Impact of Government Policy Changes on Business and Industry

  1. Market orientation
  • Earlier firms used to produce first and go to the market for sale later.
  • Now firms have to study and analyze the market first and produce goods according to customer needs
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  1. Increasing competition:
  • New industrial licensing and entry of foreign firms have increase competition for Indian firms in service industries like telecommunications, airlines, banking, and insurance.
  • Maruti is facing competition from both Tata Motors and Hyundai
  1. Reduction of budgetary support to the public sector :
  • The central government’s budgetary support for financing the public sector  has declined
  • To survive and grow, PSU’s will have to be more efficient and generate their resources
  1. Important for change:
  • After 1991, firms have to continuously modify their operations through mergers, acquisitions, takeovers to grow
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  1. Need for developing human resources:
  • Need for developing human resources: Indian enterprises have suffered for a long with inadequately trained personnel.
  • The new market conditions require people with higher competence and greater commi­tment. Hence the need for developing human resources.
  1. Demanding customers:
  • With awareness and Increased competition in the market
  • Customers have a wider choice in purchasing better quality goods and services.
  • Price war in the telecom sector
  1. Adopt the Rapidly changing technological environment:
  • Increased competition forces the firms to develop new ways to survive and grow in the market. New technologies make it possible to improve machines, processes, products and services.
  • The rapidly changing technological environment creates tough challenges before a smaller firm