Page 32 - DMGT401Business Environment

Unit 1: Indian Business Environment

The legal factors i.e. laws especially the government policy relating to the businesses often Notes
undergoes a change with each budget session and the amendments and laws changed from time
to time especially in a country like India. There are consumer protection legislation,
environmental legislation, health & safety and employment law, etc., which are continually
modified in a wide range of areas.
Economic factors are affected with every change in the social ones. There are multiple fluctuations
associated with general booms and slumps in economy. In a boom nearly all businesses benefit
and in a slump most lose out. Other economic changes that affect business include changes in the
interest rate, wage rates, and the rate of inflation (i.e. general level of increase in prices). Businesses
will be more encouraged to expand and take risks when economic conditions are right, e.g. low
interest rates and rising demand.

Political changes relate to changes in government influence. In recent years these changes have
been particularly significant because as members of the European Union we have to adopt
directives and regulations created by the EU which then become part of UK law. Political
changes are closely tied up with legal changes.
Changes in technology have also become particularly significant in the post-millennium world.
This is particularly true in terms of modern communication technologies. The creation of databases
and electronic communications have enabled vast quantities of information to be shared and
quickly distributed in a modern company enabling vast cost reductions, and often improvements
in service. Organisations need to be aware of the latest relevant technologies for their business
and to surf the wave of change.

Notes SLEPT factors affecting the airline industry in recent years include:
1. Social: Increased popularity of foreign travel leading to a boom in demand for air
travel. However, this has been adversely affected by international terrorism.
2. Legal: There are increasingly tight rules about the materials that need to go into
aircraft construction in order to make them safer and more resistant to fire hazards.
This has had the impact of raising costs.
3. Economic: Lower interest rates have meant that people have more disposable income
to spend on luxuries like long distance air travel.
4. Political: The development of freedom of movement and trade in the European
Union has led to greater levels of competition on European routes coupled with
increased movement of people.
5. Technological: Modern aircraft are safer and more economic to run than in the past
making possible cheap air travel.

1.3.5 Methods of Scanning the Business Environment

There are three ways of scanning the business environment:
1. Ad-hoc scanning: Short term, infrequent examinations usually initiated by a crisis
2. Regular scanning: Studies done on a regular schedule (say, once a year)

3. Continuous scanning: (also called continuous learning) – continuous structured data
collection and processing on a broad range of environmental factors

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