CHANGING NATURE OF

INDIAN AND
INTRENATIONAL BUSINESS
SOUMENDRA ROY

INTRODUCTION
The rapid scientific technological advancements are
reshaping the world.
Developments in information and communication
technology have revolutionized every activity
For business and commerce, they have facilitated
improvements in productivity and bottomline of the
business and commerce besides opportunities for
better customer service.
The productivity improvements come out of the
increased speed, accuracy and ability to handle big
volumes that technology offers.
For the financial sector and banking, the
developments in information technology have spelt
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very
special benefits. Soumendra Roy

PARADIGMS SHIFT IN BUSINESS

Twenty first century competition is characterized by
at least three fundamental paradigms shifts, viz. (a)Ability of organizations and individuals to network
globally and seamlessly;
(b)Ability to communicate, transmit, store and retrieve
large amounts to information including voice, data,
video; and
(c)Mobility of capital to feed good projects around the
world.
()With the battle for market share and mind-share
deepening, companies are increasingly resorting to
non-traditional resources (like knowledge) and
innovative means (like quick response) to create
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sustainable
competitive
advantage.

CHANGING NATURE OF INDIAN

BUSINESS

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FACTORS IMPACTING INDIAN

BUSINESS
These factors are
the six aspects of
business environment Political
Economical
Social
Technological
Environmental
Legal

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POLITICAL FACTORS
In the period prior to liberalization, India's annual growth
rate was low at around 3.5%, only a few licenses were
given out for important sectors
Core industries were directly managed by the govt. as
public sector enterprises
Licence Raj established the self-perpetuating bureaucracy
that still exists in India and corruption flourished under
this system
GOI began the process of privatization in 1991.
Purpose of privatization is to improve the efficiency of
public undertakings and to raise funds for public
investment.
The banking, financial services & insurance (BFSI) and
airline sectors have become extremely competitive, but
are in need of reforms.
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There
have been some
negative effects like curtailed

ECONOMIC FACTORS
Economic factors relate to the general condition
of the economy within which a business
operates - production and distribution of wealth
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 Liberalization was when India adopted
free market principles and it included opening
India for international trade and investment,
deregulation, initiation of privatization, tax
reforms
and inflation-controlling
measures
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SOCIO-CULTURAL
ENVIRONMENT
Socio-cultural environment covers factors such as

social customs, traditions, culture, lifestyle,

attitude of people, saving & spending patterns,
size
of
population,
demographic
profile,
education level, occupational structure, trade
unions, and other factors that influence and
describe the behavioural characteristics typical of
the people
CSR in India is in a nascent stage.
A lack of understanding, inadequately trained
personnel, non-availability of authentic data and
specific information on the kinds of CSR
activities, coverage, policy etc. further adds to
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the
reach and effectiveness
of CSR programmes

TECHNOLOGICAL DIMENSION
Technological dimension covers the nature of
technology available and used by an
economy
It also covers the extent to which
development in technologies are likely to
take place
Reflected in factors like expenditure on R&D
and rate of obsolescence
Technical obsolescence occurs when a new
product or technology supersedes the old,
and it becomes preferred to utilize the new
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technology
in placeSoumendra
of the
old

ENVIRONMENTAL FACTOR
Environmental factor refers to the physical or
geographical environment affecting the business.
It also includes the considerations like environmental
pollution, climate change, carbon footprint, etc
Carbon footprint is the total set of greenhouse gas (GHG)
emissions caused by an organization, event, product or
person.
The mitigation of carbon footprints through the
development of alternative projects, such as solar or wind
energy or reforestation, represents one way of reducing a
carbon footprint and is often known as carbon offsetting.
Carbon dioxide emissions into the atmosphere, and the
emissions of other GHGs, are often associated with the
burning of fossil fuels like natural gas, crude oil and coal.
The Kyoto Protocol defines legally binding targets and
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timetables
for cutting the
GHGRoyemissions of industrialized

LEGAL ENVIRONMENT
Legal or regulatory dimension describes
the framework of legislation impacting
business
A business has to work within the
framework of a country's laws and
regulations
Laws important to business relate to
areas like monopolies & restrictive trade,
consumer
protection,
employment,
industrial relations, health & safety, and
joint stock companies
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CHANGING NATURE OF
INTERNATIONAL BUSINESS

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CHANGES IN GLOBAL BUSINESS SCENARIO

1. The growth of whole new trading blocs and
major
changes
to
existing
ones,
e.g.
theexpansion of the European Union (EU), the
formation of the Association of South EastAsian
Nations (ASEAN) and the Andean Common
Market (ANCOM).
2. Newly emerging markets with significant growth
potential, e.g. the Chinese EconomicArea,
Indonesia, India, South Korea and Mexico.
3. Fundamental changes to the economic systems
in some countries/regions of the world, e.g. the
collapse of the former Eastern European
Communist Bloc.
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CHANGES IN GLOBAL BUSINESS SCENARIO

4. Diminishing barriers to international trade and
consequent significantly increasedcompetition
across national boundaries and often, as we shall
see later, on a globalbasis.
5. The growth of the multinational and transnational
organization.
6. The development and impact of communications
technology including the InternetThese, and
other changes, are in fact considered in more
depth in this and later study units,but at this
stage it is sufficient to note that it is the
particularly dynamic nature of theinternational
environment that provides the source of major
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business
opportunities.

CONTINUED
LIBERALIZATION
OF INTERNATIONAL TRADE
Starting after theSecond World War,
under the auspices of GATT (latter the
World Trade Organization)agreements
have been reached to gradually remove
trade barriers such as tariffs andquotas.
Imperfect though these agreements have
sometimes been, there is no doubtthat
these have helped the growth of world
trade
and
the
rising
importance
ofinternational business
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COSMOPOLITAN CUSTOMERS
Changingnature of customers and demand, and in
particular, the increasingly cosmopolitannature of
todays customers
Combined with an increasingly global media network,
todays consumer is exposed toglobal lifestyles,
products and brands
Increased affluence and education on the partof
customers led to cosmopolitan attitudes andlifestyles
Todays consumer travels widely and wants topurchase
the best value and most innovatory products and
services, regardless of theircountry of origin
Consumers and their needs change, together with
theirbuying habits and influence the business
Understanding the consumer and their needs lies at the
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heart
andplanning

IMPROVED COMMUNICATIONS
Helping to facilitate the emergence of the
more
cosmopolitan
international
consumerhave been the huge improvements
in international communication.
Increase in international travel just referred to
has
partly
come
about
because
of
theseimprovements
So, for example, it now costs considerably less
than 25% in real terms of what it didsome 20
years ago to fly the Atlantic
Of particular importance in this area, of
course,has been the growth of new
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communication
technologies

STRATEGIC NETWORKING AND

INTERNATIONAL SUPPLY CHAIN

THE

Strategic networking is the formation of alliances and

agreements between companies
Such alliances and agreements may involve, for example,
licensing,franchising and even mergers and acquisitions
Strategic networking is anattempt to combine two or more
companies skills and resources so as to be ableto compete
better
International supply chains refers to the increasingly
international nature ofsupply in as much as companies often
purchase components, raw materials , services, etc. from very
diverse parts of the worldIncreasingly, organisational buyers,
whether in manufacturing, services or retailing,have turned
towards non-domestic suppliers to provide their raw
materials,components and finished products.
A good example is that of the United Kingdomretailer, Marks &
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Spencer.

GROWTH OF GLOBAL
MNCs AND TNCs

COMPANIES

Factors already discussed which have

served to underpin the growth of
importance ofinternational business have
in turn led to the emergence of the global
company
The global company thinks, plans and
operates on a truly global basis; in other
words,it
transcends
international
boundaries
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GLOBAL BRANDS
A
combination
of
increasingly
cosmopolitan consumers and lifestyles,
together with thegrowth of global
companies, has led to the growth of the
global brand
Global brandstranscend international
boundaries and include brands such as
Coca Cola, Ford, Mercedes, IBM and
Rolex, to name just a few examples
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