BUSINESS ENVIRONMENT IN INDIAN MARKET SUMMARY

We began this chapter by understanding the concept of business. A business is societys organ of economic expansion, growth and change. A business for our purpose can be any activity consisting of purchase, sale, manufacture, processing, and/or marketing of products and/or services. The objectives and the environmental influences on business are also discussed in this chapter. This chapter explains the three basic goals of environmental analysis and business environment with its characteristics such as complexity, dynamism, multi-faceted nature and far reaching impact. The relationship between organization and its environment is also discussed in terms of interactions between them in several major areas. The environment in which an organization exists could be broadly divided into two categories external and internal environment. The external environment is further classified into two categories micro and macro environment. Micro environment relates to those forces that fall within immediate small periphery of an organization. It consists of customers, competitors, organization, market, suppliers, intermediaries, etc. Macro environment is at a distance and has broader dimensions. It consists of demographic, economic, political-legal, socio-cultural, technological and global environment, etc. We have also introduced PESTLE analysis which is used to analyze the external environment. Organizations may follow different approaches of strategic responses to the environment has also discussed in this chapter. To gain a deeper understanding of competitive environment of a business organisation, we learned, Michael Porters five forces model. The five forces threat of new entrants, bargaining power of customers, bargaining power of suppliers, rivalry among current players and threats from substitutes impact organizations in significant and different manner.

CHAPTER NO.1:
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BUSINESS ENVIRONMENT IN INDIAN MARKET INTRODUCTION

The Indian social environment is seen in various terms depending on the position of the viewer. The diverse views that exist however seem to create a debate on whether the social processes of the country are "good or bad". There exists a long tradition of seeing it from the eyes inherited from the British Colonial perspective in which Indian social processes are seen as passive, non-vibrant, indigent and lazy. There are other points of view which seem to find redeeming features in Indian social processes that are seen as potentially strong and capable of being energetic and productive. The post liberalization era of the last decade has witnessed unprecedented pace of change in volume, scale, speed, complexity, discontinuity and increased turbulence in the business environment. The emergence of global economic order has made it imperative for organizations to achieve global standards of performance, to gain and maintain competitive advantage. The hyper competitive scenario has necessitated a fundamental transformation in the conduct of business. With pressure to do more and more with less and less resources, coupled with service orientation and customer relations management, organizations are left with no options other than re-organizing their resources by developing appropriate design and re-structuring of activities and functions. Re-structuring thus is inevitable to align the internal processes and systems to changes in the external environment. This will have a far reaching impact on behavioral processes in organizations

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BUSINESS ENVIRONMENT IN INDIAN MARKET CHAPTER NO.2: HISTORY

Objectively India has been, for ever, a region wherein diversity of beliefs, faiths and ideologies have poured in from all over the world. Thus today India is one of the largest combinations of faiths, languages and customs. No other nation in the world has so many current languages and customs as India has. No other country boasts of a larger number of faiths and ideologies without coercive forces demanding uniformity. To this objective fact there exists a diversity of responses. The lines of responses of all alien perspectives find this multiplicity and diversity an unmanageable and bewildering liability. In the nineteen forties the West had predicted a disintegration of India into smaller countries within 20 years of finding Independence from colonial rule. In this line of thinking the fact of India remaining one nation is a matter of mystery. The second line of response to the objective fact of multiplicity of our society is to search for an\underlying unity. The underlying unity lies in India being a culture state as opposed to the concept of nation state which has defined national boundaries (for instance) in Europe. In a nation state political ideology and processes of power distribution remains reasonably uniform giving rise to a national identity. Historically however India has been a culture state in which although many different political entities have flourished in the form of countries with a monarchy, the dominant elements of their culture have been uniform. This basic framework was demonstrated also in medieval Indian imperialism in which Indian culture was potent fountainhead and helped design societies in the far reaches of South East Asia. These countries were all politically independent but had institutionalised processes which had their origin in India. Thus, there was no central
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seat of power in India that determined governance of say Kampuchea but the Kampuchean people revelled in the Ramayana, Mahabharata and Budha's teachings. For their social organisation they held in value, ethics and living processes based on Indian philosophies. Following its own course of development, civilisation in India took a path in which militancy and military capabilities were neglected and allowed to wither away on a large scale. Intellectual and spiritual pursuits flourished however and are being continuously rediscovered by researchers. Indian society was deeply devoted to the generation of philosophical insights and treatises were written on them in great detail with a bewildering span of topics. In all this a core belief was that man is an expression of nature therefore aggression and violence were devalued, even in their universally accepted form of military prowess. This rendered the country vulnerable to foreign aggression. Earlier foreign aggressions were marked by a subsequent process of absorption and integration. The hallmark of the process of this absorption and integration were institutions which encouraged dialogue and recalibration of social, political, intellectual and religious norms for people to employ and follow. This hallmark institution provided Indian society the strength to review and recalibrate new inputs thus never creating the forces of majority versus minority, preventing the rise of fundamentalism and leaving society to continuously balance psychological needs and social organisation. But following the expansion of Islam the attacking forces chose to convert the populace rather than integrate with the existing culture. The newly entered crusaders for Islam became a ruling minority, they were then followed by the British, who too chose not to integrate but remain the ruling minority until 1947. The Muslim and the British brought with them a fresh look at the social organisation then prevailing in India. They brought an outlook more vigorous and
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egalitarian than which existed earlier. This provided a significant impetus to question some of the pathologies of the society such as untouchability, caste and rigid brahminical dogmas where institutional values had long ago disappeared. Until these new earnings from the Islamic and Christian beliefs could get integrated even freedom from foreign rule was difficult. Vivekananda, Deanna, Ramakrishna and finally Gandhi became the beacons who showed how this new learning could be integrated. As a society thus India has withstood for nearly a full century coercive state pressures to convert into religious which have had their beginnings in other cultures and cellmates - Near about 10th century the need to protect indigenous culture from state ' pressure to convert, turned the vibrancy of the earlier society dormant and created a society which reflected all signs of turning moribund, as if the social lan energy and vibrancy had been put in a kind of cold storage and all processes and institutions of re-vitalization renewal and change having been put under house-arrest. Later, Amber attempted a degree of integration by reactivating dialogue and religious eclecticism but with no success with his Deen-e-Illahi movement. The Sufis also tried integration through dialogic processes. Akbar's attempt failed completely and Aurangzeb put the Sufis behind bars. The decay and disintegration of Mughal power was an opportunity which was seized quickly ands efficiently by the British to assert their supremacy and governance. British governance drew its principles largely from the church and military ethics. These appeared to some degree non-partisan and "fair". The British however retained the firm belief that they were "civilizing" an "uncivilized" country. To this end Indian history was re-written by the colonisers to convey this point to the Indians who were learning English and to the rest of the world. "Time has come when an attempt should be made to write the history of India purely from the historical standpoint, untrammeled by any Imperialistic or European point of view", wrote Prof. R.C. Mazumdar in 1927. He goes on further, referring to the
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then most popular historical work which was used as a textbook in the following words. While V. Smith seems to take great pleasure in thus describing at length the Greek conquest of India which demonstrates, to his satisfaction, "the inherent weakness of the greatest Asiatic armies when confronted with European skill and discipline", he has not a word to say about the political or military greatness of India as exemplified/by her colonial empires in Asia. Again, in describing the political condition of India after the reign of Marsha, he seeks to "give the reader a notion of what India always has been when released from the control of a supreme authority, and what she would be again, if the hands of the benevolent despotism which now holds her in its iron grasp should be withdrawn". These sentiments, which are echoed in other books, are not only, uncalled for and misleading, but are calculated to distort the vision and judgement of modem readers. Thos who cannot forget, even while writing the history of ancient India, that they belong to the imperial race which holds India in political subjection, can hardly be expected to possess that sympathy and perspective of ancient Indian history and civilization. European scholars have rendered most valuable service by the way of collecting material for ancient Indian history and civilization, and Indians must ever remain grateful to them for their splendid pioneer work. But they would hardly be in a position to write the history of India, so long as they do not cast aside the assumptions of racial superiority and cease to regard Indians as an inferior race. On the other hand a modern history in which internal forces and the very people themselves seemed to have turned against their own country and repeatedly done damange to it, in short a history to be ashamed of. The shame of this history is further reinforced by looking at Indian society purely with Western criteria of technological achievements and economic prosperity. Objectively in the world order of today only those nations which were militarily active and aggressive in the last three centuries are the ones which are also now technologically advanced and economically powerful,
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Objectively also it is true that the technologically advanced nations consume per capita many times over the resources, that the individuals of `less developed' countries consume (including food and energy).

CHAPTER NO. 3: OBJECTIVES OF INDIAN BUSINESS ENVIRONMENT

Enterprises pursue multiple objectives rather than a single objective. In general, we may identify a set of business objectives pursued by a large cross-section of
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enterprises. These relate to profitability, productive efficiency, growth, technological dynamism, stability, self-reliance, survival, competitive strength, customer service, financial solvency, product quality, diversification, employee satisfaction and welfare, and so on. Enterprises seek to balance these objectives in some appropriate manner. We may now elaborate some of the more important objectives of business. Survival: Survival is the will and anxiety to perpetuate into the feature as long as possible. It is a basic, implicit objective of most organizations. While survival is an obvious objective, it gains more value and prominence during the initial stage of the establishment of the enterprise and during general economic adversity. The ability to survive is a function of the nature of ownership, nature of business competence of management, general and industry conditions, financial strength of the enterprise and so on. However, business and other enterprises are interested in more than mere survival. Stability: One of the most important of objectives of business enterprises is stability. It is a cautious, conservative objective. In a sense, stability is a least expensive and risky objective in terms of managerial time and talent and other resources. A stable and steady enterprise minimises managerial tensions and demands less dynamism from managers. It is a strategy of least resistance in a hostile external environment. Growth: This is a promising and popular objective which is equated with dynamism, vigour, promise and success. Enterprise growth may take one or more of the forms like increase in assets, manufacturing facilities, increase in sales volume in existing products or through new products, improvement in profits and market share, increase in manpower employment, acquisition of other enterprises and so on. Growth may take the enterprise along relatively unknown and risky paths, full of promises and pitfalls.
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Efficiency: Business enterprise seek efficiency in rationally choosing appropriate means to achieve their goals, doing things in the best possible manner and utilizing resources in a most suitable combination to get highest productivity. In a sense, efficiency is an economic version of the technical objective of productivity designing and achieving suitable input output ratios of funds, resources, facilities and efforts. Efficiency is a very useful operational objective. Profitability: It is generally asserted that private enterprises are primarily motivated by the objective of profit. Some may go even further and emphasise that profit is the sole motive of business enterprises. All other objectives are facilitative objectives and are meant to be subservient to the profit motive. It is pointed out that private business enterprises are operated on behalf of and for the benefit of the owners who have assumed the business risk of investing their funds.

CHAPTER NO. 4: FEATURES OF BUSINESS ENVIRONMENT

The Indian economy was sheltered and protected with very little competition until around July 1991, due to the serious financial crisis as also the then emerging trends in developed and developing countries all over the world, India chose to introduce economic reforms with a view to opening up its economy. The opening up of the Indian economy has posed numerous challenges and has also provided Indian organisations
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enormous possibilities of an unlimited global market. Liberalisation: was aimed at easing barriers to entry and exit of businesses and other sectors of economy through deregulation of market and doing away with the "license raj" in the early 90s. Before economic reforms it was the government that decided what people would eat, drink or drive. Gone are the days when the consumer was left with little or no choice. De-regulation now lets the consumer decide on what will sell. A favourable climate for foreign direct investment minus the license hassles has helped create a better business environment. Domestic firms also have made entry in variety of economic sectors and in sizeable numbers. Deregulated markets have contributed to lowering of prices and quality improvement particularly in consumer products and services. Privatisation: meant transfer of assets of public sector undertakings by the government to private hands through the process of outright sale or disinvestment of equity by the government. In keeping with the spirit of socialism public ownership of the means of production and .distribution became an important objective of the national policy in India. According to the latest estimates available, a total investment of over rupees two lakh thirty thousand one hundred forty crores (Rs. 2,330,140 crores) at the end of March 1999 in the public sector, the overall rate of return on capital employed (net profit to capital employed was only 4.8% in 1998-99. This poor profitability has thus not contributed to developing a vibrant economy but has also imposed severe budgetary strains on the government. It is in this context that privatisation of public sector undertakings by different means including disinvestment acquires legitimacy as one of the options for revitalising the Indian economy. Management of these enterprises in private hands will not only
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usher in changes in the business perspective but will also generate surplus essential for growth of business and contribute to the development of the economy. The government has already initiated the process of transferring ownership through disinvestment in the joint sector of Maruti Udyog Ltd. and in the public sector in ITDC, BPCL and many are in the offing. With the change in the patterns of ownership, the organisations will have to reorient themselves to function in a competitive environment, reset their priorities and work towards benchmarking themselves with the best in the industry globally. Globalisation: entailed removing trade and tariff barriers so as to facilitate foreign direct investment, entry of multi-national corporations and opportunities for Indian organisations to conduct their businesses and operate in global market. No doubt globalisation brings with it its share of disadvantages. The environment is becoming competitive, complex and is rapidly changing. There is a pressure on companies to meet the international standards of performance in parameters like productivity, cost, quality, delivery and service and continuous innovation. For example, high labour cost in the US has inspired them to set up call center operations in India where labour is cheaper and technically qualified.

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CHAPTER NO.5: CHARACTERISTICS OF BUSINESS ENVIRONMENT

Business environment exhibits many characteristics. Some of the important and obvious characteristics are briefly described here. Environment is complex: the environment consists of a number of factors, events, conditions and influences arising from different sources. All these do not exist in isolation but interact with each other to create entirely new sets of influences. It is difficult to comprehend at once the factors constituting a given environment. All in all, environment is a complex that is somewhat easier to understand in parts but difficult to grasp in totality. Environment is dynamic: the environment is constantly changing in nature.
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Due to the many and varied influences operating, there is dynamism in the environment causing it to continuously change its shape and character. Environment is multi-faceted: What shape and character an environment assumes depends on the perception of the observer. A particular change in the environment, or a new development, may be viewed differently by different observers. This is frequently seen when the same development is welcomed as an opportunity by one company while another company perceives it as a threat. Environment has a far reaching impact: The environment has a far reaching impact on organizations. The growth and profitability of an organization depends critically on the environment in which it exists. Any environment change has an impact on the organization in several different ways.

CHAPTER NO.6 : COMPONENTS OF BUSINESS ENVIRONMENT

The environment in which an organization exists could be broadly divided into two parts the external and the internal environment. Since the environment is complex, dynamic, multi- faceted and has a far reaching impact, dividing it into external and internal components enables us to understand it better. Here we deal with the appraisal of the external environment. This is done through a description of important characteristics of the environment, dividing the environment into its external and internal parts, observing how a systematic approach can help in environmental appraisal, and classifying the external environment into two parts, the general and the relevant environment. Next, we see how the external environment can be divided into different components. The environment in which an organization exists can, therefore,
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be described in terms of the opportunities and threats operating in the external environment apart from the strengths and weaknesses existing in the internal environment. The four environmental influences could be described as follows: (1) An opportunity is a favourable condition in the organization's environment

which enables it to consolidate and strengthen its position. An example of an opportunity is growing demand for the products or services that a company provides. (2) A threat is an unfavourable condition in the organization's environment which creates a risk for, or causes damage to, the organization. An example of a threat is the emergence of strong new competitors who are likely to offer stiff competition to the existing companies in an industry. (3) A strength is an inherent capacity which an organization can use to gain strategic advantage over its competitors. An example of a strength is superior research and development skills which can be used for new product development so that the (4) company gains competitive advantage. A weakness is an inherent limitation or constraint which creates a strategic

disadvantage. An example of a weakness is over dependence on a single product line, which is potentially risky for a company in times of crisis. An understanding of the external environment, in terms of the opportunities and threats, and the internal environment, in terms of the strengths and weaknesses, is crucial for the existence, growth and profitability of any organization. A systematic approach to understanding the environment is the SWOT analysis. Business firms undertake SWOT analysis to understand the external and internal environment. SWOT, which is the acronym for strengths, weaknesses, opportunities and threats. Through such an analysis, the strengths and weaknesses existing within an
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organization can be matched with the opportunities and threats operating in the environment so that an effective strategy can be formulated. An effective organizational strategy, therefore, is one that capitalises on the opportunities through the use of strengths and neutralises the threats by minimizing the impact of weaknesses. The process of strategy formulation starts with, and critically depends on, the appraisal of the external and internal environment of an organization.

CHAPTER NO.7: ELEMENTS OF BUSINESS ENVIRONMENT

The environment of business can be categorised into two broad categories microenvironment and macro-environment. Micro-environment is related to small area or immediate periphery of an organization. Micro-environment influences an organization regularly and directly. Within the micro or the immediate environment in which a firm operates we need to address the following issues: The employees of the firm, their characteristics and how they are organised. The customer base on which the firm relies for business. The ways in which the firm can raise its finance. The local community within which the firm operates. The direct competition and how they perform. This last point might act as a convenient linking point as we move towards the macro issues influencing the way a firm reacts in the market place. Macro environment has broader dimensions. It mainly consist of economic, technological, political legal and
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socio-cultural. The classification of the relevant environment into components or sectors helps an organization to cope with its complexity, comprehend the different influences operating, and relating the environmental changes to its strategic management process. Different bases for classification have been adopted. As already discussed earlier there are two types of environmental forces, which influences an organizations business operation. Some of these forces are external to the firm and the organization has little control over them. Whereas the other types of forces which comes from within the organization and can be controlled by it. Hence, the business environment can be divided into two major components:

MACRO ENVIRONMENT

Technologic al

Demograph ic Econom ic Governm ent Leg al Politic ala Cultura lu Glob al

Macro Environment: consists of demographics and economic conditions, sociocultural factors, political and legal systems, technological developments, etc. These constitute the general environment, which affects the working of all the firms.
Consumer / Customer Competit ors Organisati on Marke Page 16 t Supplie rs Intermediar

MICRO ENVIRONMENT

BUSINESS ENVIRONMENT IN INDIAN MARKET

Micro environment: consist of suppliers, consumers, marketing intermediaries, etc. These are specific to the said business or firm and affects its working on short term basis. Environmental scanning also known as Environmental Monitoring is the process of gathering information regarding companys environment, analysing it and forecasting the impact of all predictable environmental changes. Successful marketing depends largely on how a company can synchronise its marketing programmes with its environmental changes.

Elements of Micro Environment

This is also known as the task environment and affects business and marketing in the daily operating level. When the changes in the macro environment affect business in the long run, the effect micro environmental changes are noticed immediately. Organizations have to closely analyse and monitor all the elements of micro environment in order to stay competitive. Consumers/Customers: According to Peter Drucker the aim of business is to create and retain customer. Customers are the people who pay money to acquire an organization's products. The
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products may be both in form of goods or services. The organizations cannot survive without customers. They will cease to exist. Customers may or may not be a consumer. Consumer is the one who ultimately consumes or uses the product or service. A father may buy a product as a customer for his daughter who will be a consumer. A consumer occupies the central position in the marketing environment. The marketer has to closely monitor and analyse changes in consumer tastes and preferences and their buying habits.

Competitors: Competitors are the other business entities that compete for resources as well as markets. Competition shapes business. A study of the competitive scenario is essential for the marketer, particularly threats from competition. Following are a few of major questions that may be addressed for analysing competitions: Organization : Individuals occupying different positions or working in different capacities in organizations consists of individuals who come from outside. They have different and varied interests. In micro environment analysis, nothing is important as self-analysis by the organization itself. Understanding its own strengths and capabilities in a particular business, i.e., understanding a business in depth should be the goal of firms internal analysis. The objectives, goals and resource availabilities of a firm occupy a critical position in the micro environment. Market : The market is larger that customers. The market is to be studied in terms of its actual and potential size, its growth prospect and also its attractiveness. The marketer should
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study the trends and development and the key success factors of the market he is operating. Important issues are : Cost structure of the market. The price sensitivity of the market. Technological structure of the market. The existing distribution system of the market.

Suppliers : Suppliers form an important component of the micro environment. The suppliers provide raw materials, equipment, services and so on. Large companies rely on hundreds of suppliers to maintain their production. Suppliers with their own bargaining power affect the cost structure of the industry. They constitute a major force, which shapes competition in the industry. Also organizations have to take a major decision on outsourcing or in-house production depending on this supplier environment. Intermediaries: Intermediaries exert a considerable influence on the business organizations. They can also be considered as the major determining force in the business. In many cases the consumers are not aware of the manufacturer of the products they buy. They buy product from the local retailers or big departmental stores such as Big bazaars, Subhiksha and Vishal Mega Mart that are increasingly becoming popular in some big
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cities. Elements of Macro Environment Macro environment is explained as one which is largely external to the enterprise and thus beyond the direct influence and control of the organization, but which exerts powerful influence over its functioning. The external environment of the enterprise consists of individuals, groups, agencies, organizations, events, conditions and forces with which the organization comes into frequent contact in the course of its functioning. It establishes interacting and interdependent relations, conducts transactions, designs and administers appropriate strategies and policies to cope with fluctuations therein and otherwise negotiates its way into the future. Demographic Environment : The term demographics denotes characteristics of population in a area, district, country or in world. It includes factors such as race, age, income, educational attainment, asset ownership, home ownership, employment status and location. Data with respect to these factors within a demographic variable, and across households, are of interest, to businessmen in addition to economist. Marketers and other social scientists often group populations into categories based on demographic variables. Some of the demographic factors have great impact on the business. Factors such as general age profile, sex ratio, education, growth rate affect the business with different magnitude. India has relatively younger population as compared to some countries. China on the other hand is having an aging population. Many multinationals are interested in India considering its population size. With having approximately sixteen percent of the worlds population, the country holds huge potential for overseas companies.
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Economic Environment : The economic environment refers to the nature and direction of the economy in which a company competes or may compete. The economic environment includes general economic situation in the region and the nation, conditions in resource markets (money market, manpower market, raw material components, services, supply markets and so on) which influence the supply of inputs to the enterprise, their costs, quality, availability and reliability of supplies. Economic environment determines the strength and size of the market. The purchasing power in an economy depends on current income, prices, savings, circulation of money, debt and credit availability. Income distribution pattern determines the marketing possibilities. The important point to consider is to find out the effect of economic prospect and inflation on the operations of the firms. Strategists must scan, monitor, forecast, and assess a number of key economic factors mentioned in the table below for both domestic and key international markets. Political-Legal Environment : This is partly general to all similar enterprises and partly specific to an individual enterprise. It includes such factors as the general state of political development, the degree of politicalization of business and economic issues, the level of political morality, the law and order situation, political stability, the political ideology and practices of the ruling party, the purposefulness and efficiency of governmental agencies, the extent and nature of governmental intervention in the economy and the industry, Government policies (fiscal, monetary, industrial, labour and export-import policies), specific legal enactments and framework in which the enterprise has to function and the degree of effectiveness with which they are implemented, public attitude towards business in general and the enterprise in particular and so on. There are
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three important elements in political-legal environment.

Socio-Cultural Environment : This is too general an entity which influence almost all enterprises in a similar manner. It is a complex of factors such as social traditions, values and beliefs, level and standards of literacy and education, the ethical standards and state of society, the extent of social stratification, conflict and cohesiveness and so forth. Socio-cultural environment consist of factors related to human relationships and the impact of social attitudes and cultural values which has bearing on the business of the organization. The beliefs, values and norms of a society determine how individuals and organizations should be interrelated. The core beliefs of a particular society tend to be persistent. It is difficult for businesses to change these core values, which becomes a determinant of its functioning. Technological Environment : The most important factor, which is controlling and changing peoples life, is technology. Technology has literally created wonder. Man could realise its dream of walking in the moon, traveling in spaceships, and go to the other side of the globe within few hours. They have already started dreaming of living of very extended life of hundreds years with the latest development of genetic sciences and technology. Global Environment Today's competitive landscape requires that companies must analyse global environment as it is also rapidly changing. The new concept of global village has changed how individuals and organizations relate to each other. Further, new migratory habits of the workforce as well as increased offshore operation are changing
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the dynamics of business operation. Among the global environmental factors that should be assessed are: Potential positive and negative impact of significant international events such as a sport meet or a terrorist attack. Identification of both important emerging global markets and global markets that are changing.

CHAPTER NO. 8: STRATEGIC RESPONSES TO THE ENVIRONMENT

The business organization and its many environments have innumerous interrelationship that at times, it becomes difficult to determine exactly where the organization ends and where its environment begins. It is also difficult to determine exactly what business should do in response to a particular situation in the environment. Strategically, the businesses should make efforts to exploit the opportunity ad thought the threats. In this context following approaches may be noted: Least resistance: Some businesses just manage to survive by way of coping with their changing external environments. They are simple goal-maintaining units. They are very passive in their behaviour and are solely guided by the signals of the external environment. They are not ambitious but are content with taking simple paths of least resistance in their goal-seeking and resource transforming behaviour. Proceed with caution: At the next level, are the businesses that take an intelligent interest to adapt with the changing external environment. They seek to monitor the changes in that environment, analyse their impact on their own goals and activities and translate their assessment in terms of specific strategies for survival, stability and strength. They regard that the pervasive complexity and turbulence of the external environmental elements as given within the framework of which they have to function as adaptive-organic sub-systems. This is an admittedly sophisticated strategy than to wait for changes to occur and then take corrective-adaptive action. Dynamic response: At a still higher sophisticated level, are those businesses that
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regard the external environmental forces as partially manageable and controllable by their actions. Their feedback systems are highly dynamic and powerful. They not merely recognise and ward off threats; they convert threats into opportunities. They are highly conscious and confident of their own strengths and the weaknesses of their external environmental adversaries.

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CHAPTER NO. 9:CHALLENGES FOR ORGANISATION

As a global player, India has not been able to match other industrialized countries in terms of `quality' and `price' of its products. A review of industrial performance and productivity in developing countries found that between 1950 and 1982, India was one of the worst performers. India's share in world trade declined from over 1% in 1950s to about 0.6% in 1990s. Within Asia, it lost its pre-eminent position in industrial and economic spheres. On the social side, also, the country fared badly even in comparison with some of the neighbouring countries in South Asia (UNDP, 1995). The main reasons for the slow down of industrial growth are low productivity, high costs, low quality of production and obsolete technology. In post liberalisation era however, Indian organisations have been gearing up to take the challenges head on. The Indian economy has shown remarkable recovery during the last decade in terms of Macro Economic Indicators including the Foreign Direct Investments. Several Indian organisations are in the process of transforming them-selves into multi-nationals and are on the path of becoming formidable global players. The sustained competitive edge however, would call for meeting the following challenges. Global Standards : In borderless global economic order, it is imperative for organisations to achieve global standards of performance in productivity, quality, cost, delivery and customer service. The capacity to learn from one's own and others' experiences, to innovate and to incorporate innovation in product and services with speed will be a prerequisite for sustained growth and global presence of Indian organisations of today and tomorrow.
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Life Cycle of Organisation : The organisation's life cycle has undergone a complete transition. Organisations are made up of their products and procedures, people and their relationships, knowledge and technology. Innovation has gained importance. Manufacturers are thus producing products with new variations in features at a phenomenal rate making the product cycle shorter. Expertise and technology go hand in hand with innovation. Rapid technological advancements and the need to constantly upgrade one's skills have led to shortening of the technological life cycle. Thus there is a constant need for retraining and redeployment of manpower. The life span of organisation is increasingly becoming shorter. The growing trend towards acquisition, merger even bankruptcy is indicative of this trend. Price Led Strategy : A monopoly usually thrives on a cost-led strategy. The consumer buys at a price quoted by the enterprise as he has no choices available in the market. In such a situation there is no pressure on organisation to reduce cost and improve quality. Cost reduction and quality improvement were conceived as contradictory. In public sector enterprises, prices of many products and services were administered by the government of India. The needs of consumers and the price they can afford to pay were not considered. However, with growing competition providing wider choices of products and services in the markets there is pressure on organisations to produce or provide service at a price which is competitive and affordable by the consumers. Organisations therefore have to develop price-led strategy in place of cost-led strategy. For Example: Imagine buying a bottle of coke for Rs. 100 seems unimaginable, doesn't it? Keeping the markets sensitivity to price in mind, coke has launched its 200 ml bottle for an amount of Rs. 5. Likewise the incoming calls on Hutch and Airtel
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have been made free owing to pressure from competitors such as Reliance and Tata. Thus it is clear that the consumer's role in determining the price has become a reality. Decision Response Time : In a highly competitive scenario characterised by constant change, organisations have to respond quickly to the internal pressures within the system and demands of the external environment. With the advances in Information Technology, time has shrunk to nothingness. At the click of a button one can have access to information on any subject from any part of the world. Mass opinions can be mobilised instantly. Business transactions can be carried out without any time lag. Speed by which organisations respond to these demands will have a decisive role to play in their survival vis--vis their competitors. This will call for continuous and progressive reduction in decision response time in organisations. Knowledge Capital : Amongst all the resources available to the organisation, knowledge capital is unique to the organisation which can neither be copied nor borrowed. Human resources as custodian of knowledge thus are being considered as assets capable of growth with no known limits. Individually acquired knowledge and intellect will need to be converted into collective knowledge and collective intelligence. It is this collective knowledges that provides distinct competitive advantage to the organisation. Organisation there-fore, need to continually invest in utilizing, nurturing and developing its intellectual capital.

CHAPTER NO. 10:

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BUSINESS ENVIRONMENT IN INDIAN MARKET CHANGING DIMENSIONS OF INDIAN BUSINESS

Business Environment is the world around a company over which it has no direct control. It covers many dimensions impacting a company's activities & performance. It is an aggregate of all forces & factors external to the business enterprise, but which influence it's functioning. There is a mutual inter-dependence between business and its environment. A business enterprise is an open system and it continously interacts with its environment. Businesses take inputs like raw material, capital, labour, energy, etc. from the environment, and transform them into goods & services, and then send them back into the environment. Interaction between business and environment is in various ways such as: exchange of information, resources, influence & power. There are several layers of influences surrounding a business. The outermost layer, called the macro-environment, consists of dimensions that impact almost all companies in an economy. These factors are the six aspects of business environment - Political, Economical, Social, Technological, Environmental, & Legal. Political environment includes factors like a country's political system, type of goverment, centre-state relations, public opinion, law & order, nature of government policies towards business - particularly those related to taxation, industrial relations, regulation of business & industry, and foreign trade regulations. It also relates to the stability of the government in power, the risk of major political disturbances, or threats from anti-social elements, terrorists or other countries. In the period prior to liberalisation, India's annual growth rate was low at around 3.5%, only a few licenses were given out for important sectors like steel, electrical power, energy and communication, and these licence owners built up
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powerful corporate empires. India at that time was a socialistic economy with excessive govt. control. Core industries were directly managed by the govt. as public sector enterprises, and banking and airline industries were nationalised. A huge public sector emerged and state-owned enterprises made large losses. There was public sector monopoly and investment in infrastructure was poor. Licence Raj established the selfperpetuating bureaucracy that still exists in India and corruption flourished under this system. GOI began the process of privatisation in 1991. Privatisation means having private ownership, management and control into public sector undertakings. The purpose of privatisation is to improve the efficiency of public undertakings and to raise funds for public investment. As a result financial institutions have become more active, working culture is improving and management is being professionalised, there is improvement in technology, better investment behaviour of Indian entrepreneurs and companies are aware of the significance of human capital. The banking, financial services & insurance (BFSI) and airline sectors have become extremely competitive, but are in need of reforms. There have been some negative effects like curtailed growth in some industries, reduced employment opportunities due to adoption of capital intensive technology, sell-outs & takeovers by foreign companies, losing markets and declining capacity utilisation.

Auto Industry

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A few decades ago, the markets were not opened up. Due to lack of competition, Bajaj scooters had 13 year waiting lists. Consumers had no choice but to wait for delivery and they were even willing to pay premiums equal to the original cost. Strings were pulled and quotas were invoked to speed up allotment as these scooters were much sought after as wedding gifts. Those were the heydays of 'hamara Bajaj'. Buying a car meant choosing between a Premier Padmini (which was a Fiat 1100 assembled in India), the Ambassador by Hindustan Motors (a replica of the Morris Oxford - an old British car) and the Standard Automobiles' Gazelle, as they were the only cars available in India. The production of Maruti Suzuki 800 hatchback in 1983 by Maruti Udyog (a JV between GOI & Suzuki Motors of Japan), paved the way for a renaissance in the Indian automobile sector. Today with it's booming economic growth, India is on every vehicle manufacturer's map for obvious reasons. It is the 2nd largest two-wheeler market, the 4th largest commercial vehicle market, and the 11th largest passenger car market globally. Many foreign manufacturers have set up base in India offering an assortment of vehicles for every need. Domestic manufacturers have also improved their quality & production levels and are in the race for a bigger share of the consumer pie. As a result of all this, there is also a growth in the auto-ancillaries and spares industry, as well as the second- hand auto market. Some of the reasons for the impressive growth of this industry are easy availability of vehicle finance, attractive rates of interest, and convenient installments. Competition has forced manufacturers to be innovative and responsive to customer needs. Customer expectations have also soared to higher levels. Economic factors relate to the general condition of the economy within which a business operates. It comprises of the factors and forces concerned with means of production and distribution of wealth. It refers to the nature of economic system, economic policies
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of the country, organisation of capital & money markets, GDP, income level, growth rate, inflation rate, interest rates, money supply, and unemployment rate. The Indian economy is currently the 9th largest in the world by nominal GDP and the 4th largest by purchasing power parity (PPP). Economic growth rates are projected at around 7.5%-8% for the financial year 2011-2012. Economic Liberalisation was when India adopted free market principles and it included opening India for international trade and investment, deregulation, initiation of privatisation, tax reforms and inflation-controlling measures. The fruits of liberalisation reached their peak in the year 2007 as India reached it's highest GDP growth rate of 9%. With this India became the 2nd fastest growing economy in the world, next only to China.

CHAPTER NO.11: CONCLUSION

Indian society was deeply devoted to the generation of philosophical insights and treatises were written on them in great detail with a bewildering span of topics. In all
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this a core belief was that man is an expression of nature therefore aggression and violence were devalued, even in their universally accepted form of military prowess. This rendered the country vulnerable to foreign aggression. Earlier foreign aggressions were marked by a subsequent process of absorption and integration. The hallmark of the process of this absorption and integration were institutions which encouraged dialogue and recalibration of social, political, intellectual and religious norms for people to employ and follow. India began its new history as a political entity a nation state for the first time in 1947 with two streams of history which appear somewhat contradictory. A glorious accomplishments and repeated failure to assert, A vibrant society, one of the oldest in the world, unique in its understanding of man and nature, spiritually highly developed.

CHAPTER NO.12: REFERENCE

BIBLIOGRAPHY Management Challenges for the 21st Century, Butterworth Heinemann, Drucker, Peter F.
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Mittal Publications, New Delhi, - Ganesh, G Privatization in India

WEBSITES www.google.com www.wikipedia.com

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