Write two impacts of legal-regulatory environment on business.


Impact of Legal Regulatory Environment on Business: The following are the examples of the impact of the legal regulatory environment on business:

(i) By removing control on the capital market, a huge amount of capital was collected through various new issues in the primary market.

(ii) By giving relaxation imposed on the Foreign Direct Investment (FDI) and Foreign Exchange, many multinational companies entered in the Indian market. Consequently, there has been a tremendous increase in the foreign exchange reserves in the country.

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Give any two examples of the impact on business organisations due to change in economic environment.


Impact of Economic Environment on Business: The following are the chief examples of the impact of economic environment on business:

(i) After reforms were introduced in the banking sector, the bank loans were allowed on easy terms. It also led to better services. It helped really fast development of business.

(ii) The change in the economic environment resulted in the establishment of Leasing Companies, Mutual Funds and Venture Capital Business.

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What is meant by ‘political environment’of business?


Political environment of business means the outcome of a combination of various ideologies advocated by different political parties. It includes the factors related to the governmental activities, such as: type of government in existence (single party or coalition government), attitude of government towards different industrial sectors, progress towards the passage of laws, platforms of various political parties, predisposition of candidates running for various posts, efforts by various groups of people for getting maturity in their favour, etc.

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Write three impact of political environment on business.


Impact of Political Environment on Business: The following are some of the examples of the impact of the political environment on business:

(i) In the year 1977, the Janta Government adopted a stringent attitude towards the multinational companies. As a result of this attitude, the multinational companies like the IBM and the Coca-Cola had to quit India.

(ii) The new government encouraged the multinational companies for investment in India. This led to the opening of the doors of the Indian market for the multinational companies. Consequently, the Coca-cola, entered the Indian market once again.

(iii) It was only because of the political interest that Hyderabad came to be known as Cyberabad. In other words, it came to be recognised as the centre of Information Technology (IT). As a result of it, many I.T. companies came to be established.

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Give two examples of the impact on business organisations of changes in social environment.


Business is born and develops in society. Therefore, the effect of various social factors on business is but natural. For example, some years ago the manufacturers of Vanaspati Ghee used to import animal fat for manufacturing Ghee. On the basis of the strong public protests, the government cancelled the import licence of these manufacturers. Similarly, with the news that some cold drinks contain pesticidal element, people protected against it and minimised the consumption of these cold drinks.

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