Name :- Mohammed

Mohd Adnan Azam Lari

Enrollment no:- 2000101682

2000100082

Subject & Code:- Business Environment

BM318

Course:- BBA 3rd Year 5th Semester

Assignment 2
 Q1. Explain Foreign direct investment. Also discuss the recent developments in
government policy related to fdi and different percentage of fdi allowed in various
sectors.

A1. A foreign direct investment is an investment in the form of a controlling

ownership in a business in one country by an entity based in another country. It is
thus distinguished from a foreign portfolio investment by a notion of direct control.
This is primarily attributed to ease in FDI rules in India. India, today is a part of the top 100
clubs on Ease of Doing Business (EoDB).FDI inflows in India stood at $45.15 bn in 2014-15
and have consistently increased since then. Moreover, total FDI inflow grew by 65.3%, i.e.
from $266.21 bn in 2007-14 to $440.01bn in 2014-21 and FDI equity inflow also increased by
68.6% from $185.03 bn during 2007-14 to $312.05 bn (2014-21).
India has attracted a total FDI inflow of $27.37 bn during the first four months of F.Y. 2021-22
which is 62% higher as compared to the corresponding period of F.Y. 2020-21 ($ 16.92 bn).
India received the highest annual FDI inflows of $84,835 mn in FY 21-22 overtaking last
year’s FDI by $2.87 bn. Also, FDI equity inflow in FY 2021-22 were $ 59,825 mn.
FDI Equity inflow in Manufacturing Sectors have increased by 76% in FY 2021-22 ($ 21.34
bn) compared to previous FY 2020-21 ($ 12.09 bn).
Total FDI inflows in the country in the last 22 years (April 2000 - March 2022) are $ 847 bn
while the total FDI inflows received in the last 8 years (April 2014- March 2022) was $ 523 bn
which amounts to nearly 40% of total FDI inflow in last 22 years.
In FY 2014-15, FDI inflow in India stood at mere $ 45.15 bn, which increased to $ 60.22 bn in
2016-17 and further to the highest ever annual FDI inflow of $ 83.57 bn reported during the
FY 2021-22.
Total FDI inflows in the country in the second quarter of FY 2022 (July - September) is $ 16.6
Bn and total FDI equity inflows stands at $ 10.3 Bn.
Singapore (27.01%), USA (17.94%), Mauritius (15.98%), Netherland (7.86%) and Switzerland
(7.31%) emerge as top 5 countries for FDI equity inflows into India FY 2021-22.
Top 5 sectors receiving highest FDI Equity Inflow during FY 2021-22 are Computer Software
& Hardware (24.60%), Services Sector (Fin., Banking, Insurance, Non Fin/Business,
Outsourcing, R&D, Courier, Tech. Testing and Analysis, Other) (12.13%), Automobile
Industry (11.89%), Trading 7.72% and Construction (Infrastructure) Activities (5.52%).
Top 5 States receiving highest FDI Equity Inflow during FY 2021-22 are Karnataka (37.55%),
Maharashtra (26.26%), Delhi (13.93%), Tamil Nadu (5.10%) and Haryana (4.76%).

Q2. Explain any one International economic institution and its impact on Indian Trade.

In the post-globalization world, almost every country thrives on the import and
export of goods. To ensure the growth and development of global trade, it is
necessary that it must be regulated and controlled by international organizations.
The emerging global economy, in the post -globalization era, paved the way for
international economic institutions that are entrusted with setting common rules and
regulations for the participating countries to ensure a viable and profitable trading
system across economies of different countries.
In this article, we have discussed some of the most important economic institutions
that are important from the RBI Grade-B Phase 2 Exam perspective. You should be
familiar with the functions of each of these organizations.

Q3. Discuss Competition law in detail and specially highlight the latest amendments
done.
A3. India’s foray into free-market liberalization and its transition from a “command and control”
based regime to that of a free economy paved the way for the annulling of the Monopolies and
Restrictive Trade Practices Act, 1969 (MRTP Act), which restricted the growth of monopolies in the
market. India now boasts of a contemporary competition law which is on par with established
competition principles of the world. This transformation was initiated with the launch of the
Competition Act in the year 2002. The Act is now known as the Competition (Amendment) Act,
2007, thanks to the amendments enacted during that year. This article provides an overview of
the competition law in India.

The Bill seeks to amend the Competition Act, 2002, to regulate mergers and acquisitions
based on the value of transactions. Deals with transaction value of more than Rs 2,000
crore will require CCI's approval.

Q4. Discuss the features of latest monetary & fiscal policy of India.
A4. Monetary policy refers to central bank activities that are directed toward influencing
the quantity of money and credit in an economy. By contrast, fiscal policy refers to the
government's decisions about taxation and spending. Both monetary and fiscal policies
are used to regulate economic activity over time.

Q5.Give brief overview of :

A-International Environment:- International managers face intense and constant challenges

that require training and understanding of the foreign environment. Managing a business
in a foreign country requires managers to deal with a large variety of cultural and
environmental differences. As a result, international managers must continually monitor
the political, legal, sociocultural, economic, and technological environments.

The political environment

The political environment can foster or hinder economic developments and direct
investments. This environment is ever‐changing. As examples, the political and economic
philosophies of a nation's leader may change overnight. The stability of a nation's
government, which frequently rests on the support of the people, can be very volatile.
Various citizen groups with vested interests can undermine investment operations and
opportunities. And local governments may view foreign firms suspiciously.
Political considerations are seldom written down and often change rapidly. For example,
to protest Iraq's invasion of Kuwait in 1990, many world governments levied economic
sanctions against the import of Iraqi oil. Political considerations affect international
business daily as governments enact tariffs (taxes), quotas (annual
limits), embargoes (blockages), and other types of restriction in response to political
events.

Businesses engaged in international trade must consider the relative instability of

countries such as Iraq, South Africa, and Honduras. Political unrest in countries such as
Peru, Haiti, Somalia, and the countries of the former Soviet Union may create hostile or
even dangerous environments for foreign businesses. In Russia, for example, foreign
managers often need to hire bodyguards; sixteen foreign businesspeople were murdered
there in 1993. Civil war, as in Chechnya and Bosnia, may disrupt business activities and
place lives in danger. And a sudden change in power can result in a regime that is hostile
to foreign investment; some businesses may be forced out of a country altogether.
Whether they like it or not, companies are often involved directly or indirectly in
international politics.

The legal enviroment

The American federal government has put forth a number of laws that regulate the
activities of U.S. firms engaged in international trade. However, once outside U.S.
borders, American organizations are likely to find that the laws of the other nations differ
from those of the U.S. Many legal rights that Americans take for granted do not exist in
other countries; a U.S. firm doing business abroad must understand and obey the laws of
the host country.

In the U.S., the acceptance of bribes or payoffs is illegal; in other countries, the
acceptance of bribes or payoffs may not be illegal—they may be considered a common
business practice. In addition, some countries have copyright and patent laws that are
less strict than those in the U.S., and some countries fail to honor these laws. China, for
example, has recently been threatened with severe trade sanctions because of a history
of allowing American goods to be copied or counterfeited there. As a result, businesses
engaging in international trade may need to take extra steps to protect their products
because local laws may be insufficient to protect them.

The economic environment

Managers must monitor currency, infrastructure, inflation, interest rates, wages, and
taxation. In assessing the economic environment in foreign countries, a business must
pay particular attention to the following four areas:
• Average income levels of the population. If the average income for the
population is very low, no matter how desperately this population needs a product
or service, there simply is not a market for it.

• Tax structures. In some countries, foreign firms pay much higher tax rates than
domestic competitors. These tax differences may be very obvious or subtle, as in
hidden registration fees.
 • Inflation rates. In the U.S., for example, inflation rates have been quite low and
relatively stable for several years. In some countries, however, inflation rates of 30,
40, or even 100 percent per year are not uncommon. Inflation results in a general
rise in the level of prices, and impacts business in many ways. For example, in the
mid‐1970s, a shortage of crude oil led to numerous problems because petroleum
products supply most of the energy required to produce goods and services and to
transport goods around the world. As the cost of petroleum products increased, a
corresponding increase took place in the cost of goods and services. As a result,
interest rates increased dramatically, causing both businesses and consumers to
reduce their borrowing. Business profits fell as consumers' purchasing power was
eroded by inflation. High interest rates and unemployment reached alarmingly high
levels.

• Fluctuating exchange rates. The exchange rate, or the value of one country's
currency in terms of another country's currency, is determined primarily by supply
and demand for each country's goods and services. The government of a country
can, however, cause this exchange rate to change dramatically by causing high
inflation—by printing too much currency or by changing the value of the currency
through devaluation. A foreign investor may sustain large losses if the value of the
currency drops substantially.

When doing business abroad, businesspeople need to recognize that they cannot take for
granted that other countries offer the same things as are found in industrialized nations. A
country's level of development is often determined in part by its infrastructure.
The infrastructure is the physical facilities that support a country's economic activities,
such as railroads, highways, ports, utilities and power plants, schools, hospitals,
communication systems, and commercial distribution systems. When doing business in
less developed countries, a business may need to compensate for rudimentary
distribution and communication systems.

The sociocultural environment

Cultural differences, which can be very subtle, are extremely important. An organization
that enters the international marketplace on virtually any level must make learning the
foreign country's cultural taboos and proper cultural practices a high priority. If a business
fails to understand the cultural methods of doing business, grave misunderstandings and
a complete lack of trust may occur.

Management differences also exist. In China, a harmonious environment is more

important than day‐to‐day productivity. In Morocco, women can assume leadership roles,
but they are usually more self‐conscious than American women. In Pakistan, women are
not often found in management positions, if they're in the workplace at all.

In addition, the importance of work in employees' lives varies from country to country. For
example, the Japanese feel that work is an important part of their lives. This belief in
work, coupled with a strong group orientation, may explain the Japanese willingness to
put up with things that workers in other countries would find intolerable.

Likewise, culture may impact what employees find motivating, as well as how they
respond to rewards and punishments. For example, Americans tend to emphasize
personal growth, accomplishment, and “getting what you deserve” for performance as the
most important motivators. However, in Asian cultures, maintaining group solidarity and
promoting group needs may be more important than rewarding individual achievements.

Finally, language differences are particularly important, and international managers must
remember that not all words translate clearly into other languages. Many global
companies have had difficulty crossing the language barrier, with results ranging from
mild embarrassment to outright failure. For example, in regards to marketing, seemingly
innocuous brand names and advertising phrases can take on unintended or hidden
meanings when translated into other languages. Advertising themes often lose or gain
something in translations. The English Coors beer slogan “get loose with Coors” came out
as “get the runs with Coors” in Spanish. Coca‐Cola's English “Coke adds life” theme
translated into “Coke brings your ancestors back from the dead” in Japanese. In Chinese,
the English Kentucky Fried Chicken slogan “finger‐lickin' good” came out as “eat your
fingers off.”

Such classic boo‐boos are soon discovered and corrected; they may result in little more
than embarrassments for companies. Managers should keep in mind that countless other,
more subtle blunders may go undetected and damage product performance in less
obvious ways.

The technological environment

The technological environment contains the innovations, from robotics to cellular phones,
that are rapidly occurring in all types of technology. Before a company can expect to sell
its product in another country, the technology of the two countries must be compatible.

Companies that join forces with others will be able to quicken the pace of research and
development while cutting the costs connected with utilizing the latest technology.
Regardless of the kind of business a company is in, it must choose partners and locations
that possess an available work force to deal with the applicable technology. Many
companies have chosen Mexico and Mexican partners because they provide a willing and
capable work force. GM's plant in Arizpe, Mexico, rivals its North American plants in
quality.

Consumer safety in a global marketplace

The United States leads the world in spending on research and development. As products
and technology become more complex, the public needs to know that they are safe. Thus,
government agencies investigate and ban potentially unsafe products. In the United
States, the Federal Food and Drug Administration has set up complex regulations for
testing new drugs. The Consumer Product Safety Commission sets safety standards for
consumer products and penalizes companies that fail to meet them.
Such regulations have resulted in much higher research costs and in longer times
between new product ideas and their introduction. This is not always true in other
countries.

B-Technological Environment
Technological environment refers to the state of science and technology in the country
and related aspects such as rate of technological progress, institutional arrangements
for development and application of new technology, etc. Concepts of technological
environment: 1. Technological environment is a component of macro or indirect action
environment. 2. Technological environment changes very fast. 3. Technological
environment affects the manner in which the resources of the economy are converted
into output. 4. Technological environment is self reinforcing. An invention in other
places. Online channelsOnline marketing is the practice of leveraging web-based
channels to spread a message about a company’s brand, product, or services to its
potential costumers. The mentioned techniques used for the online marketing includes
email, social media, display advertising, search engine optimization, Google AdWords
and more. The objective of marketing is to reachpotential customers through the
channels where they spend their time reading, searching, shopping, and socializing
online. E-commerce E-commerce is the activity of electronically buying or selling of
products on online services or over the Internet. Electronic commerce draws on
technologies such as mobile commerce, electronic funds transfer, supply chain
management, Internet marketing, online transaction processing, electronic data
interchange (EDI), inventory management systems, and automated data collection
systems. Ecommerce is in turn driven by the technological advances of the
semiconductor industry, and is the largest sector of the electronics industry. Modern
electronic commerce typically uses the World Wide Web for at least one part of the
transaction's life cycle although it may also use other technologies such as e-mail.
Typical e-commerce transactions include the purchase of online books (such as
Amazon) and music purchases (music download in the form of digital distribution such
as iTunes Store), and to a less extent, customized/personalized online liquor store
inventory services.[1] There are three areas of e-commerce: online retailing, electronic
markets, and online auctions. Ecommerce is supported by electronic business.
[2] E-commerece in India India has an internet users base of about 475 million as of
July 2019, about 40% of the population.[1][2] This number is expected to be 627
million by the end of 2019.[3] Despite being the second-largest user base in world, only
behind China (650 million, 48% of population), the penetration of e-commerce is low
compared to markets like the United States (266 million, 84%), or France (54 M, 81%),

but is growing, adding around 6 million new entrants every month.[4] The industry
consensus is that growth is at an inflection point.[5] In India, cash on delivery is the
most preferred payment method, accumulating 75% of the e-retail activities.[6]
Demand for international consumer products (including long-tail items) is growing
faster than in-country supply from authorised distributors and e-commerce offerings.
In 2017, the largest e-commerce companies in India were Flipkart, Amazon, Myntra,
and Snapdeal. [7] In 2018, Amazon beat Flipkart and was recorded the biggest
ecommerce in india in terms of reveneue. Online bankingOnline banking allows a user
to conduct financial transactions via the Internet. Online banking is also known as
internet banking or web banking. Online banking offers customers almost every service
traditionally available through a local branch including deposits, transfers, and online
bill payments. Virtually every banking institution has some form of online banking,
available both on desktop versions and through mobile apps. Online servicesAn online
service refers to any information and services provided over the Internet. These
services not only allow subscribers to communicate with each other, but they also
provide unlimited access to information. Online services can range from simple to
complex. A basic online service may help subscribers gain needed data through a search
engine, while a complex one might be an online mortgage application from a bank.
Online services may be free or paid. Advantages of online services

• global access, 24 hours a day, 7 days a week.

• improved client service through greater flexibility.

• cost savings.

• faster delivery of products.

• increased professionalism.
• less paper waste.

• opportunities to manage your business from anywhere in the world.

Franchise business A franchise business is a business in which the owners, or

"franchisors", sell the rights to their business logo, name, and model to third party retail
outlets, owned by independent, third party operators, called "franchisees".

Franchises are an extremely common way of doing business. In fact, it's difficult to
drive more than a few blocks in most cities without seeing a franchise business.

Examples of well-known franchise business models include McDonalds, Subway, UPS,

and H & R Block. In the United States, there are franchise business opportunities
available across a wide variety of industries.