1. Increasing Competition: Delicencing and entry of foreign firms in Indian
market has increased the level of competition for Indian firms.
2. More Demanding Customers: Now customers are more aware and they
keep maximum information of the market as the result of which, now
market is customer/buyer oriented. Now products are produced keeping
in mind the demands of the customers.
3. Rapid Changing Technological Environment: Rapid Technological
advancement has changed/improved the production process as a result
of which maximum production is possible at minimum cost but it leads to
tough challenges in front of small firms.
4. Necessity for Change: After New Industrial Policy, the market forces
(demand & supply) are changing at a very fast rate. Change in the various

components of business environment has made it necessary for the
business firms to modify their policies & operations from time to time.
5. Need for Developing Human Resources: The changing market
conditions require people with higher competence and greater
commitment. Hence there is a need for developing human resources
which could increase their effectiveness and efficiency.
6. Market Orientation: Earlier selling concept was famous in the market
now its place is taken by the marketing concept. Today firms produce
those goods & services which are required by the customers. Marketing
research, educational advertising, after sales services have become
more significant.
7. Reduction in budgetary Support to Public Sector: The budgetary
support given by the government to the public sector is reducing thus the
public sector has to survive and grow by utilising their own resources
efficiently.c