International Business: Concept Business Environment Books at. External Factors Influencing Business Environment. International Business Understand the meaning of business environment. Define factors affecting departments which offer M.B.A.. Programmers to young. BUSINESS ENVIRONMENT UNIT – 1 BUSINESS AS A SOCIAL SYSTEM Business is an integral part of social system and it is Download as DOC, PDF, TXT or read online from Scribd. Flag for MBA 1st Sem Syllabus With Books Names.
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Download Legal Environment and Business Law Notes Pdf. Here We Provide the Download Links for MBA 3rd Sem Study Materials & Books. Ք To relate the impact of environment on business in an integrated . According to Arthur M. Weimer, business environment encompasses the. Hi Fellow MBA students I am sharing with you the ebook & lecture notes of the subject Business environment. The attached PDF file will help.
Carries of money market each pre requisite for the success of RBI bank rate policy. The important macro environment factors as follows: Modernization has brought in change in the Indian society. Third country location: The natural environment determines what can be got done in a society and how institution can function. Public Sector Ratnas Govt.
If Central Bank conducts an open market operation that increases demand for government securities, thereby raising their prices and lowering their interest rate. Therefore equity owners will consider themselves wealthiest and consumption expenditures will rise. Instruments Targets of Monetary policy: The instruments of monetary policy refer to the exo variable that the Central Bank can change at its discretion with a view to controlling and regulating the money supply and the availability of credit.
The measures of monetary policy are classified under two categories. Quantitative measures of monetary control II. Qualitative and selective credit controls. Traditional measures are open market operations. Effectiveness of Open Market Operations 1. When commercial banks possess excess liquidity the open market operation does not work effectively. During the period of depression, open market, operations are not effective for lack of demand for credit.
Open market has limited effectiveness due to under developed security and capital market. Discount Rate on Bank rate policy Is the rate at which the Central Bank rediscount the bills of exchange presented by the commercial banks. The RBI Act, , defines Bank rate as the standard rate at which the bank is prepared to buy or rediscount bills of exchange or other commercial papers eligible for purchase under this act.
It rediscounts only approved bills and the first class bills of exchange. Why Rediscount? When commercial banks, faces a shortage of cash reserves, they approach the Central Bank to get their bills of exchange rediscounted.
Of its functions — it is lender of lost Resort Central Bank. For rediscounting the bills of exchange, the central bank changes the rate. This is called Bank rate policy or discount rate policy.
This was first adopted by Bank of England in It was an effective bank of market was introduced in Central banks want to control the flow of bank credit, to achieve this objective, it will raise the discount rate.
This action of the Central Bank reduces the flow of the credit in three ways. Reduces the banks capacity to borrow. Bankers lending rate is adjusted to deposit rate. This turns borrowers into depositors, savings in bank are in form of deposits.
Effective only when commercial bank borrows from Central bank, because they have their own financial resources. The share of banking credit has declined. Variations in the discount rate become effective only where demand your credit is interest elastic. Cash reserve ratio, CRR is the percentage of total deposits which commercial banks are required to maintain in the form of each cash reserve with the Central Bank. CRR is non-interest bearing often keep their cash reserves below the safe limits.
It might lead to financial crisis in banking sector. Central bank imposes CRr, to control money supply. It controls legal powers to change.
It is a legal requirement. Therefore it is called statutory reserve ratio, SRR. When economic conditions demand monetary contraction the Central bank cRr, when it demands monetary expansion, Bank decrease CRR.
Qualitative or Selective Credit Controls The qualitative methods of monetary control affect when effective , the entire credit market in same direction.
They lead either to expansion or to contraction of the total credit. The impact is uniform. Authorities face problems like, i Rationing the credit ii Diverting the flow of credit from non-priority sectors iii Curbing speculating tendency based on the availability of bank credit.
These are not served well by quantitative measures, qualitative or selective credit controls is used. When there is shortage of institutional credit available for the business sector, the large and financially strong sectors or industries tend to capture the lions share, in the total instalments. Credit priority sectors and weak industries are starved of necessary fund and bank credit goes to non-priority sector. The gap between the value of the mortgaged property and amount advanced is called lending margin.
This was used by RBI first time in By , extensive use in scarce agricultural products — like food grains, cotton, oil seeds, vegetable oil, sugar, Khandsari and gur, cotton textile and yarns, decrease price secures loans.
This increases the buying, power and stocking and future mortgaging and borrowing. Therefore prices shoot up due to artificial scarcity. This is widely used in India. But not effective in underdeveloped country. In this method, the central bank writers letters to and holds meetings with the banks on moey and credit matters, with clear directive to the banks to carry out their lending activity in a specified manner. The time lag: Its divided into two parts: The time taken by households and the firms to react in response to the policy action taken by the monetary authorities.
This lag is long. Problems in forecasting Reliable assessment of magnitude of the problem recession or inflation as it helps in determining the appropriate policy measures. Non-Banking financial intermediaries: Structural change reduces effectiveness of monetary policy. Eco growth 2. Promotion of employment 3. Eco justice or equity.
Was formulated to meet the financial needs of the country in the post- independence period. But the result was unsatisfactory for the development of the money market and commercial bank. General Central Banking Functions:. Issue of currency notes Originally provision was for issuing currency notes according to proportional reserve system but not elastic and did not suit the developmental planning. The provisions regarding maintenance of reserves was again amended on October 31st , which foreign exchange reserve to Rs.
Bankers to Govt. The RBI has obligations to transact the banking business of the central and state govts. It accepts money and makes payment on the govt. RBI [Govt] 1. Advices Govt. Sells treasury bills 3. Makes wages and means of advance short term loans, repayable within 90 days from the date of advance. RBI is the sole agent for transacting govt. Bankers Bank: Assists scheduled commercial banks [Banks where affairs are not conducted in a manner detrimental to depositors interest must maintain a cash reserve as decided by RBI.
RBI considers factors such as the financial its tending policy and securities offered. While making advances to it. It can deny residenting without any reason. Licensing of Banks 2.
Branch Expansion 3. Liquidity of assets of commercial bank 4. Management and methods of working 5. Amalgamation 6. Reconstruction and liquidation. The provisions regarding maintenance of reserves were again amended on October 31, which reduced.
The amount of gold coin and billion and foreign exchange reserve to Rs. Banker to the Govt. It is banker, agent and advisor. The RBI has the obligation to transact the banking business of the central and state government. RBI Govt. Advices govt. Makes ways and means of advance — short term loans, repayable within 90 days from the date of advance. SBI is the sole agent for transacting govt. Advices on banking policies, financial matters. Established UTI in to mobilize savings. To small investors, UTI offers the advantages of reduced risk, steady income, liquidity etc.
Assisted development of short term coop credit for agri and also participated in establishing the agri refinance and development coop covers in Half of capital Rs. It also influences commercial banks lending policy, rate of interest, form of securities against loans and portfolio distribution. Stabilises external value of Rupee and therefore its function is of an custodian of nations foreign exchange reserves.
Credit control Has all authority to use qualitative and quantitative methods of credit control, but are ineffective.
Agricultural Finance Other integrated scheme of agriculture credit was implemented, RBI role from lender of last resort changed to that of an active agency for promotion of appropriate specialized agencies of agricultural, finance the setting up of NABARD in Collection and publication of data The RBI has been entrusted which the task of collection of compilation of statistical into related to banking and other financial sectors of economy.
RBI bulletin — monthly — presents was only above function but also provides results important studies and investigations conducted by RBI. Report on currency and finance is an annual publication which provides comprehensive review of various development of economic and financial importance. Firstly commercial bank are not much dependent on RBI for financial assistance.
Carries of money market each pre requisite for the success of RBI bank rate policy. The silver several little purposes. Fiscal Policy Def: The objectives are derived from the aspiration and goals of the society. Objectives are: These objectives vary from country to country and from time to time. The objectives are growth, employment and equality. The two basic instruments that are used to achieve the social goals are taxation and public expenditure.
RBI attempted to raise resources by selling govt. There is fiscal bias. RBI direct scheduled bank to keep certain reserves of their liabilities created after a specified date in cash. System of different rates In RBI introduced a system of lending rates on slab basis.
It was effective for 4 years till it was replaced by her liquidity ratio system. It is formulated, reformulated to make it fair, equitable and efficient. Taxation Enquiry Committee TEC to suggest suitable tax measures for mobilizing additional tax revenue. Nicholas Kaldor Committee — under chairmanship of Prof. Nicholas Kaldor, tax expert of Britain to suggest new tax measures to augment govt.
Direct Taxes Administration Committee: Tax policy was designed to perform two basic functions. Was formed primarily to meet the financial needs of the country in the post- independence period. The problem faced was how to mobilize adequate financial resources to finance the development programmes chalked out in 5 year plans. The known source of development finance taxation, domestic borrowing, external borrowing on foreign aid had the potentials of yielding adequate development finance.
Taxable potential was very low as income was low and per capita borrowing was lower. The repayment near slow. So taxation policy was formulated. The state and central government levies taxing power extensively and intensively.
The taxes imposed are from ,. Wealth tax 3. Gift tax New in 4. Expenditure tax 5. Capital gains tax. A tax rates were imposed on direct indirect taxes. Central Excise duty is imposed on all imaginable non-agriculture products. High import duty is imposed on almost all items of exports. Industrial Finance Sources of finance for small and medium scale industries Both medium and small scale industries require capital for plant and machinery, production and final disposal.
The capital varies in rural areas they have to borrow from money lenders or land owners and pay high interest rate. In urban areas, capital is better mobilized. SBI with RBI took the initiative of setting up a pilot scheme for the provision of credit for small scale industries. The schemes was extended to all branches of SBI.
Others CBs were slow in lending by March they had made advances amount to Rs. The advances to small borrowers is Rs. Functions are 1. To secure govt. To provide financial, technical and other assistance to fulfil orders. To secure coordination between large and small scale industries to enable small scale. In order to manufacture ancillaries and component parts required by the large-scale industries. To underwrite and guarantee loans from banks and other credit institute.
It also introduced hire purchase of machineries on easy payments. It conducts surveys and secures contracts from central government. It has taken over the outstanding portfolio of IDBI relating to the small scale sector worth over Rs. Principal interest for SBI 2. Coordinate functions of other banks and financial institutions.
Administer small industries for fund and national equity fund. Refinances loans and advance extended by primary lending institute and provide resources support system. Rediscount on discounts bills arising from sale of machinery. Grants direct assistance as well as refinance loans extended by primary lending institute for financing export of products manufactured by last for industrial concerns in SSI. Extends financial support to state small industries development corporation for providing scarce raw materials to marketing the end products of industrial units in the SSI.
Technical upgradation and modernization of existing units, expanding channel for marketing. Stimulate the promotion of new industries 2. Assist the expansion and modernization 3. Furnish technical and managerial aid. Long term or medium term loans, both rupee loans and foreign currency loans. Participates in equity capital and in debenture and underwrites new issues of shares and debenture. Guarantees loans from other private investment sources. Provides financial services such as deferred capital, leasing credit, instalment sale, asset credit and venture capital.
The total financial assistance amounted to Rs. While its disbursement amounted to Rs. This consisted of foreign currency, loans, rupee loans, guarantee and subscription of shares and debentures. Commenced leasing operation in Apart from HDFC, other institute are. UTI was formally established in February , to extend facilities of investment in equity capital of companies, by the large and growing number of small investors in the middle income group of the community.
The management and direction is entrusted in the hands of the trust and in hands of Board of Trustees. Stimulate and pool the savings of the middle and low income group. Enable them to share the benefits and prosperity of the reply granting industrialiszation in the country.
It could be achieved in three fold: By selling units of the trust among as many investors as possible in different parts of the country. By investing the sale proceeds of the unit and also the initial capital fund of Rs. By paying divides to those who have bought the units of the trust. On August , the Govt. IRBI was established in March , for revival, assisting and promoting industrial development and rehabilitating industrial concern. IRBI extends credit to sick small scale units emphasis on continuous modernization, improve productivity and upgrade technology.
Export — Import Bank of India Commonly known as Exem Bank, was set up on January to take over operations of the internal financial wing of the IDBI to provide financial assistance to exporters and importers.
Wholly subscribed by the Central Govt. Financing for exports and imports of good and services 2. Financing of joint ventures in foreign countries. Loans to Indian companies a Direct financial assistance to exporters b Technical consultancy services c Oversees investment d Pre-shipment credit 2.
Loans to foreign govt. Loans to cities in India include a Export bills re discounting schemes of short bills b Refinance of export credit.
Till it was a wholly owned subsidiary of the RBI. Functions of the IDBI 1. Direct Assistance: By way of projects loans, underwriting of a direct subscription to industrial securities, soft loans, technical refund loans and equipment finance loans.
It subscribes to purchase and underwrite the issue of stocks, shares and bonds or debentures. Indirect Assistance: Can refinance term loans to industrial concerns repayable within 3 to 25 years given by the IFCI and State finances. Refinance term loans repayable between years given by scheduled banks or state cooperative banks.
It can refinance bank and state cooperative banks. Special Assistance: IDBI Act has provided for the creation of a special fund known as the development assistance fund. It provides assistance to backward areas in relation to industrial development with the financial institute gives advances to small scale sector for regional development and soft loan scheme. Industrial Finance 1. Short-term finance: Refers to the funds required for a period of less than one year required to meet variables seasonal or temporary working capital requirement.
Banks are primary sources. Medium term finance years may be regarded as medium term. Is required for permanent working capital, small expansions, replacements and modifications etc. Corporate securities are instruments by capital is raised by joint stock companies. There are two classes:. Preference shares: Characteristics 1. Dividends are fixed 2. Those who hold PS get their dividends before others 3. During wind up also they get the money first.
Kinds 1. Cumulative PS: Have fired dividends whether these are profits or no profits. If profits are not sufficient then dividend are accumulated and paid the next year.
Convertible cumulative PS: Introduced in Non cumulative PS: They cannot claim arrears of dividends of any year out of the profits of subsequent year.
Participating preference shares: Shareholders receive a fixed rate of dividend in priority to ordinary share, have sight to participate in the balance of profit in an agreed proportion together with ordinary shareholders have voting rights. Non-participating PS: Entitled to only fixed share of dividends and have no claim in surplus profit, do not have voting right. Redeemable PS: Shares which can be purchased back by the company at any time. Irredeemable PS: That cannot be purchased back.
Once the claims of dividend of PS are complete the FS get them. They are irredeemable and holders handle normal voting rights. Two types of equity shares: With voting rights 2.
With differential rights as to the dividend, voting or otherwise in accordance with such rates of subject to conditions as may be prescribed.
Included by the Act by companies Amendment Act It may consolidate and divide all or any part of share capital into shares of a large amount. May correct all or any of its fully paid up shares into stock and vice versa. Can sub divide the existing shares into shares of lower denominations. Can also cancel shares which have not been take up and reduce its capital 7.
Creditorship Securities Consists of Debentures and bonds and credit instruments that are used by companies to raise funds. Redeemable and sure deemable perpetual 2. Mortgage and simple 3. By a charge on the assets or property of the company 4. Spread over in different cities 5. Estimates of deposit and annual turnover is not available 6. RBI has no control over the lending activities. Nidhi operate — South India Some kind of mutual funds Restricted only to the member.
Indigenous bankers are individual firms which receive deposits and give loans and thereby operate as banks. The activities not regulated. They do not constitute a homogeneous group. The principal constituents of the Indian Money Market is.
The Call Money Market: Overnight and money at short notice for periods upto 14 days. It is meant to balance the short term needs of banks, exist in developed markets. Market which deals with treasury bills is called treasury bills market. They are short term liability of the Central Govt.
Issue to meet revenue deficits. The market is undeveloped. RBI is the captive holder of these bonds.
It is also auctioned. The Repo Market: Is a money market which helps in collateralized short term borrowing and lending through sale purchase operations of debt. It is sold by their holder to an investor with an agreement to repurchase them at a predetermined rate and date. The Commercial Bill market: Is sub market where commercial bills trade bill are handled. The commercial bill is a bill drawn by one merchant firm on the another.
They arise only out of domestic transactions. Purpose is to reimburse seller, but buyer delays payments. The Certificate of Deposit Market: Issued by bank to depositors of funds that remain on deposit at the bank for a specified period.
They are similar to term deposits but are negotiable and trade able in the short term money market. Commercial Paper: Is short term instrument of raising funds by corporates. Is the sale of an entire issue of securities by a company directly to one or few investors, usually financial institutions.
The appeal made to sell and buy through brokers. Insurance companies, investment companies, trust accounts, pension and provident funds etc. Standing Behind the issue: Underwriter guarantees the sales of a specified number of shares within a specified period.
Convertible and unconvertible Convertible debentures the holders have the option to convert their debenture holdings into equity share of the company at a specified rate after a specified period. For a new company with new and unknown promoters, it is not advisable.
If company fails to generate sufficient response, this is a flop. Money Market Money market refers to a mechanism whereby on the one hand borrowers manage to obtain short term loanable funds and on the other, tenders succeed in getting credit worthy borrowers for their money. Unorganized sector Confined to small towns and villages. The indigenous bankers are financial intermediaries.
Among these the most prominent are financial companies, chit funds and Nidhis. They give loans to retail on wholesalers, artisans and other self- employed persons. The chit funds are saving institutions. Have regular members who make subscription 2. Collection is given to member of the fund. Purchase price may be negotiated or may be determined by competitive bidding. The Consortium Method: Syndicated Method Underwriting is jointly done by a group of underwriters who form a syndicate for this purpose.
Adopted for new issues, risk is widespread. Advantages 1. Relieves the issue of the risk. To fulfil minimum requirements 3. Reduces specialized functions 4. Have expert knowledge of the capital market conditions 5. Assist in mobilization of funds in the capital market 6. Help stabilize capital markets. Participation Certificate Like certificate of deposits PCs are also issued by banks normally for periods ranging from three months to 6 months. Maximum period to one year.
In need of funds, it allows a bank to obtain from other banks and financial institutions. Money Market mutual Funds Was introduced by RBI in April , the objective was to provide an addition short term avenue to the individual investors.
To make is attractive Rs. Lack of integration No coordination between organized and unorganized sector. There is no coordination and cooperation between them. The indigenous bankers have no connections with RBI. Too many concession rates, no fixed interest, inappropriate lending and borrowing. Shortage of funds in the MM The loanable funds far exceed its supply.
Due to small savings, low per capita income, poverty, population and wasteful consumption. Seasonal stringency of funds and fluctuation in interest rates India, basically farm regulated, and has bearing on funds demand and supply. Oct — June require additional finance a monetary stringency is crated.
Inadequate Banking facilities Though we have opened CBs everywhere, but still lack in banking facilities. Rural areas still to be covered. Reform measures 1.
Introduction of stamp duty 2. Many MM Instruments are realtered 4. It is the money and money value investors in business unit. A business enterprise can raise capital from various sources. Long term trends can be raised either through issue of securities by borrowing from certain institutions.
Borrowers of Capital are: Public Corporations Business units. Lenders are: Individual investors Institutional investors Banks Special Industrial financing institutions.
The MM and CM are interdependent 1. User also opt for both markets. Short term and long term rates are interdependent. Some institution serve both money and capital market. For financing Five Year Plans 2. Mobilization of savings and accusation of capita formation Paucity of resources and increasing demand for investments by industrial organization in India. Capital upto is important. Promotion of Industrial Growth Stock exchange is a central market through about resources are transferred to the industrial sector of the economy.
Encourage people to invest in productive rates than non productive channel. Raising long term capital Permanent capital is raised for a permanent present born companies require funds permanently. The exchange gives investors to buy on sell their securities while permanent capital with the companies remain same.
Ready and continuous market: Stock market is every element of marketability makes investment with more liquid as compared to other assets. Proper channelisation of funds Not only creates liquidity through its pricing mechanism, but also functions to allocate resources to the most efficient industries. To channalise their funds in a particular company. Provision of a variety of services FI provide variety of services i Grant of long term and medium term loans in entrepreneurs.
Function Provides services to both corporate and investor class sectors useful services. Ready and continuous market Provides a convenient place where shares can be bought and sold.
Easy marketability make investment in securities more liquid as compared to other assets. Protection to Investors The functioning is regulated and conducted by well laid rules. Provides safety to investors. After scare everything comes under SEBI. Provides information to assess the real worth of securities Trading is continuous and prices are determined by their supply and demand. Proper channelisation of funds Flow of funds is into most efficient industries.
The prevailing market price of a security and relative yield are the guiding factor for the people in channel is their funds in particular company. Promotion of Industrial Growth The funds are invested in productive channels than unproductive sections like real estate, building etc. Accelerates capital formation The positive features of the stock market encourage peoples to save and invest in corporate securities.
The twin fee market of recoverable return and liquidity are definite incentive to the people to invest in securities. Raising long term capital Stock exchange offers investors opportunity to investors to buy and sell their securities while retaining the permanent capital.
Impact of company performance 9. Economic barometer Stock exchange prices are important economic indicated of the performance. Benefits to community: Development Inculcates habits of saving and accelerates the process of capital for margin Optimum utilization of saree resource Give picture of the economic of state and country Manages fund for public sector.
The government is empowered to nominate not more than three members on the government body. Functions 1 Ensure — Rules are observed by members 2 To protect the interests of the investing public 3 To approve the quotation of new shares. It is registered and governed by various regulations. It ensures that the person is of good moral conduct, component, possess enough experience and are financially sound can become its members.
They enjoy special privileges. Non members are not allowed to enter the floor. Remisieres act as agents for the members and receive commission on the business procedure by them. Also known as they commission men. Types of Dealings 1. Ready delivery contracts: These involves investment transactions care known as cash trading. The settlement is done within a fixed time, noted seven days from date of contract.
When settled same day it is spo delivery contracts. Forward Delivery contracts: Involves speculative transactions are known as forward. Trading the speculators are interests in dealings. It is done on fixed settlement days on the end of every fortnight through clearing house only. Clearing house: An institution share accounts brokers are settled. All transactions are taken into account.
Speculation and speculators: Speculation — Refers to making quick profits by anticipating the changes in the prices of shares. Speculative transactions are carried out in the stock exchange day in and day out. Speculators who are optimist and crytallise in prices and purchase shares. Speculators who sell in anticipation and fall of prices in future. Growth of Indian Stock Markets The first organized stock exchange was established in India at Mumbai in and was styled as the native share and stock brokers associations.
The WEM is concerned with trading in govt. All transactions in debt securities through brokers. This is aimed to ensure transparency and facilitate regulation. The capital market segment of NSE. The regime in which trading on NSE operates is characterized by 4 key innovations:. The physical floor was replaced by anonymous computerized order matching with strict price time priority 2. Satellite communications NSE has a net work of 2, satellite terminals all over the country.
NSE is not owned by brokers. It is a limited liability company and brokers are franchises. Traditional practices of unrealiable fortnightly settlement cycle with the crepe clause of badly were replaced by a strict weekly settlement cycle without badla. Phase I — a — First three year plan [passively b — export insufficient expansion. Exports were given high priority. Effective nominal exchange rate of the rupee depreciate in the Import Substitution Objectives are: To save scarce foreign exchange for the import of more important goods.
To achieve self reliance in the production of as many goods as possible. Import Policy 1. I Phase — Import substitution mostly took the form of domestic production of consumer goods.
II Phase — Emphasis shifted to the replacement of the import of capital goods. III Phase — Emphasis was on reducing the dependency on imported technology by developing and encouraging the use of indigenous techniques. The immediate aim of import substitution in this country was the conservation of foreign exchange.
It long fun objective was to initiate structural changes of far reaching significance in the economy. The result is industrial sections as achieved diversification and depth necessary for future growth. Indian Society Social system is a very broad concepts. It includes the people, the government, political, educational and industrial economic environments imbibed in it.
Indian Society basically a traditional society. Now in the recent times changing towards modernity. The family values, traditions and culture is rich in.
The quality of life have improved due to employment and high earning. The society stands for certain beliefs, values which are a source of institutional drive.
The different languages keep people bonded together. Indian society is very sensitive culture of Indian society has changed slowly, but will require much more time to adapt to modernization. Acceptance of new is not immediate. The society is also turning into liberalization. Women in middle class families enjoy greater freedom. The change is gradually taking place, from ethical and tradition to modern and silicon. Culture Refers to that part of the total repertoire of human action 15 product which is socially as opposed to genetically transmitted.
Culture is - There is human product of social interaction - Provides pattern for meeting biological and socio needs. Elements of Culture 1.
Knowledge and belief: Refers to a peoples prevailing motions of reality. They include myths and metaphysical beliefs as well as scientific realities. Refers to societal norms which define what is expected; customary, right or proper in a given situation. Follows norms of proper behavior. Organization of culture Refers to the social structure and the integration of traits, complexes and patterns that make up the cultural system.
Stratification i. Each stratum has its own role limitation and rank. The organism of culture is determined to a large extent by major social institutions. The important common institutions of modern cultures are the eco system, the political administrative system, the educational system, religion, family, expressionistic, aesthetic and recreational institutions. They are established to mice and common societal needs. Cultural traits unit as observation [like normal behavior, shaking hands or saying namaste, or an articraft like wooden bowl.
Cultural pattern specific and enduring system of trait complexes [Refers to major segments of the culture. Adaptation is essential for survival e. Culture Shock: Environment changes produces culture, shock — a feeling of confusion, in security and caused by strangers of new environment. Cultural Transmission The important character is its transmissive quality. It is transmitted from one generation to the next and to the new members admitted to the culture.
Culture accumulates more techniques, ideas, products and skills. Cultural transmission takes place by means of symbolic communication. A symbol is any sign signal or word that conveys a meaning. It also facilitates cultural diffusion is the spread of cultural elements from one place to another. Can be done through high educational change and communication. Cultural conformity Individuals in a community either conform or deviate from cultural norms.
Cultural conformity follows that the most important process in society is that which ensures that people do indeed meet their role obligation. By William F. Orgburn says that various parts of modern culture do not change at the same rate; and that since there is a correlation and interdependence of parts, a rapid change in one part of our culture requires read. Investments through other changes in various co-related parts of that culture.
The important factors that contribute do cultural lag are ignorance, wrong nations, conservation, sentiment factors, political factors and vested interests. Low context and high context cultures: High context is one that places great value on the intangible aspects of a negotiation or business deal.
They look beyond facts and figures and take into consideration factors like personal relationships, atmosphere and attitudes towards respect, religion and trust. Low context: Assumes a high degree of shared knowledge on the behalf of a transaction partner and thus deals only with tangible aspects of the deals as facts, figures and performance.
Atmosphere and personal relationship means little. Business can be done without meeting face to face. Masculine and Famine culture: Appreciates aggressiveness and assertiveness while respecting the goal of material acquisition.
Achievements is more important than building long term relationship. Success is the function of individual and society is made up of leaders follows.
Appreciates inter-personal relationship put quality of life before material acquisition, appalled concern for individuals and less fortunate. Business hinges more on personal relationships — friends doing business with friends, rather than on pure efficiency and written contracts.
Monochromic and Poly chronic societies; Monochronic: How a culture views time. Universalism vs. Fans Tompenaalis identified five cultural dimensions. Neutral Vs. Emotional Emotional are held in check E. Japan Emotions are openly and naturally UR expressed. People smile a great deal, talk loudly when exited, greet each other enthusiastically E.
India, Mexico and Swiss. Specific Vs. China, Spain friend association. Achievement Vs. People are accorded status based on Status is attributed based on who or how well they perform their functions. Accords status based Give high status to high achievers on age, gender, or social connections. Politics There are not radical differences in the philosophic of major political parties in some countries, the situation is quite different in others.
The government system in a number countries, including several countries which are making rapid eco progress and having liberal policies towards foreign capital and technical is not very democratic. Indian politics believes in nationalism, but now with the liberalization, globalization, the countries are in a competition to woo foreign capital and technology. As a result there has been an influx of foreign investment to the countries like ours. The restrictions and regulations, trade policies, procedures, incentive system as all very different in Indian political system.
Coalition governments of different political practices are becoming common. Some political leaders are so powerful that they wild enormous control over the party. There is a universal trend towards political decentralization. Thisnindicates some shifts in the power centres firms have to deal with.
Universally, the desire of ethnic groups to become independent of the supremacy of others is growing. Leads to innovations 2. Increases productivity 3. Nature, importance and scope — Mode of entry into international business — Framework for analyzing international business environment — geographical, economic, socio-cultural, political and legal environment. International Economic Environment: Multinational Corporations: Nature of International Business Environment: Foreign Investment: Capital flows — types and theories of foreign investment; foreign investment flows and barriers.
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