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International economic growth and business environment
 

International economic growth and business environment

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    International economic growth and business environment International economic growth and business environment Presentation Transcript

    • INTERNATIONAL ECONOMIC GROWTH AND BUSINESS ENVIRONMENT UNIT 1 CHAPTER- 4
    • What is the Economic Environment?
      • The economic environment comprises of the nature and the level of development of the economy, economic resources, size of the economy, economic system and economic policies.
      • The economic environment helps in the formulation of business strategy.
    • Economic Policies
      • The economic policies have direct and influential impact on the business.
      • It includes the following:
        • Industrial Policy
        • Trade Policy
        • Foreign Exchange Policy
        • Foreign Investment and Technology Policy
        • Fiscal Policy
        • Monetary Policy
    • 1. Industrial Policy
      • Define the role of the different sectors.
      • Affect the location, choice of technology, scale of operation, product mix etc…
      • Liberalization has increased the business opportunities. Also increasing the competition.
    • 2. Trade Policy
      • Trade policy becomes the part of the Industrial Policy.
      • Example: Restrictive import policy, helps the domestic companies, while after liberalization, they faced competition. This also facilitated global sourcing.
    • 3. Foreign Exchange Policy
      • It plays vital role in the business, as it regulates the cross-border movement of the capital.
      • Liberalization has facilitated the flow of funds.
    • 4. Foreign Investment and Technology Policy.
      • Until 1980, there was restrictive policy, due to which there was restriction in the transfer of funds and technology.
      • After liberalization, countries gained with the import of latest technology.
    • 5. Fiscal Policy
      • Focuses on the Public expenditure and revenue.
      • It may affect development of various regions and sectors.
      • Government incentives and disincentives may encourage or discourage certain businesses.
    • 6. Monetary Policy
      • Focuses on the supply of money in the economy.
      • It influences savings, investments and consumer spending in the economy.
      • It also affects the exchange rate of the currency.
    • Economic Conditions
      • Boom:
        • High level of output
        • Employment
        • Increase in income
        • Rising demand
        • Hike in the prices.
      • Recession
        • Low output
        • Decrease in the employment
        • Decrease in income
        • Fall in Demand
        • Fall in prices
      The economic condition may be a widespread or may be confined to a region. Example: -- South East Asian Crisis 1997-98. -- A recession in US.
      • Exports and Imports of a country are affected by a number of domestic and international conditions.
      • The external factors are:
        • Rate of growth of the importing countries.
        • Rate of growth of the world.
        • Rate of change in the price level in the importing country.
      • The internal factors are:
        • Rate of growth of the Indian Economy.
        • Rate of change in the domestic price level.
    • Global Linkages
      • Magnitude and nature of cross border:
        • Trade flows
        • Resource flows
      • Membership of WTO, IMF, World Bank, Trade Blocs.