![]() ![]() Foreign capital/investment policy was liberalized and in many sectors100% direct foreign investment was allowed.Disinvestment was carried out in many public sector enterprises.The role of public sector was limited only to four industries.Only six industries were kept under licensing scheme.Main features of NEP, 1991 are as follows: Helps in improving performance: Correct analysis and continuous monitoring of business environment helps an organization in improving its performance.Įconomic Environment in India: As a part of economic reforms, the Government of India announced New Economic Policy in July 1991 for taking out the country out of economic difficulty and speeding up the development of the country. For example, ITC Hotels planned new hotels in India after observing boom in tourism sector. Assistance in planning and policy formulation: Understanding and analysis of business environment helps an organization in planning &policy formulation.Coping with rapid changes: Continuous study/scanning of business environment helps in knowing the changes which are taking place and thus they can be faced effectively.In order to know the availability of resources and making them available on time at economical price. Tapping useful resources: Business environment makes available various resources such as capital, labour, machines, raw material etc.For example, Bajaj Auto made considerable improvements in its two wheelers when Honda & other companies entered the auto industry. Identification of threats: Correct knowledge of business environment helps an organization to identify those threats which may adversely affect its operations.Identification of opportunities to get first mover advantage: Understanding of business environment helps an organization in identifying advantageous opportunities and getting their benefits prior to competitors, thus reaping the benefits of being a pioneer.For example, a shift of preference from soft drinks to juices will be welcomed as an opportunity by juice making companies while a threat to soft drink manufacturers. ![]() Relativity: Business environment is a relative concept whose impact differs from country to country, region to region and firm to firm.Complexity: Business environment is complex which is easy to understand in parts separately but it is difficult to understand in totality.Uncertainty: Business environment is uncertain as it is difficult to predict the future environmental changes and their impact with full accuracy.Dynamic: Business environment is dynamic in nature which keeps on changing with the change in technology, consumer's fashion and tastes etc.For example, increased awareness of health care has raised the demand for organic food and roasted snacks. Inter-relatedness: All the forces/factors of a business environment are closely interrelated.who influence business firm directly while general forces include social, political, economic, legal and technological conditions which affect a business firm indirectly. Specific forces include investors, competitors, customers etc. ![]() Specific and general forces: Business environment includes both specific and general forces. ![]()
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