm Acts are as follows:

Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

This Act permits farmers to sell their produce outside the APMC regulated mandis but it does not
abolish them. It aims to provide lucrative prices to farmers via alternative trade channels. It also
prohibits state governments from imposing any tax on the trade of produce outside the mandis.

Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act,
2020

It creates a national framework for contract farming. Although contract farming was legal prior to
the enactment of this act as well, this act aims to provide a complete comprehensive outline for
such an arrangement. This will enable farmers to contract a guaranteed price for their produce prior
to production/sowing.

Essential Commodities (Amendment) Act, 2020

The ECA has been amended to state that the Government of India will list few commodities as
essential and control their supply and prices only in cases of war, famine, extraordinary price rises,
or natural calamities. Other produce including cereals, pulses, potato, onion, edible oilseeds, and oils
have been deregulated. The amended act also states that the government will impose stock limits
on essential commodities only when the rise in price is at least 100% for horticultural produce and
50% for non-perishable agricultural produce.

The enactment of these acts has created fear in the minds of farmers and has led to widespread
protests. Despite several rounds of talks, the government and the farmers have not been able to
arrive at a mutually agreeable solution. The farmers fear that increased private sector participation
will lead to exploitation and that their interests will not be safeguarded. Although the government
has made several attempts to pacify the farmers, they have all been in vain