environmental context

MODULE 1

ENVIRONMENTALCONTEXT

July 1991India has taken a series of measures to structure the economy and improve the BOP position The new economic policy introduced changes in several areas

The policy have salient feature which are -

1Liberlisation (internal and external)

2Extending Privatization

3Globalisation of the economy

Which are known as ldquoLPGrdquo (liberalization privatization globalization)

Introduction

Reasons for implementing LPG

Excess of consumption and expenditure over revenue resulting in heavy govt borrowings

Growing inefficiency on the use of resources Over protection to industries Mismanagement of the firm and the economy Increase in losses for public sector enterprises Various distortion like poor technological development

shortage of foreign exchange and borrowing from abroad Low foreign exchange reserves Inflation

The Path of liberalizationbull Relief for foreign investorsbull Devaluation of Indian rupeesbull New industrial Policybull New trade policybull Removal of import Restrictionsbull Liberalization of NRI remittancesbull Freedom to import technologybull Encouraging foreign tie-upsbull MRTP relaxationbull Privatization of public sector

Advantages of liberalization

bull Industrial licensingbull Increase the foreign investment bull Increase the foreign exchange reserve bull Increase in consumption and Control over

pricebull Check on corruptionbull Reduction in dependence on external

commercial borrowings

Disadvantages of Liberalization

bull Increase in unemploymentbull Loss to domestic unitsbull Increased dependence on foreign

nations bull Unbalanced development

PrivatizationPrivatization means transfer of ownership andor

management of an enterprise from the public sector to the private sector

It also means the withdrawal of the state from an industry or sector partially or fully

Privatization is opening up of an industry that has been reserved for public sector to the private sector

Privatization means replacing government monopolies with the competitive pressures of the marketplace to encourage efficiency quality and innovation in the delivery of goods and services

Advantages of Privatization

bull Privatization helps to reduce the burden on Govtbull It will help profit making public sector unit to modernize and

diversify their businessbull It will help in making public sector unit more competitivebull It will help to improving the quality of decision making

because the decisions are free from any political interferencebull Privatization may help in reviving sick units which are the

liability of the public sectorbull It Encourage the new innovations without any restrictionsbull Industrial growthbull Increase the foreign investmentbull Increase in efficiency

Disadvantages of Privatization

bull Industrial sicknessbull Lack of welfarebull Class strugglebull Increase in inequalitybull Opposition by employeesbull Problem of financingbull Increase in unemploymentbull Ignores the weaker sectionsbull Ignores the national importance

GlobalizationGlobalization implies integration of the economy of the

country with the rest of the world economy and opening up of the economy for foreign direct investment by liberalizing the rules and regulations and by creating favorable socio-economic and political climate for global business

According to IMF -rdquoThe growing economic interdependence of countries worldwide through increasing volume and variety of cross border transaction in goods and services and of international capital cash flows and through the more rapid and widespread diffusion of technologyrdquo

Pros and Cons of Globalization

Globalization have several benefits these are - Free flow of capital and increase in the total capital

employed Free flow of technology Increase in industrialization Spread of production facilities throughout the globe Balanced development of world economies Increase in production and consumption Commodities at lower price with high quality Increase in jobs and income Higher Standard of living Balanced human development

Negative effects of Globalization

bull Loss of domestic industriesbull Exploits Human resourcebull Decline in incomebull Unemploymentbull Transfer of natural resourcesbull Lead to commercial and political colonismbull Widening gap between rich and poorbull Dominance of foreign institutions

STRUCTURAL REFORMS POST NEW ECONOMIC POLICY OF 1991

International comparisons show that India has been among the fastest growing Economies in the world

Economic reforms launched since June 1991 may be categorized undertwo broad areas

1048696major macro-economic management reforms1048696structural and sector-specific economic reforms

Political reforms

Political Environment - It affects different business units extensively Components(a) Political Belief of Government(b) Political Strength of the Country(c) Relation with other countries(d) Defense and Military Policies(e) Centre State Relationship in the Country(f) Thinking Opposition Parties towards Business Unit

bull Implementation is complicated further when the central government and the states are in the hands of different partiesbullThe rapidly increasing frequency of elections at the central and state levels during the post- 1990 period of economic reforms has led the incumbent governments and the contesting opposition parties to resort to vote-bankrsquo politics or competitive populismlsquobullComputerization of government and governance is the fastest way to reduce corruptionbullLokpal The Anna Hazare movement has taken up the anti-corruption cause through the demand for a strong and effective Lokpal institution bullPolicies made by governments openly serve the interests of big corporates and foreign capital at the expense of the people

The areas in which the state has a comparative advantage over the private sector include poverty alleviation programs human resource development provision of social services such as primary health and primary education and similar activities categorized as building human capital and social infrastructure

The state also has a new role in setting up independent regulatory authorities to encourage genuine competition and to oversee the provision of services by the private sector in critical areas such as utilities water supply telecommunications and stock market operations

Socio-economic reforms in India

Led to expansion of opportunities in retail trade communications and financial banking and real estate services

Globalization has meant an increased demand for residential office and commercial space On a limited scale residential space has been converted into commercial malls new shopping plazas have sprung up and townships with quality infrastructure have been developed around major cities to accommodate the branch offices of multinational and domestic companies

Globalization has influenced city-level policies wherein new institutional and financialArrangements were forged to improve service delivery and management andenhance city-level productivity

Todayrsquos trade deficit petroleum pricing down equity markets housing crisis constricted flow of funds and overall cost of living is challenging us more than it is

After globalization the consumer goods industries have become ever more aggressive advertisers and sellers Most packaged foods cosmetic aids and fashion accessories being aggressively sold may be harmful

Business process outsourcing and Call Centers that flourished in Indian metropolises inthe last few years run in the nights to coincide with the daytime office hours in theWest This working at nights requires adjusting the biological clock and social practicesto a different time which is turning out to be a major cause for health-related and socialproblems

Noticeable changes are occurring in family structure especially in the urban centersand fertility is falling due to a weakening of traditional family controls and a decliningvalue given to procreation

It has its impact on the social structure values social institutions and attitudes India is a Multilingual multiethnic and multi-cultural society Globalization has impacted noticeably oncultural identity and social harmony among various social groups

Globalization has also added to the disparities among the states with private capitalonly concentrating on those developed states that have the infrastructure that guaranteesquick returns

GDP Inflation and Employment rate

SCOPE OF SOCIO-ECONOMIC REFORMS

Influence of socio ndash economic environment Attitude Behavior Values which influence commitment quality and quantity output and employeesrsquo dedication towards work

a) Economic problems like poverty malnutrition inflation etc which influence on the organizationb) The quality of available human resource in organization and their knowledge education level skills norms beliefs etcc) Social belief customs rituals and its influence on working and function of an organization d) Educational level standard of living degree of westernization and influence of mass media will considerably influence the demand of certain goods which in turn will influence the organizational productivity of different goods

Legal Reforms

Change in Employment Laws Major amendments in laws that govern business functioning Flexible legal system for welfare of employees Reduced subsidies tariffs and restrictions leading to higher number of loopholes in the legal system Free movement of capital in and outside country (FDI) New culture adoption leading to formation of a legal system that is more unconventional Increase in environmental and Consumer protection laws Tax Laws Child Labour Night-shift Bonded labour contract

Technological reforms

Easy accessibility to technologyComputerized functioning of the economic activitiesRise of virtual world Social media upheaval Removal of distance related constraintsStandardization of technological arenaScientific improvements and innovations (Research)Technological advancement in production techniques Technical skill set upgradation Downsizing of manpower Hazardous and repetitive jobs taken over by machines Alienation of workers Scope of Internet Privacy Issues

ELEMENTS OF INTERNAL ENVIRONMENT

1) Physical Element2) Technological Element3) Social Element4) Political Element (Organizational Conflicts)5) Economic Element6) Mission7) Policies8) Organizational culture9) Organization Structure10)HR systems

THE NEW BUSINESS ENVIRONMENT

1) Productivity2) Knowledge Management3) Quality4) Responsiveness5) Globalization6) Outsourcing7) High value addition8) Information Technology9) Excellence Culture10)Benchmarking11)Virtual organization

Impact of structural reforms on HRM in India

1 Redundant Manpower2 Diversified workforce3 Quality Management4 Talent war and Attrition5 Downfall of the trade union6 Stress management and emotional Intelligence7 Industrial Security8 Cut-throat competition for growth 9 Standardization of skill set across the globe10Job-hopping due to abundance in opportunities

WHAT IS STRUCTURAL ADJUSTMENTStructural adjustment is a term which is often used to describe a package of reforms usually advocated by the World Bank and the International Monetary Fund (IMF) while granting loans to countries in deep debt or acute foreign exchange crisis

Response of workers to structural adjustments in environment has been studied in following three ways

i) Individual negotiations over collective bargainingii) Individual Grievance Redressed over Industrial disputeiii) Preference to participation in management

Response of union to structural adjustment in environment

1 Instead of taking confrontation union has been adopting cooperation strategies2 The trade union movement is itself undergoing considerably change as a result of changes mergers and joint ventures3 Trade union as mobiliser of workerrsquos strength and unity has now become a statutory tool to regulate the function of employees

THANK YOU

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July 1991India has taken a series of measures to structure the economy and improve the BOP position The new economic policy introduced changes in several areas

The policy have salient feature which are -

1Liberlisation (internal and external)

2Extending Privatization

3Globalisation of the economy

Which are known as ldquoLPGrdquo (liberalization privatization globalization)

Introduction





































Political reforms



















Legal Reforms















THANK YOU

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Political reforms



















Legal Reforms















THANK YOU

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Legal Reforms















THANK YOU

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THANK YOU

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environmental context

Business

Transcript of environmental context