2.

POLITICAL ENVIRONMENT

24. Write a note on preamble? Ans : The Preamble is an introduction to the Constitution and contains its basic philosophy. The Preamble to the Indian Constitution states that We the people of India having solemnly resolved to constitute ourselves into a Sovereign, Socialist, Secular, Democratic Republic and to secure to all citizens: Justice- social, economic and political; Liberty of thought, expression, belief, faith and worship; Equality of status and opportunity; and to promote among them all fraternity assuring the dignity of the individual and the unity and integrity of the Nation. The preamble of Indian constitution provides a roadmap for governance, functioning of business and ensures equality and dignity for human life.

25. What is political environment? Outline the impact of political environment on business

Ans: The political environment includes factors such as characteristics and policies of the political parties, the nature of the constitution and government system and the government environment, encompassing the economic and business policies and regulations. These factors may vary very significantly across different countries, different provinces in a country and also over the time. The vital institutions under political system include legislature , executive and judiciary, each bestowed with well defined role and authority. They have profound influence on business. The businessman of today cannot limit himself to the problems internal to his business unit but has to intelligently keep himself constantly abreast of the national problems. Such an understanding will help him in the long run while dealing with his own managerial and business problems being influenced by the political environment. Public opinion is a very important aspect of modern life. In a democracy, any act must be supported by public opinion to be upheld and sustained. Even so the business activity must get the support of public opinion. Political leaders are the representatives of the public and the spokesmen of its opinion. Therefore, business and politics are closely related. Without

a clear understanding of dynamics of politics and the support and encouragement from the politicians, business cannot prosper. The business strategy adopted by the businessman is to be framed keeping in mind what is the present political situation, what are going to be the steps taken by political forces in the country and abroad and what will be the repercussions of different political developments on the life of business. If the general atmosphere in the political circle is against business-specially the private sector, the businessman has to deal with it by making necessary modifications in his attitude, policies and practices. If he does not care for the political environment he may be meeting with the failure as the political forces may finish the chances of his success by creating insurmountable obstacles in his way. The case of Maruti Limited which was set up for the manufacture of mini-cars in good example of how the change of political forces affects favorably or adversely the business venture. During the emergency, when the country was governed by the Congress (I), Mr. Sanjay Gandhi was able to get all sorts of assistance from the Government including huge finance because of his close relations with the then Prime Minister Mrs. Indira Gandhi. With the change in Government, i.e., when the Janata party came into power, the same concern had to see its dooms day as so many charges of corruption and bungling were laid against Maruti Limited and its Directors because of which the business came to a close and the legal battle is still going on. The political climate determines the prospects and problems of any concern. Reliance Retail business in Uttar Pradesh faced many hurdles and suffered huge losses since Mayavathi Government came to power. Similarly investment in Telangana Region had drastically slowed down if not turned negative- that may largely be ascribed to political factors.
2.2 LEGAL ENVIRONMENT

27. Write a note on impact of a) Legislature, b) Executive or government and c) Judiciary on business Ans : Impact of legislature on business : Various laws like consumer protection Act, Environment protections Act, MRTP Act or Competition Act, Companies Act, various Acts governing employee welfare /security viz. factories Act, PF Act, ESI Act, Gratuity Act, workmen compensation Act etc., create several obligations on the part of organizations. Contravention of the provisions of any law/act calls for severe penalties to the firm. Impact of Executive or Government on business: Executive is the law implementation agency. Keeping in tune with federal setup, the powers are divided between the central and State Government. The role of the govt. is vital as it facilitates smooth conduct of business.

The mutual impact of govt. and business towards each other is show below : Govt. to Business Business to Govt. Variable Maintaining Law and order. Licensing. Money & credit. Facilitate fair competition. Relevance to Business Payment of Taxes. Providing information for making policy decisions. Taking up & completely contracts/project. Participation in voluntary programs.

Facilitate growth & development of Service to Govts. bodies. business. Providing Infrastructure Exchange of information. Protecting the industries. interests of small Implementation of rules, policies, programs envisaged by the govt.

Facilitate transfer & adoption of technology. Govt. also influences business by fixing tariffs and quotas. With the advent of liberalisaton, privatization and globalization, the role of government changed from regulator to a facilitator. However the role of government continues to be relevant as licensing continues, though the list of industries subject to licensing is reduced, subsidies and tariffs continue though on a reduced scale. Impact of Judiciary on business: The role of the judiciary is to ensure that the executive authority conforms to the general rules laid down by the legislature. It also settles the relationship between private citizens on the one hand, and between citizens and the government on the other. The power of the judiciary to settle legal disputes affects business considerably. Judiciary has the power to penalize the erring organizations /employers, duly protecting their rights. 29. Name the fundamental rights which influence business. Ans: The constitution of India provides for 8 fundamental rights. The rights and their implications for business are discussed as below: Right to equality: Prohibits any discrimination on citizen on the grounds of religion, caste, sex, region, race etc. However protective discrimination in the case of disadvantaged groups like SC, ST, BC etc continues Right to freedom, which guarantees freedom of speech and expression, to assemble, to form associations or unions, move freely and reside and settle anywhere in India, and to practice any

profession, trade or occupation- all of which have profound economic implications for individuals and business firms. Right to life and personal property, which includes right not to be subjected to the bonded labour, right to decent environment, right to pure drinking water, good roads etc. Right to freedom of religion Right to cultural and educational freedom Right against exploitation, which prohibits exploitation through trafficking, forced labour etc. Right to constitutional remedies, this guarantees judicial protection for exercising fundamental rights except under extraordinary circumstances. The government of India enacted Right to Education Act, which makes education for children between 6 and 14 yrs free and compulsory, which is likely to rewrite the destiny of the nation. The fundamental rights enshrined in the constitution guarantee several economic rights to the citizens, but reasonable restrictions are imposed in public interest.

Judicial Activism: It refers to the review power vested with courts on various government decisions and legislations. Activism implies the right of the court to act on certain cases/issues upon its own knowledge (acting suo motto) without waiting for some one to petition. Judicial activism is felt necessary to ensure distribute justice, restore faith in the people towards social and political institutions and to check declining values in the society. However an over/hyper active judiciary could disrupt executive power and it may lead to government by judiciary, which is not supported by any popular mandate. Indian scenario of judicial activism seems to be promising, and some steps taken by the apex court certainly enhanced the status of the judic