Emerging Business Environment in Nepal:

Nepal is one of the least developed countries in the world. After being restoration of democracy in 1990, there were so many developmental activities conducted on improving the economic, social, political and technological environments. The decade of 1990s witnessed fast changes in Nepal’s business environment. Those developments are:

1. Open market, liberalization and deregulation of the economy.
2. Privatization of major public sector enterprises
3. Consumers and environmentalists have started exerting pressure
4. Social awareness brought forth the movement towards pluralistic society.
5. Demand on business also arose from the social activists and citizens
6. Technology transfer issues cam into prominence.
7. Nepal’s participation, commitment, and membership in different forum such as WTO.

Economic reforms started by the government during the last two decades have changed the industrial and business environment significantly. After being Republic State on may 28th 2008, along with changing political scenario different possibility and challenges of economic development have started to reorganize in the sharper focus. The ever-growing process of globalization , the presence of multi-nationals in the market, the open door to import and the obvious shift to a buyer’s market have thrown new demand and challenges on business firms of the country.

1. Economic Environment: Nepal has adopted a mixed economy where the public and private sectors freely operate for the overall development of the country. Though we have come to an end of 3 years interim plan (2007-2010) the economic condition had not improved as planned. There are vast disparities in the income level of the people. The growth rate is below 3% and has heavy pressure to the low income group because of high inflation rate (i.e. more than 10%).There is  high trade deficit, import from India and China and third countries are increasing rapidly where as the export to those countries are degrading day by day due to weak and low quality product and services. Apart from this , the emerging globalization concept( i.e. free flow of goods ,services, human resources, etc. in-between countries has hit hard to the small and cottage industries. The brain-drain is also the new challenge for the nation. However, various reform programs in quality management and export oriented business bring some hope in the development of economic environment of Nepal.
2. Political and Legal Environment: Since the last 20 years Nepal has been going through a number of political ups and downs. Unstable government and frequent strike by different political parties and their sister organization create chaos in the country. The rules and regulation are being violated by peoples and organizations supported by political parties. Frequent changes in policies also create more confusion and threats to the existing and newly invested companies. Problems related to labor unions, employees’ dissatisfaction, human right and civic societies and professional have not been properly addressed. Apart from that, political parties are not reaching in a consensus to draft a new constitution for New Nepal.
3. Socio-Cultural Environment: People of different caste, religion, belief system, educational background, age, sex and awareness are in our nation. There are still the incidents related to caste discrimination. Literary rate in remote areas are not improving as expected. Most of the younger people in the villages are flown to Middle East countries for better life style and income. Hierarchy system also prevails in society and organization. People working in higher position think themselves as superior and dominate the lower position staff and people. Undue influences, hypocrisy, nepotism, favoritism are very common in our society and organization. However, Nepal are known for simple, well behaving the guests, honest for their parents and owners, loving to the nature and sacrificing. This attitude and behavior could be good source for future growth of business activities.
4. Technological Environment: The technological environment consists of that process by which organization transforms inputs into outputs. Technological development depends on government spending on research, new discoveries and development technology transfer and operation system. In Nepal there are very few industries which go side by side with the increasing improvement in technology. Especially, the financial sector, telecommunication sector are using latest technology. Whereas agriculture sector, industrial sector are still show slow pace in improving the functioning of their activities in using latest technology. There are also financial constraints for small organization to update their technologies. Apart from that, government also shows lack of interest in developing efficient and effective method to enhance the development of new technologies.