Current business environment

DNV INTERNATIONAL ACADEMY

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P R E S E N T E D TO : R A S H M I M A A M

Current Business Environment

Name: Roll NumberAnkit Rathi FY BBA 37Hem Vyas FY BBA 54

Karan Shah FY BBA 38Karan Thakkar FY BBA 49

Mehul Bharwani FY BBA 56Parth Bhanushali FY BBA 08

Parth Gala FY BBA 16Pranay Bhudbatti FY BBA 12

Sunny Myatra FY BBA 28 Vimal Thacker FY BBA 51

Presented By:


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Table of Contents

1.SOCIAL REVOLUTION2.GOVERNMENT FISCAL POLICY3.DEMAND4.E-MARKET VS. LOCAL MARKET 5.GOVERNMENT CONTROL6.NATURAL FACTORS7.EFFECTS OF ADVERTISEMENT8.TRADE CYCLE9.INTERNATIONAL POLITICAL SYSTEM10.TECHNOLOGICAL CHANGES.


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SOCIAL REVOLUTION


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What Is A Social Revolution?

A Social Revolution is a political movement that originates with the general population or society.

They happen with the whole of a society or group rather then within certain select individuals.

They are done to overthrow a certain way in which things are done.


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What Are Goals Of Social Revolution?

The goal isn’t always to completely overthrow or replace the existing power structure.

Often the goal is narrower and involves political reforms and increased levels of civil rights.

Their may be many goals within a single revolution.


6Common Characteristics Of Social Revolutions Are:

They are disorganized in nature. Generally elites don’t partake.Protests may turn into riots.


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Examples of Social Revolutions:

1. Patidar Andolan – a movement to get Patidar people special reservations like other caste.• Effect: This shut down many businesses in the Gujarat states

causing a huge loss for some industries.


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2) Transport Industry Strike: Very recently a strike occurred in the transport industry. In many states of the country, transport companies went on strike due to high toll tax rates. The effects of this were felt throughout the country because a key service was not given to the people of the country.


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EFFECTS OF GOVERNMENT FISCAL POLICY ON BUSINESSES


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TAX SLAB AMENDMENTS


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New Service Tax Rate of 14%

Hiking Service tax to 14% is the most controversial change in the budget 2015. As there are talks going on implementing GST (Goods and Service Tax) from the April, 2016, increasing of service tax hurriedly is not understandable.

Noticeably no date of applicability was announced in budget 2015 but on 19th May vide Notification no. 14.2015, finance ministry announced the applicability of the new service tax rate would be 1st June, 2015.

The new service tax of 14% is flat rate and both education cess or higher education cess get subsumed in the new service tax rate. This means service tax @ 14% will only be applicable on the services provided on or after 1st June 2015. Before this date Service Tax @ 12% would be levied on all the services provided.


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The new service tax applicable on the various services w.e.f. 1st June, 2015 is as follows

Restaurant – 5.6%Hotel Lodging – 8.4%Vehicle Rent – 5.6%Hall with Catering – 9.8%Catering – 8.4%Building Repairing – 9.8%Civil Contract with Material – 5.6%Building Residential – 3.5%Building Commercial – 4.2%GTA Transports – 4.2%All other Services – 14%For better understanding of the charging the service tax, do refer “Point

of Taxation Rules 2014” of Service Tax.


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Issuing Pan Card On purchases

Consumers buying luxury items of value above Rs.1 lakh will be required to quote PAN number. These items could be TV, Fridge, Air Conditioner or anything having price above Rs.1 lakh.


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Scheme DetailsPradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.Account can be opened in any bank branch or Business Correspondent (Bank Mitr) outlet. PMJDY accounts are being opened with Zero balance. However, if the account-holder wishes to get cheque book, he/she will have to fulfill minimum balance criteria.


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Special Benefits under PMJDY Scheme

Interest on deposit.Accidental insurance cover of Rs.1.00 lacNo minimum balance required.Life insurance cover of Rs.30,000/-Easy Transfer of money across IndiaBeneficiaries of Government Schemes will get Direct Benefit Transfer in these

accounts.After satisfactory operation of the account for 6 months, an overdraft facility

will be permittedAccess to Pension, insurance products.Accidental Insurance Cover, RuPay Debit Card must be used at least once in

45 days.Overdraft facility upto Rs.5000/- is available in only one account per

household, preferably lady of the household.


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TECHNOLOGICAL CHANGES


17The Impact of Technological Change on Business Activity

Business technology has revolutionized the way companies conduct business. The businesses use computers, servers, websites and personal digital products to develop competitive advantages in the economic marketplace. This allows owners to create operations using the best technology available.


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Features

Business owners can use technology to reduce business costs.

Business technology helps automate back office functions, such as record keeping, accounting etc.

Business technology can help to improve their communication processes. Emails, texting, websites and personal digital products applications, can help companies improve communication with consumers.


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Technology's Negative Impact on Business

Technology has positive affects on global business. However, technology also has negative impacts on business.

Evolutionary theory suggests that such extinct species failed to adapt to radically new environments when they arose.

Extending this analogy to the business world, many companies fail to adapt to an evolving environment, especially when that evolution is caused by technological change, which can threaten their very survival in the process.


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Within the last two years, competitive problems at Kodak and Nokia,pioneers in film-based technology and digital mobile phones, respectively, came to a head. Kodak was forced to enter bankruptcy reorganization as a result of its failure to adapt to the digital photography revolution, while the rapid rise of the iPhone cost Nokia its prominence in the market.


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About three decades ago, another technological pioneer, Digital Equipment Corp. (DEC), suffered a similar fate when microcomputers (PCs and servers) disrupted the market for mini-computers, in which DEC was a leader.

Some companies manage to survive, despite a radical change in their business environment. This leads us to the fundamental question: What differentiates the companies that fail to change from others that successfully adapt the change ?


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Technology Destroying Jobs

Companies adapting modern machines which can reduce use of man power and can increase the productivity much efficiently and much faser.

The robots, automation, and software are replacing people.

Rapid technological change has been destroying jobs faster than it is creating them.


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ADVERTISEMENT


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ADVERTISEMENT:

DEFINITION :Advertisement is a form of marketing communication

used to sell something related to bussiness’s product.The purpose of advertisement is to assure employees /

shareholder that a company is liable / successful.


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HISTORY OF ADVERTISEMENT

Thomas J.Barratt is the father of modern advertisement.

Barratt was born in london.He was the chairman of the soap manufacture Pears . Slogan : "Good morning. Have you used Pears' soap?"

was famous in its day and into the 20th century.

DNV INTERNATIONAL ACADEMY 26


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IN EARLIER ADVERTISEMENT

In 20th century there are certain ways through which we can provide advertisement:

1. On the radio2. Through commercial television3. Cable television4. On the internet from 1990s.


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EFFECTS OF ADVERTISEMENT

1. BRAND AWARENESS: Getting customers in the door often requires getting

them to know you even have doors to go through, especially for new businesses.

Because advertising is the only promotional strategy that gives you complete control over your message.

http://www.ducttapemarketing.com/blog/2010/11/15/5-reasons-why-you-must-advertise/


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BRAND IMAGE

Closely connected to building awareness is creating a brand image.

Through advertising, you define the perception you want targeted customers to have about your business.


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CUSTOMER BASE

You may get a few customers that happen upon your business, but advertising increases your chances of growing a strong customer base quickly.

For an innovative company or differentiated provider in an industry, alerting customers to your existence and offerings can help them fulfill unmet needs


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NATURAL EFFECT ON BUSINESS


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Natural calamities or disasters often end up destroying many business factors. The destruction then in turn leads to that factor being useless. Any revenue which could have been earned from it gets destroyed. Thus causing a huge loss.


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“Uttarakhand was expected to generate Rs 25,000 crore from tourism in 2013-14. Although Rs 5,000-6,000 crore have been generated from the first three months alone, the State is expected to realise only Rs 5,000-6,000 crore in the coming months as major tourism destinations have been washed away by recent floods.

Tourism sector contributes 25-30 per cent of the State’s Gross Domestic Product.


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The assets of a firm such as Land or Machines or Factories could get destroyed by any natural disasters. This could be a big blow to any company. A small company wouldn’t have many options for how to recover from such a loss but large companies may be able to reallocate resources and keep the firm at an equilibrium


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E-BUSINESS & TRADITIONAL BUSINESS.


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Online market and E-commerce

Since the evolution of online market and E-commerce in the business, there has been a great revolution in the methods of undertaking business.

Online market is progressing drastically as a result of advancement in technology.

Consequently, retail business is affected to a great extent. The figures regarding offline retail sales show a great fall in sales since the online markets have been introduced.


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According to Google India, there were 35 million online shoppers in India in 2014 and is expected to cross 100 million mark by end of year 2016.


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India's e-commerce market was worth about $3.8 billion in 2009, it went up to $12.6 billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion.

Six Indian e-commerce companies have managed to achieve billion-dollar valuation. Namely, Flipkart, Snapdeal, InMobi, Quikr, OlaCabs, and Paytm

https://en.wikipedia.org/wiki/Flipkart

https://en.wikipedia.org/wiki/Snapdeal

https://en.wikipedia.org/wiki/InMobi

https://en.wikipedia.org/wiki/Quikr

https://en.wikipedia.org/wiki/OlaCabs


39Namely,



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TRADE CYCLES


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Trade Cycles affecting business

Business cycles are the "ups and downs" in economic activity, defined in terms of periods of expansion or recession. During expansions, the economy is growing–in real terms, after excluding the effects of inflation. Recessions are periods when the economy is shrinking or contracting.

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Effects on Business

Jobs

Sales

production

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The business or trade cycle relates to the volatility of economic growth, and the different periods the economy goes through (e.g. boom and bust)


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Causes of Trade Cycles

Interest rates. Changes in the interest rate affect consumer spending and economic growth For example, if the interest rate is cut, this reduces borrowing costs and therefore increases disposable income for consumers. This leads to higher spending and economic growth. However, if the Central Bank increase interest rates to reduce inflation, this will tend to reduce consumer spending and investment, leading to an economic downturn and recession.

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Prices of house

A rise in house prices creates a wealth effect and leads to higher consumer spending. A fall in house prices causes lower consumer spending and bank losses. (house prices and consumer spending) In the late 1980s, the boom in house prices caused an economic boom. The drop in house prices in early 1990s caused the recession of 1991-92.

http://www.economicshelp.org/blog/82/housing/house-prices-consumer/

http://www.economicshelp.org/blog/82/housing/house-prices-consumer/


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DEMAND


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DEMAND

Demand Means= demand is a phrase that suggests economic scarcity; that is, a good or service in demand is currently desired by a relatively large number of consumers who are both willing and able to purchase. While Industry demand means the demand for the product of a particular industry. For e.g. the demand for steel produced by TISCO (Tata Iron and Steel Company) is a company demand while demand for steel produced by all companies in India is industry demand for steel in India..


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EXAMPLE OF INVIDUAL FIRM DEMAND

Initially, there were several complaints about the MSG level which was found in processed foods. MSG is mono sodium glutamate also known as lead and is allowed till 2.5 ppm in India. It was found that the MSG level was especially high in Maggi.

But there were variations in MSG content across states because the manufacturing plants are different. In goa for example – the MSG level is less but it is very high in places like Delhi where the manufacturing is from a different plant


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External business environment can change in a day – This is exactly what is causing problems for Maggi. Suddenly, the whole of India is divided in two parts. One who supports Maggi and those who don’t. For Nestle, the sudden ban and the actions it had to take are proof that External business environment can hurt even the strongest companies.

Bad news spreads fast – Literally the day after the announcement, the bad news for maggi snowballed. The first step was the ban of Maggi in Delhi, after which it was banned in 6 states. Now maggi has been taken off the shelves but the whole sector is being analysed including Yippie and the other noodle variants. At the same time, Maggi oats and other Maggi products will be analysed as well.


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Localisation should be implemented properly – Although all companies have to change their products as per the country they are operating in, localisation should take all factors into consideration. MSG levels allowed in US and China are high but they are far low in India. Nestle India should have taken care of that fact.

Quality control is not to be messed around with – If only the Quality control of Maggi was strong, these packets with the high MSG levels would never hit the market, and maggi would not have been in this controversy. Lets face it – even i am skeptical that Maggi will not bounce back strongly with lesser MSG content noodles. But the quality control needs to be in place to avoid such controversies in the first place


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All of this simply shows that the demand for an individual firm, a group of similar companies or the industry as a whole may change due to external and internal factors.

The choices which a company makes are its internal factors such as being honest and providing a good product.

External factors for demand of a product may be a company with a similar product may have bad publicity and cause the demand for a the company to fall.


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GOVERNMENT CONTROL


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Why government controls business activities?

Businesses are usually profit motivated. Many times in order to gain more profit the business might neglect issues like environmental protection and production of harmful and dangerous products.

Business might use media to portray a wrong image of their product or may even mislead customers to buy products


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•TO SAFEGUARD HEALTH AND SAFETY, GOVERNMENT OF INDIA PROMULGATES REGULATORY REQUIREMENTS FOR MANUFACTURE AND SALE OF GOODS AND SERVICES, INCLUDING THOSE IMPORTED

•REGULATIONS ARE STIPULATED THROUGH VARIOUS ACTS/ RULES & REGULATIONS BY DIFFERENT MINISTRIES UNDER GOVERNMENT OF INDIA

•ENACTMENT OF ACTS, RULES & REGULATIONS IS DONE TAKING COGNIZANCE OF THE RELEVANT WTO AGREEMENTS

REGULATORY REQUIREMENTS IN INDIA


ACTS/ REGULATIONS/ CONTROL ORDERS To regulate trade

through Mandatory Certification by BIS

PRODUCTS

Prevention of Food Adulteration Act 1954

Infant Milk Products, Packaged Drinking Water and Natural Mineral Water

The Infant Milk Substitutes, Feeding Bottles and Infant Foods (regulation of production, supply and distribution), Act

Plastic Feeding Bottles

Bureau of Indian Standards Act, 1986

Electrical Wires, Cables, Appliances and Protection Devices and Accessories

Indian Explosive Act,1884 Gas CylindersBureau of Indian Standards Act, 1986

Clinical Thermometers

Essential Commodities Act,1955

Pressure stoves, Steel Tubes

Environment (Protection), Act 1986

Compression ignition (diesel) engines

Bureau of Indian Standards Act, 1986

Cement


CERTIFICATION SCHEME FOR FOREIGN MANUFACTURERS

Scheme for Foreign Manufacturers

93 licenses granted in 16 countries such as France, UAE, South Korea, Nepal, Switzerland, Thailand Bhutan, China, etc.

Products certified include Packaged Drinking Water, Cement, Wood Products, Steel Products, Milk Products, Clinical Thermometers, Energy Meters, Electrical Appliances & Switchgear items etc.


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INTERNATIONAL POLITICAL SYSTEM


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INTERNATIONAL POLITICAL SYSTEM

With the advancement of technology, international politics and trade have been influenced to a great extent.

Politics is the X factor which affects the business relations worldwide.


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Recent visit of Prime Minister Narendra modi to USA is the relevant example. It lead to improvisation of relations between India and USA. Consequently trading between both the nations has come to an ease.


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Modi’s UAE visit

Recently, prime minister Narendra Modi visited UAE for two days’ tour.

As a result of development in political relations between the nations, UAE announced to raise Indian investments up to Rs 5 lakh crores which boosted the trade.


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Also, as a result of growing relations with other nations, Foreign Direct Investment (FDI) is raised by 26% since last financial year. Some facts and figures related to FDI are as follows:

India Foreign Direct Investment 1995-2015 | Data | Chart | Calendar

Foreign Direct Investment in India increased to 1943 USD Million in July from 1749 USD Million in June of 2015. Foreign Direct Investment in India averaged 1082.51 USD Million from 1995 until 2015, reaching an all time high of 5670 USD Million in February of 2008 and a record low of -60 USD Million in February of 2014. Foreign Direct Investment in India is reported by the Reserve Bank of India.



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Actual Previous Highest Lowest Dates Unit Frequency

1943.00 1749.00 5670.00 -60.00 1995 - 2015

USD Million

Monthly


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According to Department of Industrial Policy and Promotion (DIPP), the total FDI inflows soared by 24.5 per cent to US$ 44.9 billion during FY2015, as compared to US$ 36.0 billion in FY2014.