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PCTI Group

PCTI Group. Economic and Social Environment MS-3. MS-3 ECONOMIC AND SOCIAL ENVIRONMENT. UNIT 1 ECONOMIC ENVIRONMENT OF BUSINESS.

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PCTI Group

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  1. PCTI Group Economic and Social Environment MS-3

  2. MS-3 ECONOMIC AND SOCIAL ENVIRONMENT

  3. UNIT 1 ECONOMIC ENVIRONMENT OF BUSINESS • Your success or failure as a manager depends on a number of factors and these factors may not always be within your control; very often such factors constitute your work environment. These include your job, your department, your organization, your nation and the world around you. As a marketing manager, would you not study your market environment before launching a new product • Environment : The term “environment” refers to the totality of all the factors which are external to and beyond the control of individual business enterprises and their managements. Presentation Title | September 16, 2014 | <document classification>

  4. Factors Affects on Business Environment Social Economic Environment Physical Political Presentation Title | September 16, 2014 | <document classification>

  5. Propositions on Business Environment Three basic propositions given below : 1. Business is an economic activity. 2. A business firm is an economic unit. 3. Business decision-making is an economic process. Presentation Title | September 16, 2014 | <document classification>

  6. Economic Environment Economic Environment Macro-Economic Micro-Economic Presentation Title | September 16, 2014 | <document classification>

  7. The critical elements of macro-economic environment are : • Economic system • Nature of the economy • Anatomy of the economy • Functioning of the economy • Economic planning and program's • Economic policy statements and proposals • Economic controls and regulations • Economic legislations • Economic trends and structure, and • Economic problems and prospects Presentation Title | September 16, 2014 | <document classification>

  8. The New Economic Policy • The new economic policy was announced in July 1991 which is of far reaching importance. The new economic policy, among other things, has a baring on: • (i) Industrial Licensing, • (ii) Foreign Investment and Foreign Technology Agreements, • (iii) MRTP regulations, and • (iv) Public Sector. Our purpose is to acquaint you with the main ideas or philosophy behind the economic policy Presentation Title | September 16, 2014 | <document classification>

  9. ECONOMIC ENVIRONME NT AND BUSINESS MANAGEMENT The business environment influences business managements.The critical elements of business management are : planning, direction, organization, control or coordination, leading and motivation and evaluation. Management all levels, top, middle as well as supervisory, is concerned with these critical elements to certain degree. Presentation Title | September 16, 2014 | <document classification>

  10. ECONOMIC ENVIRONMENT AND BUSINESS MANAGEMENT A good amount of managerial skills is required in adjusting to the environment. The managers must have a thorough knowledge and understanding of the immediate business environment. Environmental scanning, thus, becomes an important step towards corporate planning and business policy decisions. Corporate mangos analyze the Strengths (S), Weakness (W), Opportunities (O) and Threats (T) that exist for their organization in the context do its environment. The SWOT analysis precedes the making/taking of strategic and tactical decisions by the management. Presentation Title | September 16, 2014 | <document classification>

  11. UNIT 2 Socio-cultural and Politico-legal Environment PART – I SOCIO-CULTURAL ENVIRONMENT Presentation Title | September 16, 2014 | <document classification>

  12. Business must have a social purpose; business concerns must discharge social responsibility and social obligations and have social commitment. • No business can survive and grow without social harmony. Different countries, over different time periods, attain social harmony and order of different forms, through different ways and means. Thus the social environment differs over space, time and methods. Presentation Title | September 16, 2014 | <document classification>

  13. The critical elements of the sociological environment of business. These elements are : • Social institutions and systems • Social values and attitudes • Education and culture • Role and responsibility of the Government • Social groups and movements • Socio-economic order • Social problems and prospects. Presentation Title | September 16, 2014 | <document classification>

  14. UNDERSTANDING THE SOCIAL ENVIRONMENT OF BUSINESS • “Social justice and economic growth must go together”. • “Society cannot materially progress without a significant structural development of the economy”. Presentation Title | September 16, 2014 | <document classification>

  15. SOCIAL RESPONSIBILITIES OF BUSINESS Business determines society as much as society determines business. Social movements should support business by indicating right directions in the national interest. Presentation Title | September 16, 2014 | <document classification>

  16. SOCIAL RESPONSIBILITIES OF BUSINESS The critical elements of the socio-cultural environment are :Social institutions and systems, social values and attitudes, education and culture, social groups and movements, the socio-economic order, social problems and prospects, etc. Presentation Title | September 16, 2014 | <document classification>

  17. Social Movements Trade Union Movement Consumer Movement Social Movements Shareholders’ Movement Management Movement Presentation Title | September 16, 2014 | <document classification>

  18. PART – II POLITICO – LEGAL ENVIRONMENT • Legislations and enactments, rules and regulations, systems and procedures, policies and plans, statements and announcements, directives and guidelines by the Government, constitute the politico-legal environment. Presentation Title | September 16, 2014 | <document classification>

  19. The politico-legal environment • The politico-legal environment of business contains a number of critical elements : • The form of Government • The ideology of the ruling party • The strength of the opposition Political stability is another critical element which affects business operations. Business grows in a region which is politically stable. Presentation Title | September 16, 2014 | <document classification>

  20. GOVERNMENT MACHINERY FOR INDIAN INDUSTRIAL ECONOMY A The Ministry of Industry The Ministry of Industry was constituted on August 24, 1976. It comprises two Departments : i) Department of Industrial Development ii) Department of Heavy Industry/Public Sector Undertakings. Presentation Title | September 16, 2014 | <document classification>

  21. The principal functional divisions/desks in the Department of Industrial Development are: • Secretariat for Industrial Approvals • Policy Desk for the Formulation and Implementation of Industrial and Licensing Policies • Industries Division • Finance Division • Administration and General Division Presentation Title | September 16, 2014 | <document classification>

  22. Recent Policy Measures • The Department of Heavy Industry or what is now called the Department of Public Sector Undertakings is exclusively concerned with basic and capital goods industries. Presentation Title | September 16, 2014 | <document classification>

  23. The Directorate-General of Technical Development (DGTD) is the technical advisory organization in the industrial field to various ministers/departments of the Government. • The Office of the Economic Adviser • Bureau of Industrial Costs and Prices (BICP) • The Directorate – General of Industrial Contingency (DIGC) was established in December 1976 • Directorate-General of Supplies and Disposals (DGS &D) Presentation Title | September 16, 2014 | <document classification>

  24. Development Commissioner (Small-Scale Industries): It provides a wide range of facilities and services including consultancy in the techno-managerial aspects to small units through the network of Small Industries Service Institution (SISI), Production Centres, Testing Centers, Product-cum-Process Development Centers, etc. Presentation Title | September 16, 2014 | <document classification>

  25. B. The Ministry of Civil Supplies • The current strategy of industrial development in India is to place heavy emphasis on heavy industry and at the same time to ensure large-scale production (or distribution ) of mass-consumption goods. Production is conducted b the availability of required inputs landform this point of view, the purchase function is important. We have already referred to the role of the purchasing organization which functions under the above ministry, i.e., • DGS&D. Presentation Title | September 16, 2014 | <document classification>

  26. The functional division of the department of Commerce are : (i) Administrative and General Davison; (ii) Finance Davison; (iii) Economic Division; (iv) Trade Policy Davison; (v) Foreign Trade Territorial Division; (vi) Export products Division; (vii) Export Industries Davison; (viii) Export Services Division, and (ix) Vigilance Division C. The Ministry of Commerce Presentation Title | September 16, 2014 | <document classification>

  27. UNDERSTANDING THE LEGAL ENVIRONMENT OFBUSINESS We may list these legislation which define the legal environment of business in India : • Company laws • Laws relating to capital market • MRTP (Monopolies and Restrictive Trade Practice Act) • FERA (Foreign Exchange Regulation Act) • IDRA (Industrial Development and Regulation Act) Presentation Title | September 16, 2014 | <document classification>

  28. Trade Unions Act • Bonus Ordinance • Factory Legislations • Social Security Enactments • Laws for Consumers’ Protection Presentation Title | September 16, 2014 | <document classification>

  29. A. Company Laws: Company laws include represents the principal laws affecting the organization and management of corporate business. B. Capital Market: The Securities Contract (Regulation) Act (SCR Act 1956 is designed to regulate the functioning of stock exchanges in India and to prevent undesirable transactions/dealings in securities. Presentation Title | September 16, 2014 | <document classification>

  30. Every stock exchange must have rules approved by the Central Government/SEBI. Securities and Exchange Board of India Act, 1992. • Over-the-Counter Exchange of India (OTCEI) : over-the counter (OTC) markets are envisaged as a floorless security trading system equipped with an electronic or computer network through which nationally and internationally scattered buyers and sellers can conduct business more efficiently and economically. Presentation Title | September 16, 2014 | <document classification>

  31. In India, OTCEI has been promoted by the UTI, ICICI, IDBI, IFCI, LIC GIC and its subsidiaries, SBI Capital Markets Limited and Can bank Financial Services Limited. OTCEI has been incorporated as a company under Section 25 of the Companies Act, 1956, which means that it cannot distribute its income among its members by ways of dividend; instead, it has to use its income for furthering its objectives. Presentation Title | September 16, 2014 | <document classification>

  32. Composition of World Trade C. Foreign Exchange Regulation Act (FERA): FERA Act 1947 has emerged as a very important piece of legislative control over (a) the activities of multinational businesses; (b) the flow of foreign capital, technology and managerial enterprise; and foreign collaboration and joint ventures. In short, FERA regulates the stock and flow of foreign investment in India. Presentation Title | September 16, 2014 | <document classification>

  33. D. The Sick Industrial Companies (Special Provisions) Act 1985 (SICA, 1985):The Sick Industrial Companies (Special Provisions) Act 1985 was enacted to address the problem of industrial sicknesses The objects of SICA are : i) securing the timely detection of sick an potentially sick industrial undertakings; ii) speedy determination, by a panel of experts, of the preventive,ameliorative, remedial another measures which need to be taken with respect to such companies; Presentation Title | September 16, 2014 | <document classification>

  34. iii) expeditions enforcement of the measures so determined; • iv) providing for matters connected with or incidental to the above mentioned objectives. • Central Government constituted the Board for Industrial and Financial Reconstruction (BIFR) with effect from January 12, 1987 • BIFR is empowered to look into all matters relating to industrial sickness including : • i) intuitional fiancé; Presentation Title | September 16, 2014 | <document classification>

  35. ii) rehabilitation of sick industrial companies; • iii) revival of sick industrial companies; • iv) amalgamation of sick industrial companies; • v) sale/lease of part or whole of the undertaking of sick industrial companies; • vi) liquidation/winding up of sick industrial companies; and • vii) other allied matters. Presentation Title | September 16, 2014 | <document classification>

  36. E. Monopolies and Restrictive Trade Practices (MRTP) Act 1969 (MRTP ACT): The Monopolies and Restrictive Trade Practices (MRTP) Act has its genesis in the Directive Principles of State Policy embodied in the Constitution of India. Article 39(b) and (c) thereof lays down that the State shall direct its policy towards ensuring : i) that the ownership and control and material resources of the community are so distributed as best to sub serve the common good, and ii) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. Presentation Title | September 16, 2014 | <document classification>

  37. The Objectives of the MRTP Act are : • a) To prevent concentration of economic power to the common detriment and control of monopolies; • b) To prohibit monopolistic trade practices; and • c) To prohibit restrictive trade practices and unfair trade practices. Presentation Title | September 16, 2014 | <document classification>

  38. F. Consumer Protection Act, 1986: • Consumer Protection Act, 1986, extends statutory recognition to the rights of consumers. The Act recognizes the following six rights of consumers : 1 Right to safety, i.e., the right to be protected against the marketing of goods and services which are hazardous to life and property. Presentation Title | September 16, 2014 | <document classification>

  39. 2 Right to be informed , i.e., to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be, so as to protect the consumer against unfair trade practices. 3. Right to choose, i.e., the right of access to a verity of goods and services at competitive prices. In case of monopolies, say railways, telephones, etc., It means right to be assured of satisfactory quality and service at a fair price. Presentation Title | September 16, 2014 | <document classification>

  40. 4. Right to be heart, i.e., the consumers; interests will receive due consideration at appropriate forums. It also includes the right to be represented in various forums formed to consider consumers’ welfare. 5 Right to seek redressal, i.e., the right to seek redressal giant unfair practices or restrictive trade practices or unscrupulous exploitation of consumers. 6 Right to consume education, i.e., the right to acquire the knowledge and skill to be an informed consumer. Presentation Title | September 16, 2014 | <document classification>

  41. G. The Environment Protection Act, 1986: The Environment Protection Act, 1986, came into effect in November 1986 and is in addition to the two allied Acts, viz., Water (Prevention and Control of Pollution) Act, 1974, and Air (Presentation and Control of Pollution) Act, 1981. • The objectives of the Act is to provide for the protection and improvement of the environment and matters connected therewith. The law covers not only land and water or air but all aspects of the environment. Presentation Title | September 16, 2014 | <document classification>

  42. UNIT 3 CHANGING ROLE OF GOVERNMENT • Japan and China differ from each other tidally in terms of their political and economic ideologies. • The tiny Japanese nation is considered to be a capitalist giant. The populous Chinese nation is one of the very few countries which still, by and large, practice communism. Presentation Title | September 16, 2014 | <document classification>

  43. PITFALLS OF COMMUNISM: • Good produced not in line with consumer’s preferences. • Difficulties in training martial balancing. • Outdated technologies. Presentation Title | September 16, 2014 | <document classification>

  44. EMERGING CONSENSUS ON THE CHANGED ROLE OF GOVERNMENT: Capitalist countries are increasingly accepting the fact that governments have to play an important role in their economies. The governments come into the picture to provide public goods and to ensure that competitive forces are not impeded in play their role. The governments promote the production of commodities with beneficial externalities and curb the production of commodities with detrimental side effects. Presentation Title | September 16, 2014 | <document classification>

  45. Block 2Structure of Indian Economy UNIT 4 Structural Dimensions of Indian Economy Presentation Title | September 16, 2014 | <document classification>

  46. Economic Growth and Development Growth may well involve not only more output derived from greater amounts of inputs but also greater efficiency, that is, an increase in productivity or an increase in output per unit of input. Development goes beyond this to imply changes in the composition of output and in the allocation of inputs by sectors. Presentation Title | September 16, 2014 | <document classification>

  47. Economic Growth : Economic growth may be defined as a significant and sustained rise in per capita real income. One must distinguish the “level” from the rate of economic growth, though these two concepts are obviously related. Real national income = National income at current prices/General price index In symbols. Y = (Y/P) x 100 Per capita real income = Real national income/ population Presentation Title | September 16, 2014 | <document classification>

  48. Economic Development: ‘Economic development’ is a broader concept than ‘economic growth’. As and when the economies grow in terms of national and per capita income levels, certain structural changes accompany the process of growth. For an understanding of the changing economic environment in a developing country, we may examine specifically the nature of some of the structural changes which are economic in character. Presentation Title | September 16, 2014 | <document classification>

  49. Structure of National Output: The percentage contribution of agriculture to gross domestic product declines and the contribution of industry and services to gross domestic product increases. Structure of Employment:It is generally accepted that one of the structural changes that occur in the course of economic growth is a progressive shift of labour from agriculture and allied activities to secondary and tertiary sectors. Presentation Title | September 16, 2014 | <document classification>

  50. Structure of Employment: Economic growth is also associated with a chane in the structure of employment of people. • Structure of Investment and Capital Formation:A change in the structure of investment and capital formation is another development during the process of economic growth and development. • Economic Growth Equation (G) • G=Rate of investment/ICOR(Incremental Capital Output Ratio Presentation Title | September 16, 2014 | <document classification>

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