Corporate decision making in golbal environment lessons for India Iinc

Copyright © JIMS, Rohini Dr. J K Goyal, Director 1

Lecture byDr. J. K. GoyalDirector, JIMS, Rohini.Venue: CPDHE, Delhi University


I. Why do we have to make decisions?

II. Who will make decisions?

III. Under what assumptions do we make decisions?

IV. What are the unique features of the present global environment?

V. What are the lessons for the Indian Corporate?


I. There is a fundamental mismatch between desires and resources.

II. This mismatch forces us to ‘trade off’.

III. This trade off involves decision making.


The Visible Hand

or

The Invisible Hand?

Related Issue:

If latter ; then what is the role of state ?


III.1.Rationality

The maximizing Attitude: All economic agents have their own‘utility’ functions.


III.2. Caveat:

Rationality is contextual: It is strictly ‘economic’ in nature


• Caselet: Suppose your boss calls you in his office and asks you tochoose one of the following options there and then:

Which one will you choose and why?

Option I10% increase in your salary and 100% increase in your

colleagues salary.

Option IINobody gets any increase

in salary.


III.3. Cost Benefit Analysis: Marginal Equivalence Rule


The pace of Technological Improvement

‘Moore’s Law’: Compute performance would double every 18 months.


• First Industrial Revolution: Late 18th century.

• Second Industrial Revolution: Mid 19th century.

• Micro Chip Revolution: 1970


• Contributors to Modern GDP Growth for say 4% gross rate

The larger the share of (c), the better

a Capital 0.7%

b Labour 1.3%

c Technological Improvement 2.0%


THE EASE OF DISSEMINATION OF KNOWLEDGE


• The initial costs i.e. fixed and sunk costs are very high; Variablecosts are low.

• Therefore, the larger the scale of production, the lower the perunit cost


The “ Ten Commandments”

• V.1. Thou shall not wait for Good Governance. Treat state as anecessary evil – a leviathan.

• V.2.Thou shall not seek protection on any pretext.

• V.3. Thou shall renounce hypocracy. Profit is NOT a dirty word.

• V.4. Thou shall concentrate on your core competence ‘Stay slim’Ford Vs Toyota


• V.5. Thou shall continuously innovate - Invest in R & D.

• V.6. Thou shall build Human Capital

• V.7. Thou shall not ignore ‘Bharat’.

• V.8. Thou shall discharge thy social responsibility. Convert “CSR”into “CSO”.

• V.9. Thou shall protect Environment.

• V.10. Thou shall not commit ‘sin’. Stay Ethical


Education

Corporate decision making in golbal environment lessons for India Iinc