Question

Lately many companies have planned for significant investment in organised retailing in India. Several factors have prompted their decisions in this regard.

Customer income is rising. People have developed a taste for better quality products even though they may have to pay more. The aspiration levels have increased. The government has also liberalised its economic policies in this regard and permitted even cent percent foreign direct investment in some sectors of retailing.

Questions

1. Identify changes in business environment under different heads — economic, social, technological, political and legal that have facilitated the companies’ decisions to plan significant investments in organised retailing.

2. What has been the impact of these changes with regard to globalisation and privatisation?

Answer 1

1. The given changes relate to the following dimensions of business environment.

i. Economic environment

• Customer income is rising.

ii. Social environment

• People have developed a taste for better quality products.
• The aspiration levels have increased.

iii. Political environment

• The government has liberalised its economic policies.

iv. Legal environment

• The government has permitted cent percent foreign direct investments in some sectors of retailing.

2. Such changes have a positive impact on privatisation and globalisation. For instance, a rise in the income of the consumers and developing a taste for better quality products implies an increase in the demand. The increased demand encourages the private players to come in force.
Similarly, liberalisation in the policies is a step in favour of globalisation. With liberalised policies the foreign interaction in terms of greater FDI permission, FDI would be encouraged.