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Internal Assignment No. 1 MBA– 101 Business Environment
Q1)i)Enternal Environment of Organization
1. Owners: Owners are people who invested in company and have property rights and claims on the organization.
Owners can be an individual or group of person who started the company; or who bought a share of the company in the share market. They have the right to change the company’s policy at any time.
2. Board of Directors: The board of directors is the governing body of the company who are elected by stockholders,
and they are given the responsibility of overseeing a firm's top managers such as general manager.
ii) A multinational corporation or worldwide enterprise [1]^ is an organization that owns or controls production of goods or
services in one or more countries other than their home country.[2]^ It can also be referred as an international corporation , a "transnational corporation", or a stateless corporation. [ iii) (^) (1) Equitable Allocation of Raw Materials, Imported Components andEquipment:
The small scale industrial units should be given adequate degree of priority in the allocation pattern of essential, but scarce, raw materials, imported components and equipment. (2) Improvement in the Methods and Techniques of Production: The small scale industrial units should be encouraged to replace their outmoded equipment with that incorporating an up-to- date technology, and facilities and incentives should be provided wherever required. Up-dating the methods and techniques of production of quality goods conforming to standards. The role of the Government in this respect is quite significant. Standardisation of certain products should be ensured, the quality of products should be guaranteed, and malpractices like adulteration, misrepresentation, etc., need to be curbed drastically. iv) Privatization is the transfer of ownership of property or businesses from a government to a privately owned entity. 2. The transition from a publicly traded and owned company to a company which is privately owned and no longer trades publicly on a stock exchange.
v) In economics and political science, fiscal policy is the use of government revenue collection (mainly taxes) and expenditure (spending) to influence the economy. [1]^ According to Keynesian economics, when the government changes the levels of taxation and governments spending, it influences aggregate demand and the level of economic activity. Fiscal policy can be used to stabilize the economy over the course of thebusiness cycle. [2]
The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors. These changes can affect the following macroeconomic variables, amongst others, in an economy:
• Aggregate demand and the level of economic activity;
• Savings and Investment in the economy
• The distribution of income
Q2) Technology ("science of craft", from Greek τέχνη, techne , "art, skill, cunning of hand"; and -λογία, -logia [3]^ ) is the collection of techniques,skills, methods and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation. Technology can be the knowledge of techniques, processes, etc. or it can be embedded in machines, computers, devices and factories, which can be operated by individuals without detailed knowledge of the workings of such things. F 0 B 7Customer Relations. Technology affects the way companies communicate and establish relations with their clients. In a fast moving and business environment, it is vital for them to interact with clients regularly and quickly to gain their trust and to obtain customer loyalty. With the use of Internet and online social networks, firms interact with consumers and answer all their queries about the product. Establishing effective communication with customers not only creates rapport with them, but it also creates strong public image. It allows business enterprises to reduce and to cut carbon dioxide emissions. F 0 B 7Business Operations. With the use of technological innovations, business owners and entrepreneur understand their cash flow better, how to manage their storage costs well and enables you to save time and money. F 0 B 7Corporate Culture. Technology lets employees communicate and interact with other employees in other countries. It establishes clique and prevents social tensions from arising. F 0 B 7Security. Modern security equipment enables companies to protect their financial data, confidential business information and decisions. F 0 B 7Research Opportunities. It provides a venue to conduct studies to keep themselves ahead of competitors. It allows companies to virtually travel into unknown markets. F 0 B 7Corporate Reports. With technology, business enterprises communicate effectively with their branch offices to deliver quality financial and operational reports. F 0 B 7Industrial Productivity. Through the use of business software programs or software packages, it automated traditional manufacturing process, reduces labor costs and enhances manufacturing productivity. It enables companies to increase efficiency and production output. F 0 B 7Business mobility. Technological innovations improved companies' sales, services, shorted lead time on receiving and delivering goods and services. Enables them to penetrate multiple markets at least costs.
F 0 B 7Research capacity. It enables them to conduct studies on various companies to gain knowledge on the new trends in the market and way on avoiding them.
Q3) Monetary policy consists of the decisions made by a government concerning the money supply and interest rates. In the United States, the Federal Reserve (the Fed) determines and implements monetary policy. Borrowing The Federal Reserve sets the interest rate at which banks borrow money from them. When the Fed lowers interest rates, they make it cheaper for banks to access money, which in turn makes banks more likely to lend to businesses and consumers. Your business's ability to borrow or establish a line of credit can be largely affected by how expensive or cheap it is for banks to get money. Interest Rates The primary thing the Fed controls is the interest rate for banks to borrow money. Not surprisingly, banks turnaround and pass the savings or cost on to their borrowers. When the real interest rate is set low for banks, commercial and consumer interest rates also tend to run lower, making loans more affordable. Foreign Exchange Interest rates and the value of the dollar have a distinct relationship. When the Federal Reserve makes the cost of borrowing cheaper, more money starts flowing in the economy. The more dollars that are out there, the less each one is worth. The dollar value drops. Often, when the Fed drops interest rates, it intends to lower the dollar's value in order to make U.S. goods more affordable, and therefore, increase U.S. exports, which can foster growth in business and jobs. Inflation During a time of low interest rates and increased money flowing through the economy, inflation can occur if economic production and employment do not increase. Stagnant business, despite increased cash, means that more money is chasing fewer goods and prices rise. One of the goals of monetary policy is to prevent excessive inflation while fostering economic growth. Internal Assignment No. 2 i) (1) Competition: competition refers to the numbers of similar competitive product brands’ marketers in your industry, their size and market capitalizations. You as a marketer might not have direct influence on them, but it’s important that you monitor their activities, and then design effective strategies using your controllable variables.
(2) Governmental policies: the government policies refers to the laws and legality that guilds the land, they go a long way to affect your business operations as a marketer. For instance, government restriction on the importation of a particular product might hinder the marketers playing in that particular field.
ii) Globalization (or globalisation) is the process of international integration arising from the interchange of world views, products, ideas and mutual sharing, and other aspects of culture.[1][2]^ Advances in transportation, such as the steam
locomotive, steamship, jet engine, container ships, and intelecommunications infrastructure, including the rise of the telegraph and its modern offspring, the Internet, and mobile phones, have been major factors in globalization, generating further interdependence of economic and cultural activities. [3][4][5]^ Though scholars place the origins of globalization in
modern times, others trace its history long before the European Age of Discovery and voyages to the New World. Some even trace the origins to the third millennium BCE.[6][7]^ Large-scale globalization began in the 19th century.[8]^ In the late 19th century and early 20th century, the connectivity of the world'seconomies and cultures grew very quickly.
iii) Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate orinterest rate to ensure price stability and general trust in the currency. [1][2][3]
Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and to maintain predictableexchange rates with other currencies.
Monetary economics provides insight into how to craft optimal monetary policy.
Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values.
iv) Disinvestment refers to the use of a concerted economic boycott to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s, most commonly in the United States, to refer to the use of a concerted economic boycott designed to pressure the government of South Africainto abolishing its policy of apartheid. The term has also been applied to actions targeting Iran, Sudan, Northern Ireland, Myanmar, and Israel
v) International trade is the exchange of capital, goods, and services across international borders or territories, which could involve the activities of the government and individual. [1]^ In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Uttarapatha, Silk Road, Amber Road, salt road), its economic, social, and political importance has been on the rise in recent centuries. It is
• Coal and lignite
An investor has to take a decision regarding the following aspects while investing:
• Exchange Rate - The stronger the foreign currency is in comparison to that of the host country, lesser will
be the amount of investment required. In other words, depreciation of currency in the host country will lead to more investments.
• Market Size - This refers to the GDP growth. Developing and emerging countries are more likely to attract
investments.
• Infrastructure - Investors will invest in a country if they think that the country has suitable infrastructure to
support the business.
• Tax regime - MNCs are subject to tax in both the parent as well as host country. The host country which
attempts to reduce this double taxation of MNCs will attract more FDI.
• Labour market conditions - The educational levels of the labour as well as the wage rates also play a major
role in determining the flow of FDI.
• Financial and economic stability
• Political stability
• Policies towards Foreign Capital in India!
• The Government announced in 1991, a list of industries in which Foreign Direct Investment would be automatically
allowed up to 51 percent (Foreign Equity).
• These industries ranged from the capital goods and metallurgical sector to the entertainment, electronic, food
processing and service sectors with significant export potential. Hotels and tourist-related areas were also allowed foreign equity holdings by international trading companies of up to 51 percent.
• In order to accelerate the progress of the power sector, 100 per cent foreign equity participation was allowed for
setting up power plants. Such equity participation allowed free repatriation of profits and other incentives.
• During 1992 – 93, several additional measures were taken to encourage investment flows:
• The dividend balancing condition earlier applicable to foreign investment up to 51 per cent equity was no longer to
be applied except for consumer goods industries.
• Existing companies with foreign equity could raise it to 51 per cent subject to certain prescribed guidelines. FDI was
also allowed in exploration, production and refining of oil and marketing of gas. Captive coalmines could also be owned and run by private investors in power.
• Non-Resident Indians (NRIs) and Overseas Corporate Bodies (OCBs) predominantly owned by them were
permitted to invest up to 100 percent equity in high priority industries with reparability of capital and income. NRI investment up to 100 per cent was also allowed in export houses, hospitals, and export oriented units, sick industries, hotels and tourism related industries and without the right of repatriation in the previously excluded areas of real estate, housing and infrastructure.
• The restriction prohibiting the use of foreign brand name or trademark for approval for foreign investment and
foreign technology agreements was removed.
• Disinvestments of equity by foreign investors no longer needed to be at prices determined by the RBI.
• The Foreign Exchange Regulations Act (FERA) 1973 was substantially liberalized in 1991-93. All restrictions on
FERA companies in the matter of borrowing funds or raising deposits in India as well as taking over or creating any interest in business in Indian companies were removed. Indian companies and Indian nationals were allowed to start joint ventures abroad.
• FERA companies were also exempted from restrictions on the establishment of branches, liaison offices, and
acquisition of company in India carrying on business in trade, commerce or industry excepting agriculture and plantations. Companies with more than 40 percent of foreign equity were also now treated on par with fully Indian- owned companies. Now of course, Foreign Exchange Management Act (FEMA) has replaced FERA.
• The Indian corporate sector has also been encouraged to access global capital markets through the GDR
mechanism as described below:
• 1. Foreign Investors can invest in Indian companies through the GDR route without any lock-in period.
• 2. These receipts can be listed on any of the overseas stock exchanges and denominated in any convertible foreign
currency. However, the underlying shares would be denominated in Indian rupees.
• 3. Private placement with United States (US), investors is also permissible in accordance with the US Securities Act.
• 4. Short-term capital gains are taxable at the rate of 65 percent along with business income long-term capital gains
(computed on holdings for more than 12 months) are taxable at the rate of 10 percent.
• The Guidelines for Euro issues were liberalized in June 1996 so as to give the market a free play in judging the
quality of issues and the number of issues that can be floated in a year. The conditions relating to end-use of GDR proceeds have been relaxed significantly. Investment in the stock market and real estate is not, however permitted out of GDR proceeds.
• In August 1999, a Foreign Investment Implementation Authority (FIIA) was established within the Ministry of Industry
in order to ensure that approvals for Foreign Investments (including NRI investments) are quickly translated into actual investment inflows and that proposals fructify into projects.
• The Insurance Regulatory and Development Authority (IRDA) Act was passed by parliament in December 1999.
The Act, which seeks to promote private sector participation in the insurance sector, permits foreign equity shares in domestic private insurance companies up to maximum of 26 percent of the total paid-up capital.
• In 2000-2001, further steps were taken:
• i. Foreign Direct Investment (FDI) up to 100 percent was permitted in E-commerce subject to specific conditions.
• ii. The dividend balancing condition for FDI in twenty-two consumer goods industries was removed.
• iii. FDI under the automatic route was permitted up to 100 percent for all manufacturing activities in Special
Economic Zones (SEZs) except certain activities.
• iv. 100 percent FDI was also allowed (with certain conditions) in telecommunications sector, for Internet service
providers, infrastructure providers, providing dark fiber, electronic mail and voice mail.
• In March 2003, the Union Cabinet decided to set a cap of 26 percent on foreign investment in news channels that
seek to uplink from India, putting television news and the print media on par. Until now, there was no separate up linking policy for news and current events channels.
• Other measures adopted during 2002-03 for encouraging greater FDI inflows included permission for 100 percent
FDI in development of integrated townships regional urban infrastructure, and permission to foreign firms to pay royalty on brand name\trademark as a percentage of net sales in case of technology transfer.
