Business and Its Environment:

An Introduction
Dhaarna Rathore

Learning Objectives
The nature and scope of business
Shortlist characteristics of contemporary business
Define vision, mission and goals of business
Describe criticisms of business
Understand the nature of environment
Understand the process of environmental analysis
Suggest a suitable organisational arrangement for scanning the
environment.

Characteristics of Indian Business

Commodity Czars
Company

Product

Annual Capacity

Mittal
Steel
Steel
70 70
million
tonnes
Mittal
Steel
Steel
million
tonnes
Birla
Viscose
Viscose
fibre
251,850
tonnes
Birla
Viscose
Viscose
fibre
251,850
tonnes
Basell
(Chatterjee/Access)*
8 million
tonnes
Basell
(Chatterjee/Access)*Polypropylene
Polypropylene
8 million
tonnes
Reliance
Industries
Polyester
1.81.8
million
tonnes
Reliance
Industries
Polyester
million
tonnes
Hero
Cycles
Cycles
5.25.2
million
units
Hero
Cycles
Cycles
million
units
Essel
Propack
Laminated
Packaging
units
Essel
Propack
Laminated
Packaging 4 billion
4 billion
units
Bharat
Forge
Forgings
102,900
tonnes
Bharat
Forge
Forgings
102,900
tonnes
Moser
Baer
Optical
media
storage
billion
units
Moser
Baer
Optical
media
storage 2.52.5
billion
units
Hero
Honda
Two-wheelers
2.62.6
million
units
Hero
Honda
Two-wheelers
million
units
Jubilant
Organosys
Pyridine
22,500
tonnes
Jubilant
Organosys
Pyridine
22,500
tonnes
Orchid Chemicals
Cephalosporin
1,100 tonnes
*Deal yet to be concluded

Rank
1
1
1
1
1
1
2
3
1
2
5

1
1
1
1
1
1
2
3
1
2

Business Objectives

Business Critics

Environment of Business

Linkages among the Stages

Globalisation Strategies

Examples of Political Risks and their Impact on International Business

Risks

Impact

(A) Macro Risks

(i)Expropriation of corporate assets without
prompt
(ii)Barriers to repatriation of profits
(iii)Confiscation of properties
(iii)Loss of technology or other intellectual property
(v)Compaigns against foreign goods
campaigns
(vi)Mandatory labour legislations
(vii)Civil wars
(viii)Inflation
(viii)Currency devaluations

Loss of future profits

and adequate compensation
No motivation to improve efficiency
Loss of assets and future profits
Loss of future profits
Loss of sales and increased costs of public
relations
Increased operating costs
Destruction of property, loss of sales,
increased security costs, disrupted
production runs
Increased operating costs
Reduced values of repatriated earnings

(B) Micro Risks

(i)Kidnappings, terrorist threats, etc.
productivity
(ii)Increased taxation
(ii)Officials dishonesty

Disrupted production, higher security costs,

reduced
Reduced after tax profits
Loss of business, increased
operating costs.

International Attacks by Region (1995-2000)

1995
Africa
10
Asia
16
Eurasia
5
Latin America
92
Middle East
45
N.America
0
Western Europe
272

1996
11
11
24
84
45
0
121

1997
11
21
42
128
37
13
52

1998
21
49
14
111
31
0
48

1999
53
72
35
121
25
2
85

2000
55
98
31
193
16
0
30

International Terrorist Attacks (1981-2000)

1981
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

489
635
437
565
363
435
322
440
226
303
274
392
423

Political Risk-Scores

Hungery
S.Korea
Poland
Bulgaria
Mexico
China
Brazil
Turkey
Argentina
S.Africa
Russia
India
Thailand
Egypt
Algeria
S.Arabia
Indonesia
Colombia
Ukraine
Philippines
Iran
Venezuela
Nigeria
Pakistan

2006

2007

77
75
72
69
67
61
64
64
66
65
61
62
60
58
59
57
55
55
57
56
49
52
47
50

78
76
74
70
67
66
66
65
65
64
63
62
61
60
59
57
57
56
56
55
51
50
48
45

Ways of Managing
Political Risk

Entry Strategies

Thank You

Case:
Raghu is a worried man. He has been driving autoriksha for the past
20 years in Bangalore. Till 1990s, his earnings and life were
comfortable. With economic liberalisation cause MNCs in a gusto.
Boom in BPO, Call Centres and IT firms threw open jobs and along
with them fat salaries. Every second Bangalorean now owns a car or
a two-wheeler cutting into the once thriving business for Raghu.
Typically, a decade back 10 passengers were chasing one auto. But
now 10 autos chase one traveller. With two college going children,
and wife to take care at him, Raghu does not know what to do.