CLASSROOM EXERCISE

• 1. LIST TOP 20 BUSINESSESS IN YOUR CITY.• LIST NAME OF 20 RESTAURANTS IN YOUR

CITY.• LIST THE PRICE OF 30 ITEMS IN YOUR HOUSE.

• LET START WITH A QUESTION?• WHAT IS RECESSION.

I DON`T WANT TO SPEND.I DON`T WANT TO SPEND.

STOCK MARKET CRASHSTOCK MARKET CRASH

BANKS GO BANKRUPTBANKS GO BANKRUPT

SO PANTALOON DID IN THIS WAY• WITH MALL OWNERS: FROM FIXED RENT TO

REVENUE-SHARING MODEL……RESULTED IN 10% SAVING ON OVERALL COST.

• AIR CONDITIONER TEMPERATURE RAISED TO 25 DEGREE FROM 22 DEGREE…….RESULTED IN LOW COST.

• OFFICE OCCUPY BY EMPLOYEES DOWN FROM 200 Sq FT TO 150 Sq ft……RESULTED IN 25-30% RUDUCE IN REQUIREMENT

• CHANGED THE PAYMENT PATTERN OF DEBT TO CASH GENERATED THROUGH SALES

HERO HONDA

• OUR DEPENDENCE ON FINANCE TO CONSUMER THROUGH BANKS REDUCES FROM 55-60% TO JUST 15 %.

• SIGNED AS TITLE SPONSORS FOR HOCKEY WORLD CUP.

RESULTS: GROWING FASTER THAN THE INDUSTRY

MCDONALDS INDIA

• 24 Hr DRIVE THROUGH• IN DELHI, STORES ARE OPEN TILL 1 A.M• ALTERED OUR MENU TO TASTE OF CUSTOMERS.

SO THAT WE INVITE THE SAME CUSTOMER TO

VISIT MORE OFTEN AND INVITE NEW CUSTOMERS ALSO…RESULTED IN 10% INCREASE.

ICICI BANK• LOWER EXPOSURE TO UNSECURED LOANS• LESS RELIANCE ON DIRECT SELLING AGENTS• MORE FOCUS ON BRANCH BANKING• GREATER INPORTANCE TO HR

NATURE,COMPONENTS AND DETERMINANTS OF BUSINESS ENVIRONMENT

COMPLEX

SO BUSINESS ENVIRONMENT

COMPLEX UNSTABLE

SO WHO WILL FRONT RUNNER

• COMPANIES PROACTIVELY FACES THE CHALLENGES

• DEVISE THE WAYS TO COUNTER AND TAKE APPROPRIATE DEFENCE

• INNOCULATIVE MEASUREWILL LEAD THE PACK AMONG.

CONTINUE……….

• FIRMS ELEMENTS CHANGE EXETRNAL E. BUT– SOMETIME EXTERNAL E HAS—POSITIVE IMPACT AND NEGETIVE IMPACT.

• ITS DEPEND AND CHANGES: WHAT IS AND WILL BE

• COMPETITIVE SITUATION• PRODUCT MIX OF FIRMS• MANAGERIAL CAPABILITIES• ABILITY OF THE FIRM TO MAKE STRATEGIC ADJUSTMENT

TO ENVIRONMENT CHANGES.

INPUT PROVIDER

CUSTOMER

CHANNEL MEMBERS

BUSINESS GOVERNEMENT

EMPLOYEE

RIVALS

DOMESTIC MACRO ECONOMIC ENVIRONMENT

GROWTH AND DISTRIBUTION ENVIRONMENT

ECONOMIC SYSTEM

ECONOMIC STABILITY

ECONOMIC POLICY

SOCIAL CULTURE ENVIRONMENT

NON MACRO ENVIRONMENT

COMPETITIVE ENVIRONMENT

DEMOGRAPHIC ENVIRONMENT

INTERNATIONAL ENVIRONMENT

INTERNATIONAL ENVIRONMENT

COMPONENTS OF B.ECOMPONENTS OF B.E DIFFERENT LAYERS OF B.E OF FIRMDIFFERENT LAYERS OF B.E OF FIRM

GLOBAL B.E MAY CAUSE CHANGES IN DOMESTIC ENVIRONMENT BUT EFFECT OF LATTER ON POLICY ENVIRONMENT MAY BE SLOW AND LAGGARDGLOBAL B.E MAY CAUSE CHANGES IN DOMESTIC ENVIRONMENT BUT EFFECT OF LATTER ON POLICY ENVIRONMENT MAY BE SLOW AND LAGGARD

• INTERNATIONAL ENVIRONMENT:– MOST DYNAMIC AND VOLATILE COMPONENT OF

BUSINESS ENVIRONMENT.– EX: FOREIGN CURRENCY CHANGE.– THIS RESULT—PRICE CHANGE—DOMESTIC

MARKET WILL BE EFFECTED- ALSO IT CAN COST VARIATION IN PRODUCTION COST—AS PRICES OF GOODS CHANGE.

1. BY GROWTH OF THE WORLD ECONOMY2. DISTRIBUTION OF WORLD GDP3. ECONOMIC RELATIONS AND

INTERDEPENDENCE BETWEEN NATIONS.4. INTERNATIONAL ECONOMIC POLICIES OF

MAJOR INDUSTRIAL MARKET ECONOMIES: AMERICA,CHINA.

EX CURRENT CHANGE IN DOLLAR VALUE EFFECT ON CHINA.

CONTINUE…….

5. MULTINATIONAL CORPORATIONS6. BANKS7. MULTILATERAL INSTITUTIONS–

IMF,WTO,WORLD BANK, ILO ETC.

THESE ALL ABOVE INTURN EFFECT BY INTERNATIONAL ECONOMIC LAWS, TREATIES, AGGREMENTS AND CONVENTIONS.THESE ALL ABOVE INTURN EFFECT BY INTERNATIONAL ECONOMIC LAWS, TREATIES, AGGREMENTS AND CONVENTIONS.

ALL THESE FACTORS AFFECT– COST AND FLOW OF INTERNATIONAL TRADE, I INVESTMENT, I FINANCE, I TECHNOLOGY AND GROWTH AND COMPETENCE OF FIRMS THE WORLD OVER.

ALL THESE FACTORS AFFECT– COST AND FLOW OF INTERNATIONAL TRADE, I INVESTMENT, I FINANCE, I TECHNOLOGY AND GROWTH AND COMPETENCE OF FIRMS THE WORLD OVER.

• MIXED ECONOMY: COMBINATION OF MARKET AND COMMAND

• SOCIALIST MARKET ECONOMY– Productive Resources—with Gov– But allocation,production and distribution—as—

principle of market. 1st S.M.E.Yogoslavia-1950

NOW MOST S.M.E ARE MOVING TOWARDS(MARKET) TRANSITION TO OPEN MARKET ECONOMIES: THESE ARE CALLED TRANSITION ECONOMIES.

NOW MOST S.M.E ARE MOVING TOWARDS(MARKET) TRANSITION TO OPEN MARKET ECONOMIES: THESE ARE CALLED TRANSITION ECONOMIES.

CONTINUEE.. LAYERS OF B.E: GROWTH AND DISTRIBUTION ENVIRONMENT

• ECONOMIC GROWTH: Process of increase in real output(GDP measuring factor) over period of time(usually 1 year).– 4 components of this(GDP)

• Personal Consumption expenditure• Gross domestic Private Investment• Govt Expenditure on Consumption and Investment• Net Export

HOW GDP IS THEN ALLOCATED.

Continue…..

• Second measure: Net Domestic Product– NDP= GDP- Depreciation(this is arbitarary)

• Gross national Product:– Total final output produces by resources owned

by residents of the country. GDP includes produce by foreign companies and national also.

• GDP= C + I + X-M• NDP= GDP – DEPRECIATION• NATIONAL INCOME= NDP – T(indirect taxes)

– IT CONTAIN INCOME RECEIVED BY OWNERS, SUPPLIERS,LAND OWNER, LABOUR AND CAPITAL IN FORM OF RENT , WAGES, INTEREST AND PROFIT.

DISPOSAL INCOME= NI – T(direct taxes)

– STABILITY IN PRICE LEVEL– EXCHANGE RATE– INTEREST RATE– MONEY SUPPLY– AGGREGATE DEMAND– BALANCE PAYMENTS– EMPLOYMENT RATE– BUDGETARY BALANCE– AND NATIONAL INCOME AND OUTPUT

ALL ABOVE VARIABLE ARE INTERACTIVE AND INSTABILITY OF ONE OR FEW EFFECT OTHERALL ABOVE VARIABLE ARE INTERACTIVE AND INSTABILITY OF ONE OR FEW EFFECT OTHER

• SO YOU MAKE ECONOMIC POLICY.– MONETARY POLICY– FISCAL POLICY– INDUSTRIAL POLICY– TRADE POLICY.

• TO STIMULATE AND MAINTAIN GROWTH• ACHIEVE ECONOMIC STABILITY• INCREASE EMPLOYMENT• STABILIZE BALANCE OF PAYMENTS• CORRECT REGIONAL IMBALANCES• MAKE ECONOMY MORE COMPETITIVE.

SO IF YOU TAKE GRANTS AND OTHERS FROM MULTILATERAL INSTITUTIONS LIKE IMF,WTO THEN YOU HAVE TO FOLLOW THERE GUIDELINES

SO IF YOU TAKE GRANTS AND OTHERS FROM MULTILATERAL INSTITUTIONS LIKE IMF,WTO THEN YOU HAVE TO FOLLOW THERE GUIDELINES

• Deal with cost ……avalibility credit—market.• WHO TAKES THE ACTION: Gov`t or Central

Bank of country.– How: Directly or Indirectly– Supply of Money, rate

of Interest and banking System.

FIRM`s affect: It affects his Liquidity & Cost of capital– So in turn effects its DEBT:EQUITY FIRM`s affect: It affects his Liquidity & Cost of capital– So in turn effects its DEBT:EQUITY

SO WHAT YOU WOULD DO IN CASE: Its Recession and To fight Inflation

• If Recession: LIBERAL POLICY--- CREDIT LIBERAL

• MONETARY EXPANSION: REDUCE RATE OF INTEREST.

• TO FIGHT INFLATION: RESTRICTIVE MONETARY POLICY RAISE THE RATE OF INTEREST, REDUCE MONEY SUPPLY GROWTH RATE, RESTRICT FLOW OF CREDIT.

• USE OF TAXES AND GOVERNMENT EXPENDITURE

• GOVT-EXPEN CONSUMPTION EXPENDITURE- INVESTMENT

EXPENDITURE- TRANSFER

PAYMENTS(SUBSIDARY, GRANTS , - UNEMPLOYMENT,ALLOWANCES)

SO INCREASE IN GOV`T EXPENDITURE LEAD—MORE MONEY MORE DEMAND FOR PRIVATE GOODS ETC.SO INCREASE IN GOV`T EXPENDITURE LEAD—MORE MONEY MORE DEMAND FOR PRIVATE GOODS ETC.

CONTINUE………

• FISCAL DIRECT AND INDIRECT TAXES.• Direct taxes: reduces DISPOSIBLE INCOME– so

reduce demand or core demand to diminish

• Indrect taxes: Raises the cost of Production. Impact the profits of the firms.

• Inform of:» EXCISE, CUSTOM, SALE TAX.» SO CERTAIN CATEGORIES BECOME LESS PROFITABLE

COMPARED TO OTHER.

NOTE: FISCAL POLICIES BY GOVT AND MONETARY POLICY BY CENTRAL BANK. SO BOTH CLOSELY RELATEDNOTE: FISCAL POLICIES BY GOVT AND MONETARY POLICY BY CENTRAL BANK. SO BOTH CLOSELY RELATED

BOTH THE POLICY ARE TOFIGHT AGAINST INFLATION AND RECESSIONBOTH THE POLICY ARE TOFIGHT AGAINST INFLATION AND RECESSION

• ROLE OF GOVT.

SO FIRM RESEARCH DEEPLY AND UNDERSTAND– TO GO INTERNATIONAL MARKET.SO FIRM RESEARCH DEEPLY AND UNDERSTAND– TO GO INTERNATIONAL MARKET.

• POLITICAL• COUNTRY RISK(Erratic economic and Social

Performance, Discrimination in foreign countries)

• CULTURE RISK( Affecting marketing communication, Consumer attitude towards foreign goods and change in fashion, taste and preference).

• IT ENVELOPS AND PROVIDES TO ALL FIRMS.• FRAMEWORK

– TO OPERATE AND ADOPT

ECONOMIC SYSTEM: is a way in which a society is organised to decide….

1. WHAT PRODUCTS SHOULD BE PRODUCES AND IN WHAT QUANTITIES.

2. HOW SHOULD THE PRODUCTS BE PRODUCED.3. FOR WHOME SHOULD THE PRODUCTS BE RODUCED.

CONTINUE……..

• SO ECONOMIC SYSTEM Is a framework within which a FIRMS OPERATES AND VARIOUS ECONOMIC UNITS AND AGENTS MOULD THEMSELVES TO FIT INTO THE SYSTEM.

SUB PART OF ECONOMIC SYSTEM: a. MARKET ECONOMY b. COMMAND ECONOMY.

MARKET ECONOMY:( CAPITALISM) ARE PRODUCTIVE ASSETS ARE PRIVATELY OWNED AND FIRM HAVE THE FREEDOM TO MAKE MAJOR DECISION OF PRODUCTION & CONSUMPTION UNDER COMPETITIVE CONDITIONS.

MARKET ECONOMY:( CAPITALISM) ARE PRODUCTIVE ASSETS ARE PRIVATELY OWNED AND FIRM HAVE THE FREEDOM TO MAKE MAJOR DECISION OF PRODUCTION & CONSUMPTION UNDER COMPETITIVE CONDITIONS.

COMMAND ECONOMY: GOVERNMENT MAKE DECISION REGARDING PRODUCTION AND DISTRIBUTION.COMMAND ECONOMY: GOVERNMENT MAKE DECISION REGARDING PRODUCTION AND DISTRIBUTION.

.THE STATE OF WORLD ECONOMY & DISTRIBUTION OF WORLD OUTPUT.

. INTERNATIONAL ECONOMIC COOPERATION

. ROLE OF MULTILATERAL ECONOMIC INSTITUTIONS

. INTERNATIONAL ECONOMIC LAWS, TRETUES, AGGREEMENTS, NORMS , PRACTISES AND CODES.

. POLITICAL SYATEM AND CONDITIONS IN DIFFERENT COUNTRIES.

. TECHNOLOGY GROWTH AND TRANSFER.

. CORPORATE GOVERNANCE STANDARDS AND ETHICAL PRACTISES ACROSS COUNTRIES.

. INTERNATIONAL MARKET STRUCTURE AND COMPETITION.

. BARRIERS TO INTERNATIONAL TRADE AND INVESTMENT.

. NATIONAL ECONOMIC POLICIES OF DIFFERENT COUNTRIES.

MAJOR EVENTS AFFECTING INTERNATIONAL BUSINESS ENVIRONMENT.

• Formation of WTO in 1995• Collapse of the EASTERN EUROPE in 1989, USSR in

1991.• Emergence of European Union(EU) and Introduction

Of EURO as common currency.• Increasing economic strength and presence of MNC`s

the world over.• Increase in No. of FTA`s( Free Trade Areas).• Economic crises in east and south east Asian

countries

• ECONOMIC SLOWDOWN IN A NUMBER OF INDUSTRIAL MARKET ECONOMIES INCLUDING JAPAN.

• ECONOMIC REFORM AND OPENING UP OF A LARGE NO. OF LESS DEVELOPED COUNTRIES INCLUDING INDIA.

• PROTECTIONIST TRENDS IN THE INDUSTRIAL MARKET COUNTRIES NOTABLY IN USA.

CONTINUE…….

SO IN ADDITION TO ECONOMIC FACTORS, INTERNATIONAL SOCIAL, CULTURAL AND DEMOGRAPHIC FACTORS ALSO PLAY ROLE.

SO IN ADDITION TO ECONOMIC FACTORS, INTERNATIONAL SOCIAL, CULTURAL AND DEMOGRAPHIC FACTORS ALSO PLAY ROLE.

• COMPETITIVE ENVIRONMENT. ONE OF THE MAJOR FACTOR AFFECTING.

– RATE OF GROWTH– INCOME DISTRIBUTION– CONSUMER WELFARE

ON INDIVIDUAL BUSINESS: FREEDOM OF ENTRY AND EXIT IN THE MARKET ITS PRICE AND SCAL OF OUTPUT.

ON INDIVIDUAL BUSINESS: FREEDOM OF ENTRY AND EXIT IN THE MARKET ITS PRICE AND SCAL OF OUTPUT.

CONTINUE…..

• ALSO DEPEND UPON TYPE OF GOVERNMENT.

CAPITALIST AND MIXED ECONOMY

ATTEMPTS TO MAINTAIN LAW THROUGH..

SUITABLE ECONOMIC LAWS AND REGULATION, FREE AND FAIR COMPETITION IN VARIOUS SECTORS OF THEIR ECONOMIES, CHEK MONOPOLISTIC or ANTI-COMPETITIVE ABUSE OF MARKET POWER.

ABUSE: PRICE FIXING, PRICE DISCRIMINATION ETC. ALSO MERGERS, ACQUISITIONS AND TAKEOVER ALSO REDUCE THE NO. OF COMPETING FIRMS AND CREATE MONOPOLISTIC TENDENCIES.

ABUSE: PRICE FIXING, PRICE DISCRIMINATION ETC. ALSO MERGERS, ACQUISITIONS AND TAKEOVER ALSO REDUCE THE NO. OF COMPETING FIRMS AND CREATE MONOPOLISTIC TENDENCIES.

• POLITICAL ENVIRONMENT• LEGAL ENVIRONMENT• CULTURAL ENVIRONMENT

V.IMP—BUSINESS POINT OF VIEW—NOT IN POSITION TO BRING CHANGE IN ENVIRONMENT IT OPERATES.V.IMP—BUSINESS POINT OF VIEW—NOT IN POSITION TO BRING CHANGE IN ENVIRONMENT IT OPERATES.

• IT ALSO INCLUDE INTERNATIONAL POLITICAL RELATIONS—MNC ARE MOST INTERESTED IN THIS.

• COUNTRIES WITH ABSOLUTIST GOVT HAVE AN AFFECT.

• FREE MARKET S LIKE CHINA. BUT ONLY WITH PERMISSION OF GOVT.

INDUSTRIAL DEVELOPMENTS AND REGULATIONS LICENSING REGISTRATION OF INDUSTRIES PRICE AND OUTPUT REGULATIONS. MERGERS ACQUISITIONS AND TAKEOVER OF INDUSTRIES LOCATION OF INDUSTRIES.

INDUSTRIAL DEVELOPMENTS AND REGULATIONS LICENSING REGISTRATION OF INDUSTRIES PRICE AND OUTPUT REGULATIONS. MERGERS ACQUISITIONS AND TAKEOVER OF INDUSTRIES LOCATION OF INDUSTRIES.

FOREIGN EXCHANGE MANAGEMENT: TRANSCATIONS IN FOREIGN CURRENCY AND SECURITY. CURRENT ACCOUNT TRANSACTIONS CAPITAL ACCOUNT TRANSACTIONS FOREIGN EXCHANGE REALIZATION FOREIGN TRADE AND INVESTMENT TRANSACTIONS BORROWING AND LENDING IN FOREIGN EXCHANGE

FOREIGN EXCHANGE MANAGEMENT: TRANSCATIONS IN FOREIGN CURRENCY AND SECURITY. CURRENT ACCOUNT TRANSACTIONS CAPITAL ACCOUNT TRANSACTIONS FOREIGN EXCHANGE REALIZATION FOREIGN TRADE AND INVESTMENT TRANSACTIONS BORROWING AND LENDING IN FOREIGN EXCHANGE

CONSUMER PROTECTION:CONSUMER RIGHTS,DISPUTES,COMPLAINTS ANDGRIEVANCE REDRESSAL SYSTEM.

CONSUMER PROTECTION:CONSUMER RIGHTS,DISPUTES,COMPLAINTS ANDGRIEVANCE REDRESSAL SYSTEM.

ESSENTIAL COMMODITIES– COVERING THEIR SUPPLY, PRICES, QUALITYESSENTIAL COMMODITIES– COVERING THEIR SUPPLY, PRICES, QUALITY

WEIGHT, MEASURE AND PACKAGING- COVERING STANDARD UNITS,PACKAGING NORMS AND DECLARATION INSPECTION.

WEIGHT, MEASURE AND PACKAGING- COVERING STANDARD UNITS,PACKAGING NORMS AND DECLARATION INSPECTION.

PATENTS APPLICATION PROCEDURE, LIFE OF A PATENT, RIGHT OF PATENTEE, EXCLUSIVE MARKETING RIGHTS INFRINGMENT OF PATENTS, CLAIM PROCEDURE And SETTLEMENT.

PATENTS APPLICATION PROCEDURE, LIFE OF A PATENT, RIGHT OF PATENTEE, EXCLUSIVE MARKETING RIGHTS INFRINGMENT OF PATENTS, CLAIM PROCEDURE And SETTLEMENT.

LABOUR EMPLOYESS INSURANCE,PAYMENT OF GRATUITY,DISPUTES,BONUS,EMPLOYEES PROVIDENT FUND, COMPENSATION,DISCIPLINARY

LABOUR EMPLOYESS INSURANCE,PAYMENT OF GRATUITY,DISPUTES,BONUS,EMPLOYEES PROVIDENT FUND, COMPENSATION,DISCIPLINARY

CORPORATE MANAGEMENT FORMATION OF COMPANIES,

MANAGEMENT OF COMPANIES, GOVERANCE OFCOMPANIES, RAISING OF CAPITAL ANDLIQUIDATION OF COMPANIES.

CORPORATE MANAGEMENT FORMATION OF COMPANIES,

MANAGEMENT OF COMPANIES, GOVERANCE OFCOMPANIES, RAISING OF CAPITAL ANDLIQUIDATION OF COMPANIES.

CHANGE SLOW TO OCCUR – CAN ACCELERATE—WITH-SOCIAL MOVEMENTS—CAMPAIGN—ALSO BY EXTERNAL INFLUECECHANGE SLOW TO OCCUR – CAN ACCELERATE—WITH-SOCIAL MOVEMENTS—CAMPAIGN—ALSO BY EXTERNAL INFLUECE

EX- MAGGIE, ETC

ALSO HAS AN IMPACT ON BUSINESS ENVIRONMENTALSO HAS AN IMPACT ON BUSINESS ENVIRONMENT

POPULATION DENSITY, SEX RATIO, FERTILITY AND MORTALITY RATIO, AGE COMPOSITION, LIFE EXPECTANCY, GEOGRAPHICAL DISTRIBUTION OF POPULATIO.

ABOVE FORMS THE BASES OF MARKET SEGMENTATION, PRODUCT POSITIONING FOR MARKETERS . IT AFFECT THE SIZE OF MARKET AND DISCOURAGE/INCOURAGE PRIVATE INVESTMENT PARTICULARLY IN REGIONS OF LOW PER CAPITA INCOME.

ABOVE FORMS THE BASES OF MARKET SEGMENTATION, PRODUCT POSITIONING FOR MARKETERS . IT AFFECT THE SIZE OF MARKET AND DISCOURAGE/INCOURAGE PRIVATE INVESTMENT PARTICULARLY IN REGIONS OF LOW PER CAPITA INCOME.

IS BASED ON ITS MISSION: WHY AND FOR WHOME DOES IT EXITS. SO BASIS FOR FIRM`S EXISTENCE AND OPERATIONS

TO FULLFILL MISSION, A FIRM AHS A VISION– LAYS DOWN ITS BASIC PHILOSOPHY AND APPROACH.

A FIRM EXECUTE THE MISSION THROUGH A

STRATEGY.

STRATEGY BASED ON THOROUGH—CLEARLY OBJECTIVES TO BE ACHIEVED OVER A PERIOD OF TIME.STRATEGY BASED ON THOROUGH—CLEARLY OBJECTIVES TO BE ACHIEVED OVER A PERIOD OF TIME.

MISSION AND VISION OF THE ORGANISATIONMANAGEMENT PHILOSOPHY AND STRATEGYINDUSTRIAL RELATIONSCORPORATE CULTURE AND VALUESLINE AND STAFF RELATIONSGOVERANCE STANDARD AND CODESQUALITY CONTROL SYSYTEMTEAM SPIRIT AMONG EMPLOYEESWORK CULTURE AND SOCIO-ECONOMIC BACKROUND OF

EMPLOYEESJOB DESIGN AND COORDINATIONQULAITY OF INTERNAL COMMUNICATIONCOMPENSATION SYSTEM AND CAREER PROGRESSION OF OF

EMPLOYEESCONTROL SYSTEM OF THE ORGANISATION.

MISSION AND VISION OF THE ORGANISATIONMANAGEMENT PHILOSOPHY AND STRATEGYINDUSTRIAL RELATIONSCORPORATE CULTURE AND VALUESLINE AND STAFF RELATIONSGOVERANCE STANDARD AND CODESQUALITY CONTROL SYSYTEMTEAM SPIRIT AMONG EMPLOYEESWORK CULTURE AND SOCIO-ECONOMIC BACKROUND OF

EMPLOYEESJOB DESIGN AND COORDINATIONQULAITY OF INTERNAL COMMUNICATIONCOMPENSATION SYSTEM AND CAREER PROGRESSION OF OF

EMPLOYEESCONTROL SYSTEM OF THE ORGANISATION.

B.E IS DYNAMIC. SO THOROUGH KNOWLEDGE IS REQUIRED TO INTERPRET THE B.E. . SO REQUIRE PROFESSIONAL BUSINESS ECONOMISTS AND MANAGERS

B.E IS DYNAMIC. SO THOROUGH KNOWLEDGE IS REQUIRED TO INTERPRET THE B.E. . SO REQUIRE PROFESSIONAL BUSINESS ECONOMISTS AND MANAGERS

CHANGES IN GOVERNMENT POLICIES: OF FISCAL: MONETARY AND PUBLIC DEBT(Affects the supply of saving and the aggregate level of demand for the private sector)

VARIATIONS IN GROWTH PERFORMANCE. SECTOR WISE GROWTH—7% -INCRESE THE NATIONAL INCOME.

CORRECTIVE POLICY ACTIONS: GOVT—USE FISCAL AND MONETARY: READJUST MONEY SUPPLLY AND CREDIT GROWTH RATES.

CHANGES IN MARKET STRUCTURE AND COMPETITION.FUTURE EXPECTATION AND BUSINESS SPECULATION.

1. CHANGES IN MARKET STRUCTURE AND COMPETITION.2. FUTURE EXPECTATION AND BUSINESS SPECULATION

1. TO MAKE FIRM MORE EFFICIENT—PACKUP MARKET STRUCTURE DEPENDS UPON:

NO. OF BUYERS AND SELLERS IN THE MARKETFREEDOM OF ENTRY AND EXITINDEPENDENCE BETWEEN FIRMSMOBILITY OF THE FACTORS OF PRODUCTION.AVALIBILITY OF MARKET INFORMATION TO VARIOUS PARTICIPANTS

1. TO MAKE FIRM MORE EFFICIENT—PACKUP MARKET STRUCTURE DEPENDS UPON:

NO. OF BUYERS AND SELLERS IN THE MARKETFREEDOM OF ENTRY AND EXITINDEPENDENCE BETWEEN FIRMSMOBILITY OF THE FACTORS OF PRODUCTION.AVALIBILITY OF MARKET INFORMATION TO VARIOUS PARTICIPANTS

2. FIRM ON BASES– PAST—PRESENT PREDIT FUTURE. RATE OF INTEREST RATE OF INFLATION TAXES GOVERNMENT BORROWING ADV EXPENDITURE PRODUCTION IN Various sectors, so firm predict accordingly

2. FIRM ON BASES– PAST—PRESENT PREDIT FUTURE. RATE OF INTEREST RATE OF INFLATION TAXES GOVERNMENT BORROWING ADV EXPENDITURE PRODUCTION IN Various sectors, so firm predict accordingly

YOUNG GROUP,TASTE CHANGES: FACTOR THAT BRING CHANGE .. EDUCATION,GEOGRAPHICAL MOBILITY,FASHION TREND.

AS CONSUMER INDUCE CHANGES IN PRODUCT CONTENT AND PRESENTATION PACKAGING,DELIVERY ETC

YOUNG GROUP,TASTE CHANGES: FACTOR THAT BRING CHANGE .. EDUCATION,GEOGRAPHICAL MOBILITY,FASHION TREND.

AS CONSUMER INDUCE CHANGES IN PRODUCT CONTENT AND PRESENTATION PACKAGING,DELIVERY ETC

SO MORE COMPETITIVE ENVIRONMENT

CONTINUE………

• A. IMPORT AND FOREIGN INVESTMENT CHANGES.• AS COUNTRY PROGRESS UNDER GLOBALISATION—--

LIBERA-CHANGES OCCUR.• WHAT TYPE……………

2. EXTERNAL ECONOMIC SHOCKS

ALL ABOVE CAN CAUSE TREMENDOUS DAMAGE TO ECONOMY.ALL ABOVE CAN CAUSE TREMENDOUS DAMAGE TO ECONOMY.

AREAS OF ENVIRONMENTAL CHANGE

AREAS OF CORPORATE RESPONSE

TECHNOLOGICAL ENVIRONMENT

R&D, FOREIGN TECHNICAL COLLABORATION,CHOICE OF TECHNOLOGY,LABOUR-CAPITAL RATIO.

LABOUR ENVIR.. EMPLOYEE MOTIVATION, PRODUCTIVITY,COMPENSATION,TURNOVER RATE,WORKING CONDITIONS, LABOUR RELATIONS,NATURE OF EMPLOYMENT, JOB DESCRIPTION AND SPECIFICATION

COMPETITIVE ENVIRONMENT PRICING,MERGER,ACQUISITION OR AMALGAMATION,SUB-CONTROLLING, HORIZONTAL, VERTICAL, BACKWARD OR FORWARD INTEGRATION, MARKETING STRATEGY, NPD, ECONOMIES OF SCALE AND SCOPE.

MONETARY ENVIRONMENT WORKING-CAPITAL FINANCING, LIQUIDITY RESTRUCTURING

FISCAL ENVIRONMENT DIVIDEND POLICY, SUB-CONTRATING, TRANSFER PRICING,PRODUCT MIX,INDUSTRIAL LOCATION,SOURING.

TRADING ENVIRONMENT FOREIGN COLLABORATION, INPUT MIX,EXPORT ORIENTATION, IMPORT INTENSITY, PRODUCT MIX

FINANCIAL ENVIRONMENT PRODUCT DEVELOPMENT, OVERHEAD FINANCING, FINANCING MIX, CAPITAL STRUCTURE, RATE OF RETURN, EXTERNAL FINANCING.

LEGAL ENVIRONMENT PROCEDURE AND DOCUMENTATION, CREDIBILITY, CONFORMITY AND ETHICAL PRACTISES, INTELLECTUAL PROPERTY PROTECTION.

SOCIAL ENVIRONMENT SOCIAL RESPONSIBILTY, LOCAL AND REGIONAL RELATIONSHIPS, WELFARE EXPENDITURE.

SO IMPORTANT TO FIND OUT FIRST BEFORE A PARTICULAR RESPONSE: WHIH CAUSATIVE FACTOR WILL AFFECT WHICH COMPONENT OF BUSINESS ENVIRONMENT.

SO IMPORTANT TO FIND OUT FIRST BEFORE A PARTICULAR RESPONSE: WHIH CAUSATIVE FACTOR WILL AFFECT WHICH COMPONENT OF BUSINESS ENVIRONMENT.

POSSIBILITY OF LOSS OR DAMAGE TO A BUSINESS FIRM.

NO. OF POSSIBLE FUTURE EVENTS OR OUTCOMES IS LARGER THAN THE NUMBER OF EVENTS OR OUTCOMES WHICH WILL ACTUALLY TAKE PLACE.

NO. OF POSSIBLE FUTURE EVENTS OR OUTCOMES IS LARGER THAN THE NUMBER OF EVENTS OR OUTCOMES WHICH WILL ACTUALLY TAKE PLACE.

TO IDENTIFY AND ASSESS THE RISKS KNOW THE CURRENT STATE OF THE ENVIRONMENT AND ITS LEADING DETERMINANTS.TO IDENTIFY AND ASSESS THE RISKS KNOW THE CURRENT STATE OF THE ENVIRONMENT AND ITS LEADING DETERMINANTS.

BUT ALL ABOVE INCREASE COST: SMALL AND MEDIUM LACK THIS SYSTEM.

BUT ALL ABOVE INCREASE COST: SMALL AND MEDIUM LACK THIS SYSTEM.

SOME METHODS OF RISK ASSESSMENTSOME METHODS OF RISK ASSESSMENT

1. CHECKLISTS1. CHECKLISTS

NO. OF SOCIAL,ECONOMICAL & POLITICAL VARIABLES—EFFECT BUSINESS

NO. OF SOCIAL,ECONOMICAL & POLITICAL VARIABLES—EFFECT BUSINESS

THROUGH CHECKLIST:

YOU CAN: COMPARE RISK LEVEL OF SAME COUNTRY.. 2 DIFFERENT POINTS, 2 OR MORE COUNTRIES AT SAME POINT ETC.

YOU CAN: COMPARE RISK LEVEL OF SAME COUNTRY.. 2 DIFFERENT POINTS, 2 OR MORE COUNTRIES AT SAME POINT ETC.

2. EXPERT BASED SCORING SYSTEM2. EXPERT BASED SCORING SYSTEM

ITS LIKE THIS ITS LIKE THIS

3.ECONOMIC METHODS3.ECONOMIC METHODS

YOU: LINEAR NON LINEAR: QUANTIFY STRENGTH OF EACH VARIABLE--: THAT EFFECT B . E.YOU: LINEAR NON LINEAR: QUANTIFY STRENGTH OF EACH VARIABLE--: THAT EFFECT B . E.

YOU TRY TO QUANTIFY ECONOMIC RISK

YOU TRY TO QUANTIFY ECONOMIC RISK

4. RATING AND RANKING SYSTEMS4. RATING AND RANKING SYSTEMS

MANY BANKS : OFFER SERVICE: B O A: MAINTAINS WORLD INFORMATION SYSTEMMANY BANKS : OFFER SERVICE: B O A: MAINTAINS WORLD INFORMATION SYSTEM

NATIONAL AND INTERNATIONAL ECONOMIC ANALYSIS AND FORECASTS TO ITS CUSTOMERS: JUST LIKE SCORING SYSTEMNATIONAL AND INTERNATIONAL ECONOMIC ANALYSIS AND FORECASTS TO ITS CUSTOMERS: JUST LIKE SCORING SYSTEM

WHY I NEED TO KNOW WHY I NEED TO KNOW

TO KNOW WHERE A PARTICULAR COUNTRY STANDS

TO KNOW WHERE A PARTICULAR COUNTRY STANDS DOLLAR AND RUPEEDOLLAR AND RUPEE

CREDIT WORTHINESS

• INTERNAL DEBT WILL INVITE:

FEAR HIGHER TAXATIONPUBLIC SECTOR

DISINVESTMENTREDUCE EXPENDITURE

ON INFRAEXCESSIVE

BUREAUCRATIC CONTROL

• HIGH EXTERNAL DEBT INVITE.

POLICIES FOR IMPORT CONTROL

EXCHANGE CONTROLRESTRICTION ON

OUTWARD REMITTENCES

SOME OF THE MAJOR INDICATORS OF COUNTRIES CREDITWORTHINESS:

SOME OF THE MAJOR INDICATORS OF COUNTRIES CREDITWORTHINESS:

TAXES AS PROPORTION TO GDP

FISCAL DEFICIT

DEBT SERVICES AS PERCENTAGE OF GDP AND EXPORTS.

IMPORT RESTRICTIONS

BALANCE OF PAYMENT DEFICIT AND EXCHANGE CONTROLS.

TAXES AS PROPORTION TO GDP

FISCAL DEFICIT

DEBT SERVICES AS PERCENTAGE OF GDP AND EXPORTS.

IMPORT RESTRICTIONS

BALANCE OF PAYMENT DEFICIT AND EXCHANGE CONTROLS.

ANOTHER: RISK BENCH MARKINGANOTHER: RISK BENCH MARKING

YOU BENCHMARK RISK: NORMAL FUNCTIONING ACCEPTABLE RANGE– ENVIRONMENTAL FACTOR ASERTAIN:

YOU COMPARE THE ACTUAL RISK(ABSOLUT) WITH BENCHMARK.

R = R a -- R b

R b

1 0

0

1

rR1r= RELATIVE RISK OF THE COUNTRY

R1a= ACTUAL(ABSOLUTE) LEVEL OF BUSINESS ENVIRONMENT RISK OF COUNTRY.

R0b= ACTUAL(ABSOLUTE) LEVEL OF BUSINESS ENVIRONMENT RISK OF REFERENCE COUNTRY.

BENCHMARK = 0

MORALE OFF THE STORY: THE REFERENCE OR THE BENCHMARK COUNTRY MAY LOSE ITS STATUS AS SUCH IF THE LEVEL OF BUSINESS ENVIRONMENT RISK RISES SUBSTANTIALLT IN SUBSEQUENT YEAR.

MORALE OFF THE STORY: THE REFERENCE OR THE BENCHMARK COUNTRY MAY LOSE ITS STATUS AS SUCH IF THE LEVEL OF BUSINESS ENVIRONMENT RISK RISES SUBSTANTIALLT IN SUBSEQUENT YEAR.

RISK PREMIUM ON INTERESTRISK PREMIUM ON INTEREST

UNDERSTAND THIS

†PREVAILING INTEREST RATE: INDICATOR OF ENVIRONMENT RISK.†MORE RISK HIGH RATE OF INTEREST : FUNDING RATE HIGH FROM ABROAD.†DEVELOPED COUNTRIES: LIBOR(LONDON INTER BANK OFFER RATE:†MY COUNTRY GET MORE RATE THAN LIBOR: MY COUNTRY IS PERCEIVED RISKY SO DIFFERENCE IS CALLED SPREAD.†BANK RATE: SET BY CENTRAL BANK: . DIFFERENCE BETWEEN ACTUAL AVERAGE RATE OF INTEREST AND BANK RATE: SHOWS GENERAL RISK IN BUSINESS ENVIRONMENT.

†PREVAILING INTEREST RATE: INDICATOR OF ENVIRONMENT RISK.†MORE RISK HIGH RATE OF INTEREST : FUNDING RATE HIGH FROM ABROAD.†DEVELOPED COUNTRIES: LIBOR(LONDON INTER BANK OFFER RATE:†MY COUNTRY GET MORE RATE THAN LIBOR: MY COUNTRY IS PERCEIVED RISKY SO DIFFERENCE IS CALLED SPREAD.†BANK RATE: SET BY CENTRAL BANK: . DIFFERENCE BETWEEN ACTUAL AVERAGE RATE OF INTEREST AND BANK RATE: SHOWS GENERAL RISK IN BUSINESS ENVIRONMENT.

FOR INDIVIDUAL FIRMS IT MEANS:FOR INDIVIDUAL FIRMS IT MEANS:

BECAUSE/MAY BE: VULNERABILITY OF ECONOMY TO CHANGING::ECONOMIC CIRCUMSTANCES:POOR ECONOMIC POLICIES:ADVERSE MOVEMENTS IN SOCIAL AND POLITICAL CIRCUMSTANCES

BECAUSE/MAY BE: VULNERABILITY OF ECONOMY TO CHANGING::ECONOMIC CIRCUMSTANCES:POOR ECONOMIC POLICIES:ADVERSE MOVEMENTS IN SOCIAL AND POLITICAL CIRCUMSTANCES

SOURCES OF COUNTRY RISKSOURCES OF COUNTRY RISK

SHARP AND FREQUENT SWINGS IN CONTENT,OBJECTIVES or IMPLEMENTATION

OF MACRO POLICIES INCLUDING:

SHARP AND FREQUENT SWINGS IN CONTENT,OBJECTIVES or IMPLEMENTATION

OF MACRO POLICIES INCLUDING:

MONETARY POLICY.FISCAL POLICYANTI-INFLATIONARY POLICYEXCHANGE RATE POLICYFOREIGN TRADE POLICYPOLICY TOWARDS FOREGN INVESTMENTMULTINATIONAL CORPORATIONS

MONETARY POLICY.FISCAL POLICYANTI-INFLATIONARY POLICYEXCHANGE RATE POLICYFOREIGN TRADE POLICYPOLICY TOWARDS FOREGN INVESTMENTMULTINATIONAL CORPORATIONS

INDUSTRIAL POLICYAGRICULTURAL POLICYINCOME POLICYPOLICY TOWARDS MAJOR SOCIAL SECTORS

INDUSTRIAL POLICYAGRICULTURAL POLICYINCOME POLICYPOLICY TOWARDS MAJOR SOCIAL SECTORS

DOMESTIC ECONOMIC SOURCES:::DOMESTIC ECONOMIC SOURCES:::

CHANGES IN INDUSTRIAL LICENSING POLICYVARIATIONS IN PRICE CONTROLSTAXATION AND SUBSIDY CHANGESGOVERNMENT STANDARDSCHANGES IN ENVIRONMENT REGULATIONSFISCAL DEBT AND INTERNAL DEBT GROWTHCHANGES IN COMPETITIVE ENVIRONMENTVARIATIONS IN INTEREST RATE STRUCTURE AND CREDIT CONTROLCHANGES IN GOV EXPENDITURE AND INVESTMENTVARIATIONS IN NATIONAL INCOME.

CHANGES IN INDUSTRIAL LICENSING POLICYVARIATIONS IN PRICE CONTROLSTAXATION AND SUBSIDY CHANGESGOVERNMENT STANDARDSCHANGES IN ENVIRONMENT REGULATIONSFISCAL DEBT AND INTERNAL DEBT GROWTHCHANGES IN COMPETITIVE ENVIRONMENTVARIATIONS IN INTEREST RATE STRUCTURE AND CREDIT CONTROLCHANGES IN GOV EXPENDITURE AND INVESTMENTVARIATIONS IN NATIONAL INCOME.

DOMESTIC ECONOMIC SOURCES:::DOMESTIC ECONOMIC SOURCES:::

INFLATIONARY PRESSUREDEMOGRAPHIC CHANGESCHANGES IN INCOME AND WEALTH DISTRIBUTIONINFRASTRUCTURE GROWTH AND MAINTENANCECHANGES IN INDUSTRIAL OWNERSHIP PATTERNCHANGING PATTAERN OF INDUSTRIALIZATIONGROWTH OF UNEMPLOYMENT AND POVERTYTECHNOLOGICAL DEVELOPMENTSCHANGES IN GROWTH AND PATTERN OF DISTRIBUTION CHANNELCHANGES IN THE COVERAGE AND ATTITUDE OF MEDIA TOWARDS BUSINESS.

INFLATIONARY PRESSUREDEMOGRAPHIC CHANGESCHANGES IN INCOME AND WEALTH DISTRIBUTIONINFRASTRUCTURE GROWTH AND MAINTENANCECHANGES IN INDUSTRIAL OWNERSHIP PATTERNCHANGING PATTAERN OF INDUSTRIALIZATIONGROWTH OF UNEMPLOYMENT AND POVERTYTECHNOLOGICAL DEVELOPMENTSCHANGES IN GROWTH AND PATTERN OF DISTRIBUTION CHANNELCHANGES IN THE COVERAGE AND ATTITUDE OF MEDIA TOWARDS BUSINESS.

DOMESTIC SOCIAL AND CULTURAL SOURCESDOMESTIC SOCIAL AND CULTURAL SOURCES

CHANGES IN FAMILY PATTERNS(NUCLEAR,JOINT ETC)FAMILY DYNAMICS(PARENTAL ROLES,MALE/FEMALE ROLES, MARRIAGE ETCCHANGES IN QUALITY AND LEVEL OF EDUCATIONCHANGING NATURE OF SOCIAL ORGANIZATIONS.CHANGING RELIGIOUS AND ETHICAL VALUESCHANGES IN LIFESTYLE AND LIVING CONDITIONSLANGUAGE FACTORS– COVERING OFFICIAL, USE OF INTERNATIONAL LANGUAGE.ETC

CHANGES IN FAMILY PATTERNS(NUCLEAR,JOINT ETC)FAMILY DYNAMICS(PARENTAL ROLES,MALE/FEMALE ROLES, MARRIAGE ETCCHANGES IN QUALITY AND LEVEL OF EDUCATIONCHANGING NATURE OF SOCIAL ORGANIZATIONS.CHANGING RELIGIOUS AND ETHICAL VALUESCHANGES IN LIFESTYLE AND LIVING CONDITIONSLANGUAGE FACTORS– COVERING OFFICIAL, USE OF INTERNATIONAL LANGUAGE.ETC

₹MONETARY POLICY SWINGS

₹FISCAL POLICY VARIATIONS

₹EXCHANGE CONTROLS

₹IMPORT CONTROLS

₹TRIMS(TRADE-RELATED INVESTMENT

MEASURES).

₹PRICE CONTROLS

₹LABOUR POLICY AND LEGISLATION.

EASY MONEY POLICY: SUPPLY OF MONEY AND COST AND AVAILABILITY OF CREDIT.

IF MONEY CREDIT IF INCREASES – THAN– LIQUIDITY INCREASES DEMAND INCREASES– LOW RATE OF INTEREST. SO GOOD AT TIME OF INFLATION

EASY MONEY POLICY: SUPPLY OF MONEY AND COST AND AVAILABILITY OF CREDIT.

IF MONEY CREDIT IF INCREASES – THAN– LIQUIDITY INCREASES DEMAND INCREASES– LOW RATE OF INTEREST. SO GOOD AT TIME OF INFLATION

RESTRICTIVE MONETARY POLICY: CREDIT & MONEY RESTRICTED & RATE OF INTEREST HIGH GOOD TO CONTROL THE SURGING DEMAND.

RESTRICTIVE MONETARY POLICY: CREDIT & MONEY RESTRICTED & RATE OF INTEREST HIGH GOOD TO CONTROL THE SURGING DEMAND.

2. FISCAL POLICY VARIATIONS: CHANGES EFFECT: TAX & NON TAX REVENUES, SUBSIDIES, PUBLIC SECTOR & INFRA INVESTMENT, SOCIAL EXPENDITURE & EVENTUALLY GOVERNMENT BORROWING PROGRAMMES.

2. FISCAL POLICY VARIATIONS: CHANGES EFFECT: TAX & NON TAX REVENUES, SUBSIDIES, PUBLIC SECTOR & INFRA INVESTMENT, SOCIAL EXPENDITURE & EVENTUALLY GOVERNMENT BORROWING PROGRAMMES.

FISCAL POLICY IS DETERMINED BY: BY EXPENDITURE REQUIREMENT AS PER MACRO ECO OBJECTIVE: LIKE

AND BY REVENUE MOBILIZATION

FISCAL DEFICIT: DIFFERENCE BETWEEN REVENUE RECEIPT AND TOTAL EXPENDITURE: GOVT ADOPT MIX OF EXPENDITURE REDUCTION, ADDITIONAL TAXATION, INCRESED NON-TAX CHARGES & ADDITIONAL BORROWING FROM MARKET.

FISCAL DEFICIT: DIFFERENCE BETWEEN REVENUE RECEIPT AND TOTAL EXPENDITURE: GOVT ADOPT MIX OF EXPENDITURE REDUCTION, ADDITIONAL TAXATION, INCRESED NON-TAX CHARGES & ADDITIONAL BORROWING FROM MARKET.

CONROLS THAT GOVERNMENT PUT IN PLACE TO BAN OR RESTRICT THE AMOUNT OF FOREIGN CURRENCY OR LOCAL CURRENCY TO BE TRADED OR PURCHASED. : USE OF F.CURRENCY, RESTRICTING AMOUNT OF DOMESTIC CURRENCY THAT CAN BE EXCHANGED WITHIN THE COUNTRY.

WHY THESE CONTROLS:WHY THESE CONTROLS:

FOR NATIONAL SECURITYPROTECTION OF SOME INFANT OR NEWLY DEVELOPED INDUSTRIES AGAINST COMPETITION.RETALIATION AGAINST UNFAIR TRADE PRACTICES.FOR CONSERVING FOREIGN CURRENCY

FOR NATIONAL SECURITYPROTECTION OF SOME INFANT OR NEWLY DEVELOPED INDUSTRIES AGAINST COMPETITION.RETALIATION AGAINST UNFAIR TRADE PRACTICES.FOR CONSERVING FOREIGN CURRENCY

SO COUNTRIES IMPOSE: CONTROLS ON CURRENCY CONVERTIBILITY.

SO COUNTRIES IMPOSE: CONTROLS ON CURRENCY CONVERTIBILITY.

WHYWHY WHEN TRADE AND BOP ADVERSEWHEN TRADE AND BOP ADVERSE

HOWTHROUGH HIGHER IMPORT DUTIES,NON-TARIFF MEASURES IMPORT QUOTOS.STATE TRADING, IMPORT LICENCING, VOLUNTRY EXPORT RESTRAINTS(VER), ORDERLY MARKETING ARRANGEMENTS(OMR)

THROUGH HIGHER IMPORT DUTIES,NON-TARIFF MEASURES IMPORT QUOTOS.STATE TRADING, IMPORT LICENCING, VOLUNTRY EXPORT RESTRAINTS(VER), ORDERLY MARKETING ARRANGEMENTS(OMR)

ITS ADVERSE EFFECTS:ITS ADVERSE EFFECTS:

RESTRICT COMPETITION, LESS TECH-UPGRADATION-INNOVATION LEAD TO BREED INEFFICIENCY THROUGH DOMESTIC INDUSTRY PROTECTION.

RESTRICT COMPETITION, LESS TECH-UPGRADATION-INNOVATION LEAD TO BREED INEFFICIENCY THROUGH DOMESTIC INDUSTRY PROTECTION.

TO WHOME IT AFFECTS:TO WHOME IT AFFECTS:

MULTINATIONAL COMPANIES AND THEIR AFFILITIES.MULTINATIONAL COMPANIES AND THEIR AFFILITIES.

HOW IT EFFECTS: MAINLY 2 THINGSHOW IT EFFECTS: MAINLY 2 THINGS

(LCRs AND DBRs). LCRs MINIMUN LOCAL CONTENT REQUIREMENTS MOSTLY FOR FIRMS WHICH ARE PREDOMINANTLY ENGAGED IN ASSEMBLY OPERATIONS USING IMPORTED COMPONENTS:DBRs DIVIDEND BALANCING REQUIREMENT. DIVIDEND OUTFLOW OF AN MNC MUST BE MATCH BY AT LEAST AN EQUAL AMOUNT OF INFLOW OF F.E THROUGH EXPORTS, F.INVESTMENT SO OPERATIONS OF MNC DOESNOT CAUSE A DRAIN ON HOST COUNTRY F.EXCHANGE RESERVES.

6. PRICE CONTROL6. PRICE CONTROL

GOVERNEMENT IMPOSES ON PRODUCTS OF MASS CONSUMPTION

CEMENT,SUGARPETROLEUM PRODUCTSPHARMACEUTICALSFOODETC

CEMENT,SUGARPETROLEUM PRODUCTSPHARMACEUTICALSFOODETC

SOME AGENCIES: DPCO: DRUG PRICE CONTROL ORDER, AGRICULTURE PRICE COMMISION, BUREAU OF INDUSRIAL COSTS ETC

MORE CONTROL MORE RISK FOR INVESTMENTMORE CONTROL MORE RISK FOR INVESTMENT

MORE STRONG LABOUR BACK BY GOVERNMENT MORE RELUCTANT TO INVEST IN THAT COUNTRY. SO RISK HIGH IN LABOUR INTENSIVE INDUSTRY: IN INDIA 150 MINOR MAJOR LEGISLATION.

MORE STRONG LABOUR BACK BY GOVERNMENT MORE RELUCTANT TO INVEST IN THAT COUNTRY. SO RISK HIGH IN LABOUR INTENSIVE INDUSTRY: IN INDIA 150 MINOR MAJOR LEGISLATION.

GENERAL INSTABILITY RISK:POLITICAL SYSTEM MAY CHANGE AS GOVT CHANGES. POOR COUNTRIES ARE MORE PRONE: POOR GOVERNANCE, POVERTY, EXPLOITATION, WEAK AND INEFFICIENT GOVERNMENT SO MORE POLTICAL RISK.

GENERAL INSTABILITY RISK:POLITICAL SYSTEM MAY CHANGE AS GOVT CHANGES. POOR COUNTRIES ARE MORE PRONE: POOR GOVERNANCE, POVERTY, EXPLOITATION, WEAK AND INEFFICIENT GOVERNMENT SO MORE POLTICAL RISK.

2.OWNER SHIP RISK; RISK OF CONFISCATION(GOVERNEMENT TAKING OWNERSHIP OF PROPERTY WITHOUT COMPENSATION, EXPROPRIATION(GOVERNMENT TAKING OWNERSHIP WITH SOME COMPENSATION), NATURALIZATION, OR DOMESTICATION(SURRENDERING PART OR FULL CONTROL IN AN MNC TO NATIONAL OR DOMESTIC FIRM OR GOVERNMENT). EARLIER UNDER FOREIGN EXCHANGE REGULATION ACT(1973), FOREIGN FIRMS WERE REQUIRED TO DILUTE SHAREHOLDING TO 40%.

2.OWNER SHIP RISK; RISK OF CONFISCATION(GOVERNEMENT TAKING OWNERSHIP OF PROPERTY WITHOUT COMPENSATION, EXPROPRIATION(GOVERNMENT TAKING OWNERSHIP WITH SOME COMPENSATION), NATURALIZATION, OR DOMESTICATION(SURRENDERING PART OR FULL CONTROL IN AN MNC TO NATIONAL OR DOMESTIC FIRM OR GOVERNMENT). EARLIER UNDER FOREIGN EXCHANGE REGULATION ACT(1973), FOREIGN FIRMS WERE REQUIRED TO DILUTE SHAREHOLDING TO 40%.

DISINVESTMENT PROGRAMME

• FOR GREATER PRIVATISATION OF ECONOMY LAUNCHED IN 1991-92-> WITH ANNOUNCEMENT OF NEW INDUSTRIAL POLICY.

• TARGETS WERE SET BUT GOVERNMENT FAILED TO ACHIEVE AS PER TARGET:

• EXAMPLE: TARGET IN 2002-03 12000 CR BUT ACHIEVED 3342 CR ONLY.

WAYS OF DISINVESTMENT.

• EARLIER SALE OF MINORITY STAKE LATER Yrs STRATEGIC SALES IN ADDITION TO THIS INITIAL PUBLIC OFFERINGS(IPO) AND RIGHTS OFFER.

• FACED CRITICISM WHEN DISINVEST HPCL AND BPCL SO SUSPENDED THE OPERATION.

SOME OF THE COMPANIES DISINVESTMENT.

• HOTEL CORPORATION OF INDIA LTD(3 HOTELS) 100%

• HTL LTD 74 %• CMC LTD 51 %• ETC

PRESENT DISINVESTMENT POLICY• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:

– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, MANAGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, MANAGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

VALUATION OF P S UNITS.

• VARIOUS METHODS AVAILABLE LIKE:– DISCOUNTED CASH FLOW– HISTORICAL COST METHOD– BALANCESHEET METHOD– COMPARABLE TRANSACTION METHOD.

UNDERVALUATION OF PSU STOCK IS A LOSS OF PUBLIC PROPERTY AND A SETBACK TO NATIONAL INTEREST.

STRATEGIC SALE METHOD

• INVOLVES AN EFFECTIVE TRANSFER OF CONTROL AND MANAGEMENT FROM GOVERNMENT TO A PRIVATE ENTITY WITH THE EXPECTATION THAT THE SURRENDER OF MANAGEMENT CONTROL WOULD FETCH A BETTER PRICE FROM THE PRIVATE PARTY IN A MATCHING PROPORTION.

• PRIVATE PARTY IS CALLED THE STRATEGIC PARTNER WHICH GENERALLY HAS EXPERIENCE IN RELATED LINES OF BUSINESS.

– BALCO, CMC, VSNL, IBP , ITDC HOTELS, MARUTI, HZLREAD PAGE 497 SURESH BEDI.

PROCEEDS TO BE UTILIZE: NOT FOR DEFICITS: IT SHOULD BE USED FOR

• RETIRING HUGE PUBLIC DEBT– REDUCE INT BURDEN OF GOV`T.

• INCREASING SOCIAL WELFARE EXP PUBLIC HEALTH, EDUCATION OR EMPLOYMENT GENERATION.

• BUILDING SOCIAL AND ECONOMIC OVERHEADS• INCREASING CAPITAL FORMATION IN AGRI• RETRAINING OF WORKERS AFFECTED IN THE PROCESS

OF PRIVATIZATION• BUILDING SAFETY NET FOR WORKERS ADVERSELY

AFFECTED BY PUBLIC SECTOR RESTRUCTURING.

• CONTAINED IN LATEST COMPETITION ACT 2002.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.

COMPETITION COMMISSION OF INDIA(CCI)

• TO ELIMINATE PRACTICES HAVING ADVERSE IMPACT ON COMPETITION, PROTECTING THE INTEREST OF CONSUMERS AND ENSURING FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS.

WHILE DETERMINING THE EFFECT OF COMP,… UNDER THIS ACT FOLLOWING SIX FACTORS ARE TAKEN INTO

ACCOUNT.

• P S DISINVETMENT AND PRIVATISATION• OPENING UP OF NEW SECTORS TO PRIVATE

ENTERPRISE• DELICENSING• DE-RESERVATION OF SSI ITEMS• LIBERALISATION OF FDI• INFRASTRUCTURE DEREGULATION AND

FACILITATION• IMPORT COMPETITION.

IMPORT COMPETITION• REFORMS HAVE LED TO INCREASED

COMPETITION BETWEEN DOMESTIC BUT ALSO FOREIGN FIRMS.

• UNDER LIBERALISATION UNDER WTO INCREASED IN A NUMBER OF PRODUCTS FROM 24.1 BILLION $ IN 190-91 TO $ 44.9 BILLION IN 2001-02:

• IMPORTS IN CAPITAL GOODS, ELECTROIC, SMALL VALUED PRODUCTS, FOOD, CHEMICALS , IRON AND STEEL, MEDICINAL PRODUCTS, COMPUTER SOFTWARE ETC.

INFRASTRUCTURE DEREGULATION AND FACILITATION: RESULTED IN

INCREASE IN NUMBER OF FIRMS ENGAGED IN INFRASTRUCTURE PROJECTS AND RELATED SERVICES

CORPORATISATION OF A NUMBER OF PUBLIC UTILITIES AND THEIR FUNCTIONING ALONG MODERN CORPORATE LINES.

SO FOLLOWING AGENCIES ARE PLAYING IMPORTANT ROLE FOR THE SAME

IDFC(INDUSTRIAL DEVELOPMENT FINANCE CORPORATION.

STATE ELECTRICITY REGULATORY COMMISSION TELECOM REGULATORY AUTHORITY OF INDIA(TRAI) NATIONAL HIGHWAY DEVELOPMENT

PROJECT(NHDP)

LIBERALISATION OF FDI.

• FDI CONTRIBUTED TO COMPETITION AND EXISTENCE OF COMPETITIVE CONDITIONS INDUCES FDI INFLOIW AND MNC ENTRY.

1991-2002 16000 FDI PROPOSAL OF ABOUT 284812 CR WERE APPROVED, 7500 FOREIGN TECHNOLOGY AGGREEMENTS WERE APPROVED.

DE-RESERVATION OF SSI ITEMS

• RESULTED: COMPETITION NOT ONLY BETWEEN DOMESTIC AND FOREIGN FIRMS BUT ALSO SMALL AND LARGE FIRMS WITHIN DOMESTIC ECONOMY.– HOW1996-2003 100 ITEMS DERESERVED – EARLIER

WITH ONLY SSI. ABOUT 600 ITEMS ONLIST OF RESERVED

PRODUCTS NOW FREELY IMPORTABLE.

BROAD BANDING

• EXAMPLE: YOU CAN MAKE MOTORCYCLES UNDER LICENSE OF MANUFACTURING MOTORCYCLES, BUT WHEN BROAD-BANDED AS TWO WHEELER WOULD INCLUDE SCOOTERS AND MOPEDS AS WELL.– REASON: NEW FIRMS CAN ENTRE AND EXISTING

CAN EXPAND THEIR PRODUCT LINES AND BECOME MORE COMPETITIVE THROGH ECONOMIES OF SCALE(DIVERSIFICATION ECONOMIES).

DELICENSING: IT REDUCES ENTRY BARRIERS, ENCOURAGES THE FLOW OF PRIVATE INVESTMENT AND

ENCOURAGES COMPETITION.

• YOU DELICENSE: EARLIER – MANDATORY FOR ESTABLISHING A NEW UNIT

• EXPANDING THE CAPACITY OF AN EXISTING• CHANGING THE LOCATION OF EXISTING

SO UNDER NEW DELICENSING: NOW ONLY 5 INDUSTRIES ARE LEFT FOR REQUIREMENT OF LICENCE.

NOW ALSO INDUSTRIAL UNITS ENJOY BROAD BANDING—SO INCREAE IN COMPETITIVE ENVIRONMENT IN THE COUNTRY.

ANOTHER FACTOR LEADING TO GREATER COMPETITION.

• OPENING UP OF NEW SECTORS TO PRIVATE ENTERPRISE.– HOW: IN LAST 2 DECADES NO OF INDUSTRIES

RESERVED FOR PUBLIC SECTOR HAS BEEN GRADUALLY REDUCED.

– ONLY DEFENCE PRODUCTS– ATOMIC ENERGY– RAILWAY TRANSPORT– SPECIFIED MINERALS ARE LEFT.

DISINVESTMENT PROGRAMME

• FOR GREATER PRIVATISATION OF ECONOMY LAUNCHED IN 191-92-> WITH ANNOUNCEMENT OF NEW INDUSTRIAL POLICY.

• TARGETS WERE SET BUT GOVERNMENT FAILED TO ACHIEVE AS PER TARGET:

• EXAMPLE: TARGET IN 2002-03 12000 CR BUT ACHIEVED 3342 CR ONLY.

WAYS OF DISINVESTMENT.

• EARLIER SALE OF MINORITY STAKE LATER Yrs STRATEGIC SALES IN ADDITION TO THIS INITIAL PUBLIC OFFERINGS(IPO) AND RIGHTS OFFER.

• FACED CRITICISM WHEN DISINVEST HPCL AND BPCL SO SUSPENDED THE OPERATION.

SOME OF THE COMPANIES DISINVESTMENT.

• HOTEL CORPORATION OF INDIA LTD(3 HOTELS) 100%

• HTL LTD 74 %• CMC LTD 51 %• ETC

PRESENT DISINVESTMENT POLICY• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:

– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, AMANGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, AMANGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

VALUATION OF P S UNITS.

• VARIOUS METHODS AVAILABLE LIKE:– DISCOUNTED CASH FLOW– HISTORICAL COST METHOD– BALANCESHEET METHOD– COMPARABLE TRANSACTION METHOD.

UNDERVALUATION OF PSU STOCK IS A LOSS OF PUBLIC PROPERTY AND A SETBACK TO NATIONAL INTEREST.

STRATEGIC SALE METHOD

• INVOLVES AN EFFECTIVE TRANSFER OF CONTROL AND MANAGEMENT FROM GOVERNMENT TO A PRIVATE ENTITY WITH THE EXPECTATION THAT THE SURRENDER OF MANAGEMENT CONTROL WOULD FETCH A BETTER PRICE FROM THE PRIVATE PARTY IN A MATCHING PROPORTION.

• PRIVATE PARTY IS CALLED THE STRATEGIC PARTNER WHICH GENERALLY HAS EXPERIENCE IN RELATED LINES OF BUSINESS.

– BALCO, CMC, VSNL, IBP , ITDC HOTELS, MARUTI, HZLREAD PAGE 497 SURESH BEDI.

PROCEEDS TO BE UTILIZE: NOT FOR DEFICITS:

• RETIRING HUGE PUBLIC DEBT– REDUCE INT BURDEN OF GOV`T.

• INCREASING SOCIAL WELFARE EXP PUBLIC HEALTH, EDUCATION OR EMPLOYMENT GENERATION.

• BUILDING SOCIAL AND ECONOMIC OVERHEADS• INCREASING CAPITAL FORMATION IN AGRI• RETRAINING OF WORKERS AFFECTED IN THE PROCESS

OF PRIVATIZATION• BUILDING SAFETY NET FOR WORKERS ADVERSELY

AFFECTED BY PUBLIC SECTOR RESTRUCTURING.

• CONTAINED IN LATEST COMPETITION ACT 2002.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TARDE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TARDE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.

COMPETITION COMMISSION OF INDIA(CCI)

• TO ELIMINATE PRACTICES HAVING ADVERSE IMPACT ON COMPETITION, PROTECTING THE INTEREST OF CONSUMERS AND ENSURING FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS.

WHILE DETERMINING THE EFFECT OF COMP,… UNDER THIS ACT FOLLOWING SIX FACTORS ARE TAKEN INTO

ACCOUNT.

IMPORT COMPETION• REFORMS HAVE LED TO INCRESED

COMPETITION BETWEEN DOMESTIC BUT ALSO FOREIGN FIRMS.

• UNDER LIBERALISATION UNDER WTO INCREASED IN A NUMBER OF PRODUCTS FROM 24.1 BILLION $ IN 190-91 TO $ 44.9 BILLION IN 2001-02:

• IMPORTS IN CAPITAL GOODS, ELECTROIC, SMALL VALUED PRODUCTS, FOOD, CHEMICALS , IRON AND STEEL, MEDICINAL PRODUCTS, COMPUTER SOFTWARE ETC.

INFRASTRUCTURE DEREGULATION AND FACILITATION: RESULTED IN

INCREASE IN NUMBER OF FIRMS ENGAGED IN INFRASTRUCTURE PROJECTS AND RELATED SERVICES

CORPORATISATION OF A NUMBER OF PUBLIC UTILITIES AND THEIR FUNCTIONING ALONG MODERN CORPORATE LINES.

SO FOLLOWING AGENCIES ARE PLAYING IMPORTANT ROLE FOR THE SAME

IDFC(INDUSTRIAL DEVELOPMENT FINANCE CORPORATION.

STATE ELECTRICITY REGULATORY COMMISSION TELECOM REGULATORY AUTHORITY OF INDIA(TRAI) NATIONAL HIGHWAY DEVELOPMENT

PROJECT(NHDP)

LIBERALISATION OF FDI.

• FDI CONTRIBUTED TO COMPETITION AND EXISTENCE OF COMPETITIVE CONDITIONS INDUCES FDI INFLOIW AND MNC ENTRY.

1919-2002 16000 FDI PROPOSAL OF ABOUT 284812 CR WERE APPROVED, 7500 FOREIGN TECHNOLOGY AGGREEMENTS WERE APPROVED.

DE-RESERVATION OF SSI ITEMS

• RESULTED: COMPETITION NOT ONLY BETWEEN DOMESTIC AND FOREIGN FIRMS BUT ALSO SMALL AND LARGE FIRMS WITHIN DOMESTIC ECONOMY.– HOW1996-2003 100 ITEMS DERESERVED – EARLIER

WITH ONLY SSI. ABOUT 600 ITEMS ONLIST OF RESERVED

PRODUCTS NOW FREELY IMPORTABLE.

BROAD BANDING

• EXAMPLE: YOU CAN MAKE MOTORCYCLES UNDER LICENSE OF MANUFACTURING MOTORCYCLES, BUT WHEN BROAD-BANDED AS TWO WHEELER WOULD INCLUDE SCOOTERS AND MOPEDS AS WELL.– REASON: NEW FIRMS CAN ENTRE AND EXISTING

CAN EXPAND THEIR PRODUCT LINES AND BECOME MORE COMPETITIVE THROGH ECONOMIES OF SCALE(DIVERSIFICATION ECONOMIES).

DELICENSING: IT REDUCES ENTRY BARRIERS, ENCOURAGES THE FLOW OF PRIVATE INVESTMENT AND

ENCOURAGES COMPETITION.

• YOU DELICENSE: EARLIER – MANDATORY FOR ESTABLISHING A NEW UNIT

• EXPANDING THE CAPACITY OF AN EXISTING• CHANGING THE LOCATION OF EXISTING

SO UNDER NEW DELICENSING: NOW ONLY 5 INDUSTRIES ARE LEFT FOR REQUIREMENT OF LICENCE.

NOW ALSO INDUSTRIAL UNITS ENJOY BROAD BANDING—SO INCREAsE IN COMPETITIVE ENVIRONMENT IN THE COUNTRY.

ANOTHER FACTOR LEADING TO GREATER COMPETITION.

• OPENING UP OF NEW SECTORS TO PRIVATE ENTERPRISE.– HOW: IN LAST 2 DECADES NO OF INDUSTRIES

RESERVED FOR PUBLIC SECTOR HAS BEEN GRADUALLY REDUCED.

– ONLY DEFENCE PRODUCTS– ATOMIC ENERGY– RAILWAY TRANSPORT– SPECIFIED MINERALS ARE LEFT.

WORLD IS NOW SMALL PLACE TO WORK.

MORE OF NECESSITY.

NOW YOU SEE IT MORE AS A GROWTH FACTOR

YOU DESIGN POLICIES TO LINK WITH VARIOUS/ REST OF THE WORLD.

ITS UNDOUBTLY NOW A PILLAR OF ECONOMIC GROWTH

ITS NOT PURELY A ECONOMIC AND BUSINESS CONCEPT BUT MUCH MORE

PROCESS OF INTERNATIONAL INTEGRATION OF PRODUCTS, TECH, HR,CAPITAL,INFOR AND CULTURES.

AS GLOBALIZATION MOVES SO ECONOMIC, SOCIAL, POLITICAL MOVES AND INTERACTION FURTHER INCREASES.

PROCESS OF INTERNATIONAL INTEGRATION OF PRODUCTS, TECH, HR,CAPITAL,INFOR AND CULTURES.

AS GLOBALIZATION MOVES SO ECONOMIC, SOCIAL, POLITICAL MOVES AND INTERACTION FURTHER INCREASES.

WHY NEED TO GLOBALIZE?

• WORLD CONCERNS– BIO-DIVERSITY– ENVIRONMENTAL PROTECTION– POVERTY– SUSTAINABLE DEVELOPMENT– INTERNATIONAL SECURITY AND CO-OPERATION

SO REQUIRE GLOBAL ACTION RESULTS COUNTRIES COMING CLOSE TO EACH OTHER

WORLD LEVEL GLOBALISATIONWORLD LEVEL GLOBALISATION

INDICATOR/MEASURED BY:

SHARE OF WORLD Trade in world GDPFDI(FOREIGN DIRECT INVESTMENT) IN THE WORLD AS %AGE TO WORLD GDPTOTAL FOREIGN OUTPUT OF MNC AS %AGE OF WORLD GDPGLOBAL TRANSACTIONS IN F E AS PROPORTION OF WORLD GDPAGGREGATE TURNOVER IN FOREIGN EXCHANGE MARKETSTOTAL BALANCE OF PAYMENTS RECEIPTS OF ALL THE COUNTRIES OF THE WORLD AS PROPORTION OF WORLD GDP.

APART FROM ABOVE: CROSS BORDER TRANSACTION IN FINANCIAL SECURITIES, INT` COMMUNICATION, INT` TOURIST TRAFFIC, CROSS-BORDER FLOW OF HR ETC INDICATOR OF WORLD GLOBALIZATION.

APART FROM ABOVE: CROSS BORDER TRANSACTION IN FINANCIAL SECURITIES, INT` COMMUNICATION, INT` TOURIST TRAFFIC, CROSS-BORDER FLOW OF HR ETC INDICATOR OF WORLD GLOBALIZATION.

COUNTRY LEVEL GLOBALISATIONCOUNTRY LEVEL GLOBALISATION

SEE FROM COUNTRY POINT OF VIEW THE FOLLOWING INDICATIORS.

SEE FROM COUNTRY POINT OF VIEW THE FOLLOWING INDICATIORS.

SHARE OF FOREIGN TRADE(IMP+EXP) IN NATIONAL INCOME(CALLED FOREIGN TRADE ORIENTATION)FOREIGN INVESTMENT(INWARD AND OUTWARD) AS PROPRTION OF TOTAL DOMESTIC INVESTMENT OR NATIONAL INCOME.TRANSACTIONS IN F.E. AS PROPORTION OF TOTAL VALUE OF TRANSACTIONS IN THE ECONOMY.INTERNATIONAL INVESTMENT INCOME FLOWS(IN OR OUT) AS PROPORTION OF AGGREGATE INVESTMENT INCOME(DIVIDEND + INTEREST + ROYALTY) IN THE COUNTRYEMIGRANT AND IMMIGRANT VIS A VIS TOTAL POPULATION IN THECOUNTRYINTERNATIONAL TOURISM TRAFFIC AS PROPORTION TO TOTAL POPULATION.THE SHARE OF FOREIGN OUTPUT OF DOMESTIC MULTINATIONAL + DOMESTIC OUTPUT OF FOREIGN MULTINATIONAL AS PROPORTION OF NATIONAL INCOME OF COUNTRY.

SHARE OF FOREIGN TRADE(IMP+EXP) IN NATIONAL INCOME(CALLED FOREIGN TRADE ORIENTATION)FOREIGN INVESTMENT(INWARD AND OUTWARD) AS PROPRTION OF TOTAL DOMESTIC INVESTMENT OR NATIONAL INCOME.TRANSACTIONS IN F.E. AS PROPORTION OF TOTAL VALUE OF TRANSACTIONS IN THE ECONOMY.INTERNATIONAL INVESTMENT INCOME FLOWS(IN OR OUT) AS PROPORTION OF AGGREGATE INVESTMENT INCOME(DIVIDEND + INTEREST + ROYALTY) IN THE COUNTRYEMIGRANT AND IMMIGRANT VIS A VIS TOTAL POPULATION IN THECOUNTRYINTERNATIONAL TOURISM TRAFFIC AS PROPORTION TO TOTAL POPULATION.THE SHARE OF FOREIGN OUTPUT OF DOMESTIC MULTINATIONAL + DOMESTIC OUTPUT OF FOREIGN MULTINATIONAL AS PROPORTION OF NATIONAL INCOME OF COUNTRY.

BOP(BALANCE OF PAYMENTS)

• SYSTEMATIC SUMMARY OF ALL THE INTERNATIONAL TRANSACTIONS OF ITS RESIDENTS(INCLUDING ORGANISATION ) WITH REST OF THE WORLD OVER A PARTICULAR PERIOD, USUALY 1 YEAR.

• TRANSACTION CAN WITH FOREIGN NATIONAL, ORGANISATION, GOVERNEMENT.

CONTINUEE.

• INTERNATIONAL TRANSACTION(RECEIPTS OR PAYMENTS). DIVIDED IN TO 2:

CURRENT ACCOUNT:

IN THIS TRANSACTION HAVE ONLY FLOW DIMENSION::::::::::::::: SUCH AS EXPORT AND IMPORT, REMITTANCES,DIVIDEND AND INTEREST FLOWS.

CAPITAL ACCOUNT:

IN THIS RECORDS TRANSACTIONS WHICH HAVE STOCK DIMENSION AS WELL: SUCH AS INTERNATIONAL COMMERCIAL BORROWINGS, FOREIGN LOANS, INVESTMENTS AND FOREIGN GOVERNMENT LOANS AND ALSO TRANSACTION WITH IMF .

CAPITAL ACCOUNT:

IN THIS RECORDS TRANSACTIONS WHICH HAVE STOCK DIMENSION AS WELL: SUCH AS INTERNATIONAL COMMERCIAL BORROWINGS, FOREIGN LOANS, INVESTMENTS AND FOREIGN GOVERNMENT LOANS AND ALSO TRANSACTION WITH IMF .

A BOP DEFICIT IS FINANCIED EITHER THROUGH FOREIGN BORROWINGS OR DRAWN DOWN ON COUNTRY`S F.E. RESERVES.

A BOP DEFICIT IS FINANCIED EITHER THROUGH FOREIGN BORROWINGS OR DRAWN DOWN ON COUNTRY`S F.E. RESERVES.

OTHER INDICATORS ARE:

• WORLD PRICE INDEX AND HOME PRICE INDEX• LEADING WORLD STOCK PRICE INDICES AND

HOME STOCK PRICE INDEX.• WORLD GROWTH RATE VIA VIS HOME

COUNTRY GROWTH RATE.• VARIATIONS IN F.E OF WORLD CURRENCIES

VIS VIS HOME CURRIENCY.ALSO SEE WORLD LEVEL MACRO- INDICATORS EFFECT HOME

MARCO INDICATORS.

INDUSTRY LEVEL GLOBALISATION: INDICATORS

MNC`S:: BETTER PLACED

INDUSTRY EXPORTS PLUS IMPORTS AS PROPORTION OF INDUSTRY OUT PUT

FOREIGN INVESTMENT IN THE INDUSTRY + FOREIGN INVESTMENT BY FIRMS OF THE INDUSTRY AS PROPORTION TO TOTAL INVESTMENT IN THE INDUSTRY.

TOTAL FOREIGN EXCHANGE TRANSACTIONS CONDUCTED BY THE FIRMS IN THE INDUSTRY AS PROPORTION OF TOTAL TRANSACTIONS OF THE INDUSTRY.

TOTAL FOREIGN OUTPUT AS PROPORTION OF TOTAL OUTPUT(DOMESTIC + FOREIGN) OF THE FIRMS IN THE INDUSTRY.

INVESTMENT INCOME RECEIVED FROM ABROAD AND REPATRIATED AS A PROPORTION OF TOTAL DIVIDEND PLUS INTEREST PAID BY THE FIRMS IN THE INDUSTRY TO DOMESTIC AND FOREIGN ENTITIES.

WITHIN A COUNTRY SPECIFIC INDUSTRIES OPERATE GLOBALLYWITHIN A COUNTRY SPECIFIC INDUSTRIES OPERATE GLOBALLY

FIRM LEVEL GLOBALISATION

• WITHIN INDUSTRIAL SEGMENTS INDIVIDUAL FIRMS OPERATE GLOBALLY.

• THEY HAVE– HIGH LEVEL OF TECHNOLOGY DEVELOPMENT– STRONG COMPETITIVE ADVANTAGES– INTERNATIONAL OUTSOURCING CONNECTIONS– ACCESS TO FOREIGN MARKETS.

CONTINUE..

INDIAN MEASURES FOR GLOBALIZATION.INDIAN MEASURES FOR GLOBALIZATION.TRADE LIBERALIZATION: REDUCTION OF IMPORT TARIFFSREMOVAL OF QUANTITATIVE RESTRICTIONSLIBERALISATION: EASY NORMS FOR MNC ENTRY AND FDILIBERALISATION OF F.E. MANAGEMENT REGIMEGREATER FREEDOM TO FIIs IN MONEY AND CAPITAL MARKETSCONVERTIBILITY: RUPEE IN F.E AND VICE VERSA ON CUREENT ACCOUNT TRANSACTIONS FOREIGN TRANSACTION RELATED TO TRADE OG GOODS AND SERVICES, SHORT TERM BANKING AND CREDIT FACILITIES.

STRENGTHENING OF TRADE INFRASTRUCTURE INCLUDING PORT.WIDENING,DEEPENING AND STREAMLINING OF FOREIGN EXCHANGE MARKET

INCENTIVES AND POLICIES TO ATTARCT NRI FUND AND INVESTMENT

GREATER FREEDOM TO CORPORATE ORGANIZATION TO RAISE FUNDS DIRECTLY FROM ABROAD.

TRADE LIBERALIZATION: REDUCTION OF IMPORT TARIFFSREMOVAL OF QUANTITATIVE RESTRICTIONSLIBERALISATION: EASY NORMS FOR MNC ENTRY AND FDILIBERALISATION OF F.E. MANAGEMENT REGIMEGREATER FREEDOM TO FIIs IN MONEY AND CAPITAL MARKETSCONVERTIBILITY: RUPEE IN F.E AND VICE VERSA ON CUREENT ACCOUNT TRANSACTIONS FOREIGN TRANSACTION RELATED TO TRADE OG GOODS AND SERVICES, SHORT TERM BANKING AND CREDIT FACILITIES.

STRENGTHENING OF TRADE INFRASTRUCTURE INCLUDING PORT.WIDENING,DEEPENING AND STREAMLINING OF FOREIGN EXCHANGE MARKET

INCENTIVES AND POLICIES TO ATTARCT NRI FUND AND INVESTMENT

GREATER FREEDOM TO CORPORATE ORGANIZATION TO RAISE FUNDS DIRECTLY FROM ABROAD.