MBA-101 Behavior Organization JNU jaipur

Internal Assignment No. 1

I)                    Name two elements of internal environment affecting business

Organizational and operational:-

These are a part of the operational and administrative procedures. This includes disorganized or inaccurate recordkeeping. Interruptions to your supply chain and outdated or faulty IT systems are also factors you should evaluate. If you do not overcome these, your customers might see you as unreliable. You can also lose all your data.

Innovation:-

Your business needs innovation in order to keep up with competitors. It is essential to get one step ahead. Innovation could come in the form of marketing. It could also be through promotional initiatives in the marketing plan, stafft raining, and welfare. Embracing new technology is the best way to keep up with technological advancements.

II)                 What in multinational enterprise?

Ans. A multinational enterprise is organizations that own or control production or services facilities in one or more countries other than the home country. For example, when a corporation that is registered in more than one country or that has operations in more than one country may be attributed as MNC. Usually, it is a large corporation which both produces and sells goods or services in various countries

III)               Give two suggestions to the problems of small scale industries

a.       Arrangements may be made by the government to ensure the supply of trained and professional managers for the small scale sector.

B .Provide special incentives for encouraging larger flow of Venture

(IV) Define Privatization

Ans. Privatization is the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. It may also mean government outsourcing of services or functions to private firms,   e. g .revenue collection, law enforcement, and prison management.

(V) What do you understand by Fiscal policy?

Ans. Fiscal policy is the use of government revenue collection (taxation)and expenditure (spending) to influence the economy, or else it involves the government changing the levels of taxation and governments pending in order to influence aggregate demand and the level of economic activity. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending  in various  sectors

Note: Answer any two questions. Each question carries 5 marks (Word limits 500)             

Q.1 Explain Monetary policy & its effect on business

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.

The effects of monetary policy on business are manifold. Though in a direct sense it affects only domestic business enterprises, foreign business entity who has an interest and stake in domestic market also gets affected to an extent. for simplicity, I am explaining three major impact on domestic business units.

1.       By changing say interest rate (one of many policy instruments available to RBI i.e. Repo, CRR,SLR etc.), Monetary policy can affect the amount of liquidity in the system. Say RBI increases Repo Rate. The borrowing cost of commercial banks will now go up and they will pass the same to their borrowers. Generally an industry needs loan from Banks to expand its business or any kind of investment. Now since loan has become more costlier, it will negatively affect their investment decision.

2.       Continuing from above scenario of increased Repo: Apart from this direct effect on business entity, there is also another effect which plays through consumers. The people who are working in different business industries are also consumers of different goods in market. If a business industry shuns its investment decision, it means it is not generating extra employment which could have been there if the business had hired people for its new investment or increase the salary of existing ones for their increased effort. So because of this lost increase in income of the people who are employed or loss of employment opportunities, spending (hence demand for various goods and service) of these people will not increase. In this way it can affect the demand for a wide range of products and affect many business industries.

3.       Also stocks can be traded as goods by consumers on exchange. As mentioned in the previous point, monetary policy can affect one’s income and hence demand for various goods, so stock price can also vary based on the demand and thus market capitalization of a business can change.

Q.2 What is International Trade? Explain various Trade Reforms related to foreign trade announced in India in recent times.

International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events. Political change in Asia, for example, could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes.

Trading globally gives consumers and countries the opportunity to be exposed to good sand services not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks , currencies and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in acountry's current account in the balance of payments

The new foreign trade policy 2015-2020 is kept ready to make necessary shape after forming new Government, on 1st of April, 2015. However, the validity of Foreign Trade Policy 2015-2020 will be with effect from the first notification at the time of declaration of FTP 2015-20. The FTP 2015-20 comes in to force with effect from 01st April 2015.Changes in schemes and incentives are expected in new Foreign Trade Policy 2015-20.However, the status quo might be maintained under some of the schemes. The priorities of policies taken by new government also are likely to be incorporated in new Foreign Trade Policy 2015-2020 (FTP 2015-20).The new Foreign Trade Policy 2015-2020 (FTP 2015-20) is made product wise and location wise and tried to maximize the foreign trade from the country. Although some exporters could not make benefit out of Foreign Trade Policy of 2009 -14, those exporter scan contact local office of Director General of Foreign Trade DGFT to get assistance. Pre policy suggestions to Foreign Trade Policy 2015-2020 (FTP 2015-20)have been sent from different government departments concerned, Export Promotion Councils, Commodity Boards, Manufacturer’s associations, Traders forum, and other export promotion agencies of government and non  government to the concerned authorities to shape new Foreign Trade Policy 2015-2020. Customs and Banking related matters also have been updated after discussing all concerned to mold Foreign Trade Policy 2015-2020 (FTP 2015-20) in such a way to safeguard exporters of the county by resolving their previous issues under Foreign Trade Policy

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Internal Assignment No. 2

Q. 1.        Answer all the questions:

(i)            Name two elements of external environment affecting business.

ANSWER- An organization must have the ability to examine and make changes based on internal and external environmental factors that affect its performance. The use of tools to analyze these environmental factors is the key to a successful organization.

External environmental factors are events that take place outside of the organization and are harder to predict and control. External environmental factors can be more dangerous for an organization given the fact they are unpredictable, hard to prepare for, and often bewildering. Some examples of external environmental factors are:

1. Changes to the economy                     2.    Threats from competition

3.       Political factors                                     4.   Government regulations

4.       The industry itself

(ii)           What do you understand by globalization?

ANSWER- Globalization refers to the changes in the world where we are moving away from self-contained countries and toward a more integrated world. Globalization of business is the change in a business from a company associated with a single country to one that operates in multiple countries.

Market globalization is the decline in barriers to selling in countries other than the home country. This change will make it easier for your company to begin selling products internationally, since lower tariffs keep consumer prices lower and fewer restrictions when crossing borders makes it easier for a company to enter a foreign market. It also means that companies must consider other cultures when developing their business strategies and potentially adjust the product and marketing messages if they aren't appropriate in the target country. This may not be an issue in the camera industry, but a hamburger company entering India would definitely need to revisit their product and strategies to be successful!

(iii)          What is monetary policy?

ANSWER-  Monetary policy is how central banks manage liquidity to create economic growth. Liquidity is how much there is in the money supply. That includes credit, cash, checks and money market mutual funds. The most important of these is credit. It includes loans, bonds and mortgages. 

In India, monetary policy of the Reserve Bank of India is aimed at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth.

For instance, liquidity is important for an economy to spur growth. To maintain liquidity, the RBI is dependent on the monetary policy. By purchasing bonds through open market operations, the RBI introduces money in the system and reduces the interest rate.

(iv)          What is Disinvestment?

ANSWER- In business, disinvestment means to sell off certain assets such as a manufacturing plant, a division or subsidiary, or product line. Disinvestment is sometimes described as the opposite of capital expenditures. Some people use the term divestiture, or to divest when discussing disinvestment.

For example is a consumer products company selling off a profitable division that no longer meets its long range goals. The proceeds from this disinvestment are then used to improve the company's financial position by reducing its debt.

(v)           What is International Trade?

ANSWER- International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events. Political change in Asia, for example, could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes.

Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies, and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country's current account in the balance of payments.

Q. 2.        Explain various challenges to disinvestment programme.

ANSWER- While over the years many countries have implemented successfully the strategy of disinvestment and privatisation of public sector units (PSUs), this tool of public policy still continues to remain elusive and contentious in India. Unfortunately, in India the process of disinvestment has remained stalled for the past over two years. Most strident opposition to disinvestment is from the Left allies of the United Progressive Alliance Government.

Reviving privatisation policy-But proponents of reform think that such criticism should not deter the Government from reviving its disinvestment policy, and they think the time is ripe to do so.

Economic resurgence- It is essential that the Government sends a powerful message of its ability to push through some challenging reforms such as disinvestment and/or strategic sale of PSUs. The opportunities afforded by the excellent valuations, based on the performance of many profit-making PSUs, must be leveraged.

Capital raising activity on rise- Capital raising activities of the private corporate sector are on the rise and in the coming year major companies together are expected to raise a whopping Rs. 100,000 crorefrom the capital market. Why should profit-making PSUs shy away or be denied the opportunity of raising new equity and in the process also divest a part of the existing equity capital is a moot question.

Expanding equity base- Is the issue of expanding the equity base of the economy on a continuous basis, given that now there is a robust capital market infrastructure and the need to make available an increased quantity of quality equity to investors. In fact, a reactivated disinvestment programme will provide a powerful thrust to spread the equity culture and strengthen the capital market.

Q. 3.        What is Foreign Direct Investment? Explain its importance. Explain government policies regarding FDI.

ANSWER- Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. The key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business.
FDI has a major role to play in India’s economic development. The total FDI inflow in our country was US$27 billion in 2010-11. Over the past few years, many sectors have seen the growth of foreign investment. The Government is also coming out with new reforms to promote more and more of this investment.

Investment policy of India can be broadly classified into two periods – 1948-1990 and 1991 onward. Till 1990, there were only restricted policies and regulated inflows. But from 1991 onward, India witnessed liberalization of foreign investment laws.

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.