Question

Lately many companies have planned for significant investment in organised retailing in India. Several factors have prompted their decisions in this regard. Customer income is rising. People have developed a taste for better quality products even though they may have to pay more. The aspiration levels have increased. The government has also liberalised its economic policies in this regard and permitted even cent percent foreign direct investment in some sectors of retailing. Questions 1. Identify changes in business environment under different heads — economic, social, technological, political and legal that have facilitated the companies’ decisions to plan significant investments in organised retailing. 2. What has been the impact of these changes with regard to globalisation and privatisation?

Answer 1

Several factors have prompted their decisions in organised retailing in India.

Explanation:

Changes in business environment in different heads are:

1. Economic environment: The differences in the levels of development and income of people have implications for the business. There is liberalisation of economic policies.
2. Technological environment: Advancements in technology is a favoring factor for doing investments in companies.
3. Social environment: For a business to be successful, its strategy should be the one that is appropriate in the social environment.There is increase aspiration levels due to increase in incomes.
4. Political environment: The political parties and politicians impose different policies for investments which are favorable for competition of business.
5. Legal environment: There will be different laws and regulations for companies to plan investments and government encourages foreign investment law .

The impact of these changes with regard to globalisation and privatisation are:

The liberalisation in India is an encouraging factor of globalisation for doing business and it increases competition among the companies. It increases business opportunities for private business and there is no unnecessary government restrictions.

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Changes in business environment in different heads and the impact of these changes with regard to globalisation and privatisation

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