Professional Documents
Culture Documents
No business concern can ignore the environment around it except at its own
peril. “The penalty of environ mental disregard is heavy. It not only reduces
profit margins and makes opportunities for expansion slip, but it also
arouses social hostility and makes social environment growingly inhospitable
to business operations.”
Economic Environment
In a mixed economy like India, business enterprises work for both profita-
bility and social interest. In this age of planning, business enterprises work
within the framework of a planned business environment. Private sector
has to function within the conditions largely created by the State. The
private and public sectors must function as parts of a single organism
rather than as two separate entities.
The Industrial Policy of 1956 stressed the need for proper direction and
regulation of the private sector as well as the increasing role of the State
to achieve rapid growth in national wealth. In the words of the planners, "It
(private sector) has to visualise for itself a new role and accept in the
larger interest of the country a new code of discipline. Private enterprises,
like any other institution, will endure and justify itself only to the extent
to which it proves to be an agent for promoting the public good."
Some changes were made in the Industrial Policy in 1970 and 1973.
Restrictions on large industrial houses, preferential treatment to small
scale sector, boost to joint sector, etc., are some of these changes. In
recent years there has been a trend towards liberalisation, simplification
and rationalisation of industrial policy.
Legal Environment
There are several business laws in our country. These relate to development
of corn panics, foreign collaboration, foreign exchange, labour
management, industrial disputes, social security benefits, and other such
allied problems. A working knowledge of these laws is very helpful for the
entrepreneur and the business executive. Such knowledge will keep them
away from innocent breaches and resultant penalties. Some laws differ from
Slate to State and amendments arc made from time to time. Therefore, the
entrepreneur must always keep in touch with those who know the latest
position in law. In addition, an entrepreneur should:
(a) read the books that enlighten on the legal side of business
(b) consult government agencies concerned with the implementation of
business laws.
(c) retain labour law consultants.
Political Environment
Socio-Cultural Environment
Hadimani found that caste attachment was high in both weavers and
non-weavers. In case of the former such attachment hindered
entrepreneurship while in the latter it promoted entrepreneurship. A
holistic approach to the problems of caste dualism revealed that
Marwaris succeeded better because they had entrepreneurial traits.
Enduring qualities of business men such as hardwork, devotion to
work, honesty and quality control were more pronounced among
Marwaris. However, entrepreneurship is no more confined to the
traditionally known communities.
Structure and economic status of the family are important because these
determine the support which an entrepreneur gets from his family. Such
support influences the success of an entrepreneur. "Membership of a
resourceful family or community facilitates entrepreneurship. Joint family
system is supposed to inhibit individual is in and accumulation of control.
But once a beginning is made the family become the breeding ground for
more entrepreneurs. The same family members who are a drag on resources
prove to be strength in adversity. About half of the entrepreneurs were
living independently and the other half in joint families.
The average annual earnings increased from grandfather to father and from
father to the entrepreneur himself. This improvement in economic status
must have had a positive impact on entrepreneurs' activities. The financial
soundness of the past generation creates a sense of security and thereby
encourages the spread of entrepreneurship. The magnitude of
entrepreneurial activity also depends upon the economic status or financial
origins of the entrepreneur. Most of them show initiative in consolidating
and building up on the base provided by the father and the grandfather.
Few of them start from a scratch and thus become selfmade entrepreneurs.
A look into the place of activity and nature of market revealed that about
84 percent of the entrepreneurs operated from the local area and 90
percent of the entrepreneurs had local or regional markets. However, the
markets for trading, manufacturing and other services were widely spread
than those for fanning and professional services.
State plays now a vital role in the sphere of entrepreneurship. This role may
be classified into three categories:
1. Supporting role
2. Regulating role
3. Participative role
Private industrialists in India often complain that there are too many
controls and these controls have failed to achieve the intended objectives.
In recent years there has been a trend towards liberalisation of economic
activities. The control and regulatory mechanism is a dynamic process and
has to be viewed against the environmental situation existing at a point of
time. Different degrees of control may be necessary at different stages of
economic growth.