State any five impacts of government policy changes on business and industry.
1) Market Catalyst: The government can implement a policy that changes the social behaviour in the business environment. For example, the government can levy taxes on the use of carbon-based fuels and grant subsidies for businesses that use renewable energy. Similarly, tax and duty exemptions on a particular sector trigger investment in it and may generate growth.
2) Political Stability: Government policy will always depend on the political culture of the moment. A stable political system can make business-friendly decisions that promote local businesses and attract foreign investors. Unstable systems present challenges that has a negative affect on the business environment.
3) Government Spending: Governments get money to spend from taxation. Increased spending requires increases in taxes or borrowing. Any tax increase will discourage investment, especially among entrepreneurs, who take the risks of starting and managing businesses.
4) Interest Rates: Government policy can influence interest rates, a rise in which increases the cost of borrowing in the business community. Higher rates also lead to decreased consumer spending. Lower interest rates attract investment as businesses increase production.
5) Regulations: Trade regulations, and the requirements for permits or licenses have effects on business. Businesses might spend a lot of money and time to comply with regulations that ultimately prove to be ineffective and unnecessary. Fair and effective regulations, however, promote business growth.
Why is the understanding of business environment important for managers? Explain with the help of any four points.
Explain how does the understanding of business environment help the management in the following:
(a) Tapping useful resources; and
(b) Coping with rapid changes
What is included in ‘Political Environment of business? State.
An environmental conscious multinational company “AXN Ltd.” follows certain well-defined business principles that result to minimize the employee turnover. Following are some of the important environmental factors followed by ‘AXN Ltd.’
(1) Honour the law of every country in which it operates.
(2) Respect the culture and customs of all nations.
(3) Provide clean and safe products to enhance the quality of life throughout the world.
(4) Develop a culture in the company that enhances individual creativity and team work while honouring mutual trust and respect between management and labour.
From the above:
(i) identify and state any one general principle of management and any one dimension of business environment.
(ii) also identify any two values which the above guiding principles and environmental factors are conveying to the society.
