Dynamics of Business Environment Globalization, Liberalization and Privatization

The case of Tata Steel clearly shows that the government policy in a country affects the growth and performance of the business. Th e government policy is the most important factor of the overall business environment, which influences the other constituents of the environment. There are several factors which contribute to the business environment in a country: economic, competitive, technological, political and legal, social and cultural, and ecological. The companies which understand this and respond appropriately are successful and survive for a long time, while others struggle to survive. For instance, Hindustan Motors was enjoying the protected markets under the restrictive economic policy. As the government liberalized its policy and opened the automobile sector for global players, Hindustan Motors could not respond to the change and is struggling to survive (see Exhibit 2.1). As the business has become globalized, understanding the global environment becomes important for the growth and performance of the business enterprises