Download pptx - Business Environment Module 2

05/03/2023 LEAD COLLEGE OF MANAGEMENT, PALAKKAD

1

Business EnvironmentModule 2

Eldo Geevarghese Zacharia KayyalathAsst. Professor/ Placement Officer

LEAD College of ManagementPalakkad, Kerala


2

Bird’s Eye Review

• Globalization – Strategies

• World Trade Organization – implications

• Public Sector in India- role in economic devp

• Privatization

• Intellectual Property Rights (IPR) and related issues.


3

Globalization • Interdependence among countries

• Cross border transactions

– Goods

– Services

– Capital flows

– Technologies

– People

– Knowledge


4

Globalization

• IMF Defines:

– The growing interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and widespread diffusion of technologies


5

…….or else

• It is the closer integration…. of the countries and the people of the world ...brought about by the enormous reduction of costs of transportation and communication….., and the breaking down of artificial barriers to the flows of the following across borders– Goods– Services– Capital– Knowledge– people


6

First Echelon1. Buzz FrEedOm:

• Import / x-pot• sourcing finance and other factors from abroad• Free flow of investments

– What do you MEAN?– We WANT Economic Liberalization first to achieve the so called

globelization

Govt. should lift

restrictions


7

2. Facilities

Where is the facilities?


8

Oh I seeee


9

3. Resource:s…… – Fin-A-nce– Tech-o-logy– R & D– Man-A-gerial e-X-perti-s-e– BRA-nd I-mage– H Resourse

– NOTE THE POINT: – SMALL FIRMS DO EXCEL WITH THEIR UNIQUE ADVANTAGES….

05/03/2023 10

4. Competitiveness:• Low cost• Product qulity• Product differentition• Technologicl superiority• Fter sles servises• Mrketing strtegies……


11

Foreign Market Entry Strategies1. Exporting2. Licensing/Franchising3. Contract Manufacturing4. Assembly operations5. Fully owned manufacturing facilities6. JV7. M&A8. Strategic alliance9. Third country location


12

Exporting• Traditional mode• Good when:– Volume of foreign buzz is not large enough to justify

the production in a foreign destination– Cost of production in a foreign destination is high– Risks involved in investments in a foreign

destination


13

• Licensing and franchising:– Firm in one country (licensor) permits a firm in

another country (licensee) to use its IPR– Patents – Trade marks– Copyrights– Technology– Technical know how– Marketing or any other skills

– Monetary benefits is in the form of royalty/fees etc..• In many countries, it is regulated by the various

governments (say 5% of sales)


14

• Contract Manufacturing:

– Firms doing international marketing contracts with firms in foreign countries to manufacture or assemble the products while retaining the responsibility of marketing the product.


15

…….for Eg


16

….wow….advs• No setting up of production units• If ideal production facilities are avail ABLE its easy

for the marketer to get started• Low cost high profit• No risk in investing in foreign companies


17

• Assembly Operations– Ideal when there are • economies of scale in the manufacturing of parts and

components • labour intensive • labour is cheap in foreign market • Low import duties on import of parts


18

• Joint Ventures – Sharing of ownership and management in an

enterprise


19

Favoring Globe

• HR• Wide base• Growing domestic market• Tran nationalization of world economies• Economic liberalization• Competition


20

Obstacles to Globalization

• Govt policies and procedures• High cost• Poor infrastructure• Obsolescence• Resistance to change• Poor quality image• Supply problem• Limited R & D• Lack of Growing competition


21

Public Sector in India- role in economic devp

• Railways• Postal Services• Telecom Services• Power Sector • Public transportation Services• Educational Institutions• Banking Sector• Oil and Gas Sector• Agricultural Sector• Tourism Sector• Air Transportation


22

Privatization


23

What should the govt do?

• Public Safety• Defense• Justice• Protect public health/environment• Education• Ensure democracy• Other?


24

Don’t Panic


25

X-pl-nation • Transfer of ownership and/or management of an

enterprise from the public sector to private sector.

• Opening up….. of the industries (only and not any other things) that has been reserved for public to the private sector.

• sAle of govt -ASS-ets


26

y?• Rise of the new right

• Dominance of economies

• International trends & organisations

• Financial crisis

• Challenges to role, size & scope of public sector


27

How govt interest is hand-led

• Regulatory regime: new or enhanced • Government dividend/ taxes..• Government role in governance – Appointments– Representation on board etc


28

Sweets of pvt-i-zation

• the fiscal burden of the state• Enable the govt to mop up funds• Helps state to trim the size of A-dm-strat-ve

mAc-ery• Concentrate more on essential state functions• Btr mgmt of enter-prize


29

Black mark!!!

• Think pls….


30

Hmm…• Certain noble objectives of public sector will be

hammered• Concentration of economic powers to few hands• Acquisition of national firms by foreign firms• Foregoing future streams of profit for the govt…• Vested interest behind privatization


31

WTO

• WTO was formed on 1st Jan,1995.

• It took over GATT (General agreement on tariffs & trade)… in 8th round of GATT, popularly known as Uruguay Round

– member nations of GATT decided to set up a new organization, ‘World Trade Organization’ in place of GATT.


32

WTF enjoys identical legal status , privileges , Immunities that the world bank & IMF get


33

• The WTO was born out of the General Agreement on Tariffs and Trade (GATT).

• Headquarters : Geneva, Switzerland

• Formation : 1 January 1995

• Membership : 153 member countries

• Budget : 163 million USD (Approx).


34

• GATT• It was ad hoc & provisional.

• It had no provision for creating an organization.

• It allowed contradictions in local law & GATT agreements.

• WTO• It is permanent.

• It has legal basis because member nations have verified the WTO agreements.

• It doesn't allow any contradictions in local law.

WTO Vs GATT

WTO has more authority than GATT


35

O-b-ject-ivesTo implement the new world trade agreement.

To promote multilateral trade .

To promote free trade by abolishing tariff & non-tariff barriers.

To enhance competitiveness among all trading partners so as to benefit consumers.


36

To increase the level of production & productivity with a view to increase the level of employment in the world.

To expand & utilise world resources in the most optimum manner.

To improve the level of living for the global population & speed up economic development of the member nations.

To take special steps for the development of poorest nations