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is a set of political, economic, social


and technological (PEST) forces that are
largely outside the control and influence
of a business, and that can potentially
have both a positive and a negative
impact on the business.
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-Today's world is a rapidly changing place.

-Developments across a range of factors will have


an impact on your business or industry.

-The classic framework (political, economic,


social, technological) identifies four major
categories of external factors that affect the ability
of your organization to survive and prosper.
  
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usiness may be understood as the organized efforts of enterprise to


Supply consumers with goods and services for a profit.
usinesses vary in size, as measured by the number of employees or
by sales volume. ut, all businesses share the same purpose: to earn
profits.
The purpose of business goes beyond earning profit. There are:
G ht is an important institution in society.
G e it for the supply of goods and services
G Creation of job opportunities
G Offer of better quality of life
G Contributing to the economic growth of the country.
Hence, it is understood that the role of business is crucial. Society
cannot do without business. ht needs no emphasis that business needs
society as much.
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Some of the external factors have a direct intimate impact on the
firm (like the suppliers and distributors) of the firm.

These factors are classified as microenvironment also known as


task environment and operating environment.

These are other external factors which effect an industry very


generally (such as industrial policy, demography factors etc.).

They constitute what is called macro-environment, general


environment or remote environment.

Hence business environment has three components.



  

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Energy and
÷overnment Regulation Physical Environment

Labor and Human Resources Regional and Local hssues

Technology The Political System

hnternational Events
" #   " = #

0hndia was under socialist-based policies for an entire generation from the
1947 until 1991.

0The economy was characterized by extensive regulation, protectionism, and


public ownership, leading to pervasive corruption and slow growth.

0Since 1991,continuing economic liberalization has moved the economy


towards a market-based system.

0 revival of economic reforms and better economic policy in 2000s


accelerated hndia's economic growth rate.

0The economy of hndia is the twelfth largest economy in the world by market
exchange rates and the fourth largest by purchasing power parity (PPP) basis.

0y 2009, hndia had prominently established itself as the world's second-
fastest growing major economy.
hndia's large service industry accounts for 54% of the country's ÷P
while the industrial and agricultural sector contribute 29% and 17%
respectively.

griculture is the predominant occupation in hndia, accounting for


about 60% of employment.

The service sector makes up a further 28%, and industrial


sector around 12%.

The labor force totals half a billion workers. Major


agricultural products include rice, wheat, oilseed, cotton, jute, tea,
sugarcane, potatoes, cattle, water,buffalo, sheep, goats, poultry .

Major industries include textiles, chemicals, food processing, steel,


transportation equipment, cement, mining, petroleum, machinery,
information technology enabled services and software.
‡ India's per capita income (nominal) is $1016,
ranked 142th in the world, while its per capita (PPP) of
US$2,762 is ranked 129th.

‡ India currently accounts for 1.5% of World trade as of 2007


according to the WTO.

‡ According to the World Trade Statistics of the WTO in 2006,


India's total merchandise trade (counting exports and
imports) was valued at $294 billion in 2006.

‡ India's trade has reached a still relatively moderate share


24% of GDP in 2006, up from 6% in 1985
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ECONOMhC hSSUES:
o griculture
o Corruption
o Education
o ÷overnment
o hnfrastructure
o Labor laws
o Environment and health
ENVhRONMENT L SC NNhN÷
0 hdentification and forecasting phenomena in the
environment
0 Ongoing environmental scanning is essential for
strategy formulation
0 Enterprises continuously engage in identifying and
forecasting opportunities and threats
0 Various sources of information are available to assist
with scanning
$   "
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0 SWOT analysis
0 Environmental conditions may be @  or
 @  :

± !!



Represents favourable (positive) conditions in


micro, market, macro environments
dvantageous to firm
‡ SWO„s

± „ 
Represents unfavourable (negative) conditions
in micro, market, macro environments
Detrimental to firm