Business Environment: Economic Environment: The Commerce subject detailed notes with practice tests are very useful for Assistant Professor / UGC NET / JRF and other competitive exams preparation.
Economic, political and social environments are changing faster than ever before, due to information technology. The success or failure of a business depends largely on how these changes are accommodated by the decision-makers. There is regular need to review their operations to achieve the objectives and to stay ahead in competition. The components of macroeconomic environment are diverse.
Business Environment: Economic Environment
The economic conditions are basically a set of economic factors that affect economic growth rate, influence business organizations and their operations. These may include national income, per capita income, availability of capital, market mechanisms, foreign exchange reserves, foreign trade, capital market, etc.
Before Economic Reforms of 1991: After independence, India started with the concept of ‘mixed economy’. The First Five Year Plan was started in 1951. India under five years plans emerged as a strong ‘interventionist’ state. ‘Market failures’ were the order of day. That does not mean that private sector in India in business was utterly insignificant. In fact, private sector was given adequate space to operate in keeping with the concept of the mixed economy. Growth of India’s private sector was subject to serious controls and regulations such as Monopolistic and Restrictive Trade Practice (MRTP), Foreign Exchange Restrictive Act (FERA), etc.
After Economic Reforms of 1991: After 1991, there was dilution in the concept of mixed economy. Such planning strategies had been dethroned in July 1991. When (P.V. Narasimha) Rao-(Manmohan) Singh model of liberal strategy was introduced against the backdrop of unprecedented crises—an IMF-World Bank model based on the free market philosophy. In 2015, economic planning was replaced with National Institution for Transforming India (NITI Aayog). Our economy is now dominated by market principles.
Business Environment and International Business : The Basics of Business Environment