BUSINESS ENVIRONMENT

SESSION - 6

SCANNING OF BUSINESS
ENVIRONMENT -POLITICAL AND
GOVERNMENT ENVIRONMENT

SOURCE
FRANCIS
CHERUNILAM
(2008),
BUSINESS ENVIRONMENT TEXT
AND
CASES,
HIMALAYA
PUBLISHING HOUSE, 18TH REVISED
EDITION. (PP.85 104)

AFTER LISTENING TO THIS SESSION, YOU WILL BE

CLEAR ON THE FACTORS SUCH AS
THE CHARACTERISTICS AND POLICIES OF THE
POLITICAL PARTIES,
THE NATURE OF THE CONSTITUTION AND
GOVERNMENT SYSTEM AND
THE GOVERNMENT ENVIRONMENT
ENCOMPASSING THE ECONOMIC AND BUSINESS
POLICIES AND REGULATIONS.

POLITICAL ENVIRONMENT

What is political environment?

Why political environment in business

is important?

Political & Government Environment

Has close relationship with the economic system and
economic policy.
In many countries regulations to protect consumer
interests have become stronger.
Some governments specify certain standards for the
products to be marketed in the country; some even
prohibit the marketing of certain products.
Promotional activities are subject to various types of
controls.
Eg: In India, Advertisement of alcoholic product is
prohibited. and the packages must carry "injurious to
health" warnings

FUNCTIONS OF STATE GOVERNMENT

What are the functions of state
government in business?
Minimal functions
Intermediate function
Activist function
How these functions interfere in the
business environment?

ROLE OF STATE GOVERNMENT IN BUSINESS

What is the role of state government in

business?
Regulatory role
Promotional role
Entrepreneurial role
Planning role
How the roles of the state government
affect the business?

GOVERNMENT AND LEGAL ENVIRONMENT

What is the Government and Legal

environment?
Standards are specified for products
(eg. Advertisement on alcoholic liquor)
Government policies
(eg. Industrial policy in India)
How the legal and government
environment and policies affect the
business?

FACTORS DETERMINING THE NATURE OF

ROLE OF GOVERNMENT

Nature & stage of the

development
economy.
Behaviour of private sector.
Political Philosophy.
Social Attitudes.
Administrative Systems, etc

ROL O GOVERNMEN
E
F T
REGULATI
ON

GOVERNME
NT
PROMOTIO
N

ENTREPRENUERSHIP

BUSINESS/ECONOMY

GOVERNMENTS ROLE AS
REGULATOR OF
BUSINESS

Ensure the private investment and production

in the industry meets the socio-economic
objectives of the government.
Ensure the efficient use of resources and
prevent exploitation.
Restraints on private activities. Control
of monopoly & big business.
Development of public enterprises as an
alternative to private enterprises to ensure
competitive dualism.
Maintenance of a proper socioeconomic infrastructure.

GOVERNMENTS ROLE AS PROMOTER

OF
BUSINESS
Providing finance to the industry.(through
developmental banks
etc.)
Granting incentives.
Creating infrastructural facilities for
industrial
growth & investment.
Establishing District Industrial Centres
Promoting
development in No
for
Industry
Districts
assisting the
development of small
industries.

GOVERNMENTS ROLE AS AN
ENTREPRENUER IN
BUSINESS
Mainly concerned with growth &
development
of public industries.
ENTREPRENUER
Has earned the name

of a

SOCIAL
ENTREPRENUER

BSNL can be a best example for the

above stated term.

GOVERNMENTS ROLE AS A PLANNER

IN
BUSINESS
Indicating priorities through the Five
Pla
Year
ns
for the sectoral allocation of
resources.
resources to all the sectors in order to
avoid
Ensuring the equal distribution of
scare
clashes.

LEGAL AND GOVERNMENT

ENVIRONMENT
How the legal and government environment and
policies affect the business?
Fundamental rights
Fundamental duties
Directive principles
Freedom of trade and commerce
Separation of powers
Division of power
Separation of power
Expansion in state intervention

FUNDAMENTAL DUTIES

The Fundamental Duties are defined as the

moral obligations of all citizens to help
promote a spirit of patriotism and to uphold
the unity of India.

These duties, set out in Part IVA of the Constitution,

concern individuals and the nation. Unlike the Directive
Principles, they are enforceable by law.

FUNDAMENTAL RIGHTS

HOW THE ECONOMIC ROLES OF

THE GOVERNMENT AFFECT
BUSINESS?

SUMMARIZING
Various political and government factors