INTERNATIONAL BUSINESS
ENVIRONMENT: AN
OVERVIEW
XISS
MARCH 2011
PRESENTATION
SEQUENCE
• BUSINESS BASICS
• ENVIRONMENTAL SCANNING
BUSINESS BASICS
•
•
•
•
•
•
•
•
•
WHAT IS BUSINESS?
WHAT ARE ITS OBJECTIVES?
WHO STARTS A BUSINESS?
WHAT IS INTERNATIONAL BUSINESS?
WHAT ARE BUSINESS
CLASSIFICATIONS?
HOW ARE BUSINESSES ORGANISED?
ORGANISATIONS AND CHANGE
HIERARCHIES AND NETWORKS
CORPORATE GOVERNANCE
ENVIRONMENTAL
SCANNING
• INTERNAL ENVIRONMENT
o
STRENGTHS AND WEAKNESSES
• EXTERNAL ENVIRONMENT
o
MICRO (OPPORTUNITIES AND THREATS)




o
SUPPLIERS
COMPETITORS
CUSTOMERS
INTERMEDIARIES
MACRO (OPPORTUNITIES AND THREATS)




THE ECONOMY
GOVERNMENT
SOCIO-CULTURAL
TECHNOLOGY
BUSINESS BASICS
• WHAT IS A BUSINESS?
o
VAST ARRAY OF ECONOMIC ACTIVITIES IN
WHICH COMMODITIES ARE SUPPLIED IN
EXCHANGE FOR SOME PAYMENT, USUALLY
MONEY. IT INCLUDES BUYING AND
SELLING, MANUFACTURING PRODUCTS,
EXTRACTING NATURAL RESOURCES AND
FARMING.
• OBJECTIVES OF BUSINESS
o
o
PROFIT
NOT-FOR-PROFIT
BUSINESS BASICS
• WHO STARTS A BUSINESS?
o
ENTREPRENEUR:. one who creates a new
business in the face of risk and uncertainty for
the purpose of achieving profit and growth by
identifying opportunities and assembling the
necessary resources to capitalize on them.
 McDONALD STARTED WITH SINGLE HAMBURGER
OUTLET IN THE US IN 1955 AND HAS CURRENTLY
THOUSANDS OF OUTLETS IN OVER 120
COUNTRIES, MAINLY THROUGH FRANCHISEES
(individual entrepreneurs own the business and operate
it under an agreement with McDonald’s).
International Companies
Bartlett-Ghoshal Classfication
• International business refers to business activities that
straddle two or more countries. Businesses are increasingly
looking beyond the bounds of their home country for new
opportunities.
• Book: Managing Across Borders: The Transnational Solution
(1989)
• Identified 3 types of Cross-national companies
• MNCs: such as Unilever, that are conglomerates (businesses
involved in many areas): responsiveness and flexibility
• Global Companies: Centralized decision making and largely
standardized products, like Ford: Efficiency
• International Cos: Focusing upon joint development and
worldwide sharing of knowledge, like the IBM. Transfer of
learning
BUSINESS BASICS
INTERNATIONAL
BUSINESS
MNCs
Loose federation
of enterprises:
National subsidiaries
solve all operative
and some strategic
Tasks
e.g. Unilever
Global
Enterprises
Tightly centralized,
Subsidiaries only
As distribution centers
e.g. Toyota
International
Enterprises
In between MNCs
And Global
Enterprises e.g.
IBM, Ericsson
BUSINESS BASICS:
BUSINESS CLASSIFICATION
•
•
OWNERSHIP
o SOLE TRADER: Self-employed, unlimited liability: Franchise a less risky route to
starting a business because the business can trade under an established brand
name
o PARTNERSHIP: unlimited liability
o Public Private partnership: Basically Financing arrangement: BOT and BOOT:
B’lore airport PPP, GMR group
o COMPANY: Share capital or equity, limited liability
 PRIVATE Companies: Not allowed to offer shares to the public: Virgin group
of companies
 PUBLIC: allowed to offer shares to the general public, listed in stock
exchanges
o STATE OWNED ENTERPRISES: Privatization, disinvestment
SIZE
o MICRO: 0-9 EMPLOYEES
o SMALL: 10-49 EMPLOYEES
o MEDIUM: 50-249 EMPLOYEES
o LARGE: 250+ EMPLOYEES
o SME: SMALL TO MEDIUM ENTERPRISES
 EXAMPLE: PICSEL TECHNOLOGIES: SMALL SCREEN DEVICES
BUSINESS BASICS:
BUSINESS ORGANISATION
• BUSINESS ORGANISATION REFERS TO
DESIGN OF ORGANISATION THROUGH
WHICH ENTERPRISE IS ADMINISTERED.
FUNCTIONAL APPROACH WHERE
BUSINESS FUNCTIONS DETERMINE
ORGANISATIONAL STRUCTURE
o DIVISIONAL STRUCTURE WHERE BUSINESS
IS ORGANISED INTO BUSINESS UNITS OR
DIVISIONS BASED ON PRODUCT, BRAND OR
GEOGRAPHICAL REGION
o HOLDING COMPANIES
o
MULTIDIVISION
APPROACH
BOARD OF
DIRECTORS
CEO
GENERAL OFFICE
DIVISION
PRODUCT OR
REGION
DIVISION
PRODUCT OR
REGION
DEPARTMENT
SALES
DEPARTMENT
MANUFACTURING
DIVISION
PRODUCT OR
REGION
DEPARTMENT
PURCHASING
DEPARTMENT
FINANCE
FUNCTIONAL APPROACH
BOARD OF
DIRECTORS
CEO
R&D
PRODUCTION
PRODUCT
DESIGN
MARKETING
RECRUITMENT
EMPLOYEE
RELATIONS
HRM
FINANCE
TRAINING
HOLDING COMPANY
• The holding company may also be said to
be based on divisions, in that a parent
company is the owner of a diverse array of
subsidiary companies. However, unlike the
multidivisional companies described above,
the holding company exerts little control over
the separate companies and provides few
general functions for the group as a whole.
The companies within the group operate, in
effect, as independent organizations.
BUSINESS BASICS
ORGANISATION AND CHANGE
• ORGANISATIONAL CULTURE:
 No two organizations, even two with similar outward
structures, will be run in exactly the same way.
Differences in behaviour, values and overall atmosphere
are part of a business’s organizational culture
 Ingrained ways of doing things
• TAKEOVER OR MERGER AS CATALYSTS TO CHANGE IN
CULTURE
• STRATEGY: PLAN OF ACTION TO ACHIEVE CERTAIN
OBJECTIVES
• DELIBERATE AND EMERGENT STRATEGY:
Strategy is often a combination of ‘deliberate’ strategy, that which has
been originally intended, and ‘emergent’ strategy, which has arisen from
events not part of the intended strategy.
• STRATEGIC THINKING
BUSINESS BASICS:
HIERARCHIES AND
NETWORKS
• HIERARCHIES AND BUREAUCRACYINFLEXIBLE AND UNRESPONSIVE
• DELAYERING OR FLAT STRUCTURE:
EMPOWERMENT
• EMPOWERMENT TIES IN WITH NETWORK
ORGANISATION.
• NETWORK ORGANISATION: IT IS THE
INFORMAL OVERLAY THAT CUTS ACROSS
WHATEVER FORMAL STRUCTURE IS
CHOOSEN.
• NETWORKS RELY ON SOCIAL CAPITAL, THAT
IS, SHARED NORMS AND RELATIONSHIPS OF
TRUST, RATHER THAN ANY FORMAL
CORPORATE
GOVERNANCE
• IT REFERS TO STRUCTURE AND
PROCESSES BY WHICH ULTIMATE
CONTROL AND DECISION MAKING
IN THE COMPANY ARE EXERCISED
• AGENCY THEORY
• SEPARATION OF OWNERSHIP AND
MANAGEMENT
CORPORATE
GOVERNANCE
SHAREHOLDERS AGM
EXECUTIVE AND
NON-EXECUTIVE
DIRECTORS
BOARD OF DIRECTORS
AUDIT
COMMIT
TEE
REMUNERA
TION
COMMITTE
E
CEO
ENVIRONMENTAL
SCANNING
• INTERNAL ENVIRONMENT CHECKLIST FOR
PERFORMING STRENGTHS AND WEAKNESS
ANALYSIS
o
MARKETING
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REPUTATION
MARKET SHARE
CUSTOMER SATISFACTION
CUSTOMER RETENTION
PRODUCT AND SERVICE QUALITY
PRICING, DISTRIBUTION, SALES AND INNOVATION
EFFECTIVENESS
 GEOGRAPHICAL COVERAGE
o
FINANCE
 COST/AVAILABILITY OF CAPITAL
 CASH FLOW (NET PROFIT + DEPRECIATION)
INTERNAL ENVIRONEMENT
CHECKLIST CONTD..
• MANUFACTURING
o
o
o
o
o
FACILITIES
ECONOMIES OF SCALE
CAPACITY
ABILITY TO PRODUCE ON TIME
TECHNICAL AND MANUFACTURING SKILLS
• ORGANISATION
o
o
o
o
VISIONARY AND CAPABLE LEAERSHIP
ENTERPRENEURIAL ORIENTATION
FLEXIBLE AND RESPONSIVE ORGANISATION
DEDICATED WORKFORCE
EXTERNAL ENVIRONMENT
• MICRO ENVIRONMENT
o SUPPLIERS
 VERTICAL VIS-S-VIS HORIZONTAL (MERGERS AND
TAKEOVERS) INTEGRATION: outsourcing or in-house?
High Inventory costs
o COMPETITORS: Competitor Array: Discretionary Income:
brand competition and desire competition
 STRATEGY TO TAKE THEM ON: Case of Bharti and
Reliance
o CUSTOMERS: Institutional or retail: Few or Many clients: IT
industry: Case of Tech Mahindra
 CREATE AND SUSTAIN
o INTERMEDIARIES: Those that help businesses in its
activities: Vital links between company and final consumers
 MARKETING AND FINANCIAL: M&A: IPO: Rights Issue:
SUPPLIER
• Vertical integration is the degree to which a firm owns its
upstream suppliers and its downstream buyers (growing raw
materials, manufacturing, transporting, marketing, and/or
retailing )
• BACKWARD INTEGRATION: Control of raw material suppliers
• FORWARD INTEGRATION: Control of distribution centers and
retailers
• HORIZONTAL INTEGRATION: Consolidation of many firms
engaged in manufacturing of same product.
• Issue: In-house or outsourcing
• High cost of inventory if supplier is unreliable
COMPETITOR ANALYSIS:
Competitor Array
Success
factors
Weighting Competitor 1 Competitor Competitor Competitor
rating
1 weighted 2 rating
2 weighted
Extensive
distribution
.4
6
2.4
3
1.2
Customer
Focus
.3
4
1.2
5
1.5
Economies
of scale
.2
3
.6
3
.6
Product
Innovation
.1
7
.7
4
.4
Total
1.0
20
4.9
15
3.7
Competitor Profiling
• Background
o
o
o
location of offices, plants, and online presences
history - key personalities, dates, events, and trends
ownership, corporate governance, and organizational structure
• Financials
o
o
o
P-E ratios, dividend policy, and profitability
various financial ratios, liquidity, and cash flow
Profit growth profile; method of growth (organic or acquisitive)
• Products.
o
o
o
o
o
o
products offered, depth and breadth of product line, and product portfolio
balance
new products developed, new product success rate, and R&D strengths
brands, strength of brand portfolio, brand loyalty and brand awareness
patents and licenses
quality control conformance
reverse engineering
Competitor Profiling
•
Marketing
segments served, market shares, customer base, growth rate, and customer
loyalty
o promotional mix, promotional budgets, advertising themes, ad agency used, sales
force success rate, online promotional strategy
o distribution channels used (direct & indirect), exclusivity agreements, alliances,
and geographical coverage
o pricing, discounts, and allowances
o
•
Facilities
plant capacity, capacity utilization rate, age of plant, plant efficiency, capital
investment
o location, shipping logistics, and product mix by plant
o
•
Personnel
o
o
o
•
number of employees, key employees, and skill sets
strength of management, and management style
compensation, benefits, and employee morale & retention rates
Corporate and marketing strategies
o
o
objectives, mission statement, growth plans, acquisitions, and divestitures
marketing strategies
Customer Analysis
• Create and Sustain
• Types of customers
o
o
Retail or Institutional
Few or More
• Customer Focus Groups
o
Mechanism for gathering the voice of the customer through
a structured group interview
 Exploratory focus groups are used to discuss customer needs,
develop concepts for new products and/or evaluate new
concepts/products
 Experiential focus groups are used to observe customers
using products (and learn from those observations) or to hear
motivations for the purchase of a product.
Intermediaries
• Financial and Marketing
o
o
o
Those that help businesses in its activities: Vital
links between company and final consumers
A financial intermediary is an entity that
connects surplus and deficit agents. The classic
example of a financial intermediary is a bank that
transforms bank deposits into bank loans.
Business organizations that expedite the
distribution of goods and services from the
producer to consumers
EXTERNAL MACRO
ENVIRONMENT
• THE ECONOMY
GNP OR GDP PER CAPITA
GNP OR GDP GROWTH
UNEMPLOYMENT AND INFLATION
RATE
o CONSUMER AND INVESTOR
CONFIDENCE
o CURRENCY EXCHANGE RATES
o TRADE BALANCE
o BALANCE OF PAYMENTS
o
o
o
Components of Economic
Environment
• Existing structure of the economy in terms of relative role of
private and public sectors.
• The rates of growth of GNP and per capita income at current
and constant prices
• Rates of saving and investment
• Volume of imports and exports of different items
• Balance of payments and changes in foreign exchange
reserves
• Agricultural and industrial production trends
• Expansion of transportation and communication facilities
• Money supply in the economy
• Public debt (internal and external)
• Planned outlay in private and public sectors
CURRENCY EXCHANGE
RATE
•
NOMINAL EXCHANGE RATE
o
PRICE OF ONE CURRENCY IN EXCHANE FOR OTHER

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

DEVALUATION AND REVALUATION
DEPRECIATION AND APPRECIATION
SPOT RATES, FORWARD RATES AND FUTURES
WHAT DETERMINES EXCHANGE RATES


PPP
PORTFOLIO BALANCE
 WHO DETERMINES EXCHANGE RATES
 MONETARY POLICY AND INTERVENTION
 EFFECTS OF EXCHANGE RATE MOVEMENTS
•
EFFECTIVE EXCHANGE RATE
o
•
AVERAGE EXCHANGE RATE AGAINST A BASKET OF CURRENCIES LIKE
THE USD INDEX (EUR, JPY,GBP, CAD, CHF, SEK)
REAL EXCHANGE RATE
o
IT MEASURES INTERNATIONAL COMPETITIVENESS
 IF PRICE GOES UP BY 4% IN GERMANY AND 6% IN US, THE US COMPETITIVENESS
FALLS BY 2%. HOWEVER IF OVER THE SAME PERIOD THE DOLLAR FELL 3%, OVERALL
US COMPETITIVENESS HAS ACTUALLY IMPROVED BY 1%.
BALANCE OF PAYMENTS
• EXPORTS LESS IMPORTS OF PHYSICAL
GOODS= MERCHANDISE BALANCE
• MERCHANDISE BALANCE+NET EXPORTS AND
IMPORTS OF SERVICES=TRADE BALANCE
• TRADE BALANCE + NET CURRENT TRANSFER
(WAGES+PROFITS+INTEREST+INTERNATIONA
L AID)=CURRENT ACCOUNT BALANCE
• CURRENT A/C BALANCE +CAPITAL A/C
BALANCE(NET PORTFOLIO
INVESTMENT+FDI+EXTERNAL BORROWING) =
BALANCE OF PAYMENTS
Balance of Payments
•
IMPORTS
o
o
o
o
o
o
•
EXPORTS
o
o
o
•
COMPARATIVE ADVANTAGE
VALUE AND VOLUME
IMPORT PENETRATION
IMPORT COMPOSITION
COMPRESSIBILITY
IMPORT SOURCES
VALUE AND VOLUME
EXPORT PENETRATION
COMPOSITION AND DESTINATIONS
TRADE BALANCE, MERCHANDISE TRADE BALANCE
o
ELIMINATING A TRADE DEFICIT
 A CHANGE IN THE VOLUME OF TRADE
 A CHANGE IN RELATIVE PRICES THROUGH A CHANGE IN THE EXCHANGE RATE OR A
CHANGE IN DOMESTIC PRICES
•
CURRENT ACCOUNT BALANCE
o
ACQUISITION OF NET FOREIGN ASSETS OR EXTERNAL DEBT GROWS TO
TUNE OF CURRENT ACCOUNT DEFICIT
BALANCE OF PAYMENTS
• OFFICIAL RESERVES
o
o
o
GOLD AND FOREIGN CURRENCIES HELD BY THE
GOVERNMENT
INTERVENTION TO SMOOTHEN TEMPORARY BLIPS IN
EXCHANGE RATES
STERILISATION
• EXTERNAL DEBT, NET FOREIGN ASSETS
o
o
EXTERNAL DEBT AS % OF GDP
DEBT SERVICE RATIO
 PAYMENT OF INTEREST PLUS PRINCIPAL AS % OF EXPORTS
OF GOODS AND SERVICES
o
NET FOREIGN ASSETS
 EXTERNAL DEBT
 ACQUISITION OF STOCKS OF ASSETS IN OTHER COUNTRIES,
LIKE INDUSTRIAL COUNTRIES AND OIL EXPORTERS
Consumer Confidence
• Degree of optimism on the state of the economy that
consumers express through their activities of savings and
spending .
• Started in 1967 and is benchmarked to 1985=100
• Monthly: Leading Indicator of economic trends.
• survey consists of five questions to be answered in positive,
negative or neutral:
o
o
o
o
o
Current business conditions
Business conditions for the next six months
Current employment conditions
Employment conditions for the next six months
Total family income for the next six months
Investor Confidence Index
• It measures the attitude of investors to risk.
• Index uses the principles of modern financial
theory to model the underlying behavior of
global investors.
• It measures confidence by assessing the
changes in investor holdings of equities.
• The more of their portfolio that institutional
investors are willing to hold, the greater their
risk appetite or confidence.
INFLATION
•
•
•
•
Persistent rise in prices
Fall in value of money
Rise in money supply
Adaptive expectations:
EXTERNAL MACRO
ENVIRONMENT
• GOVERNMENT
FORM OF GOVERNMENT
POLITICAL STABILITY
GOVERNMENT DEBT
BUDGET DEFICIT/SURPLUS
CORPORATE AND PERSONAL TAX
RATES
o IMPORT TARIFFS AND QUOTAS
o RESTRICTIONS ON INTERNATIONAL
FINANCIAL FLOWS
o MONETARY POLICY
o
o
o
o
o
PUBLIC DEBT
• India's public debt includes market
borrowings, external debt and other liabilities
like small savings and provident funds.
• Estimated public debt= Rs 34 lakh crore ( or
Rs 11.5 trillion) as on end 2008-09.
• Total P D= $723.86 billion
• Internal Debt=$225billion (31%)
• OF THE RS 34 LAKH CRORE, 22.7 LAKH
CRORE ARE INTERNAL AND THE REST
EXTERNAL DEBT.
• PER PERSON DEBT = Rs 30000/=
MONETARY POLICY
•
•
•
•
REGULATION OF MONEY SUPPLY
Various measures of money supply like, M1 and M3,
o M1: CURRENCY (Notes and coins) + demand deposits or current a/c
deposits) +commercial banks reserves with RBI: also called monetary base
o M3: M1+Time Deposits with Banks: Also called Broad Money
IMPACT ON COST AND AVAILABILITY OF CREDIT THROUGH
o REPO RATE: THE RATE AT WHICH THE CENTRAL BANK PROVIDES A
SHORT-TERM LOAN (OVERNIGHT LOAN OR LOAN FOR A WEEK), IN
RETURN FOR WHICH BANKS PLEDGE SECURITIES AS COLLATERAL
(6% in oct 2010).
o REVERSE REPO RATE: THE RATE AT WHICH THE CENTRAL BANK
BORROWS MONEY FROM THE MARKET FOR SHORT PERIODS.( 5%)
o CRR (6%)
o SLR (25%)
o BANK RATE OR DISCOUNT RATE: RATES AT WHICH THE CENTRAL
BANK PROVIDE MONEY TO COMMERCIAL BANKS TO HELP SMOOTH
LONGER (SAY, WEEKLY) FINANCING NEEDS. (6 %)
BOND YIELDS AND BOND PRICES:
o Yield calculations
o Yields and price
o Yield and economic cycle
INTERNATIONAL
ENVIRONMENT
• GLOBAL GROWTH
• WTO
o
o
PRINCIPLES
CASE FOR OPEN TRADE
 THEORY OF ABSOLUTE AND COMPARATIVE ADVANTAGE
o
o
o
o
o
GATT TRADE ROUNDS
FARM SUBSIDIES
TARIFF BARRIERS
NON-TARIFF BARRIERS
TRADING BLOCKS




FTA
CUSTOMS UNION
COMMON MARKET
ECONOMIC UNION
POLITICAL ENVIRONMENT
•
•
•
•
•
•
•
•
•
•
•
The Constitution of the country
Prevailing political system
The degree of politicisation of business and economic issues
Dominant ideologies and values of major political parties
The nature and profile of political leadership and thinking of
political personalities
The level of political morality
Political institutions like the government and allied agencies
Political ideology and practices of the ruling party
The extent and nature of government intervention in business
The nature of relationship of our country with foreign countries
EXTERNAL MACRO
ENVIRONMENT
• LEGAL
o
o
o
o
o
o
MINIMUM WAGES LAW
ENVIRONMENTAL PROTECTION LAWS
WORKER SAFETY LAWS
COPYRIGHT AND PATENT LAWS
ANTI-MONOPOLY LAW
COMPETITION LAW
ENVIRONMENT
PROTECTION LAWS
• WATER (PREVENTION AND CONTROL OF POLLUTION) ACT
1974
• AIR (PREVENTION AND CONTROL OF POLLUTION) ACT 1981
• ENVIRONMENT PROTECTION ACT 1986
• CENTRAL POLLUTION CONTROL BOARD MONITORS AIR
QUALITY AND WATER QUALITY UNDER NATIONAL AIR
MONITORING PROGRAMME AND WATER MONITORNG
PROGRAMME.
• 14 MAJOR RIVERS, 44 MEDIUM RIVERS AND 55 MINOR RIVERS:
MAINLY RAINFED DURING MONSOONS, DRY FOR REST OF THE
YEAR OFTEN CARRYING WASTEWATER DISCHARGES FROM
INDUSTRIES AND CITIES ENDANGERING THE QUALITY OF
SCARCE WATER RESOURCES
• AIR QUALITY MONITORING AS ASCERTAINED BY SUSPENDED
PARTICULATE MATTER (SPM), CARBON MONOXIDE (CO),
OZONE (O3), SULPHUR DIOXIDE (SO2), NITROGEN DIOXIDE
(NO2)
OCCUPATIONAL HEALTH
AND SAFETY (OH&S)
•
•
•
CONSTITUTIONAL PROVISIONS UNDER ARTICLES 24, 39(e AND f) and 42
BIS APPROVED IS 18001:2000 OH&S MANAGEMENT SYSTEMS (OH&SMS)
THREE TYPES OF LAWS FOR OH&S
o STATUTES FOR SAFETY AT WORKPLACES
o STATUTES FOR SAFETY OF SUBSTANCES
o STATUTES FOR SAFETY OF ACTIVITIES
•
AT PRESENT, SAFETY AND HEALTH STATUTES FOR REGULATING OH&S OF PERSONS AT
WORK EXIST IN THE FOLLOWING FOUR SECTORS
o MINES
o FACTORIES
o PORTS
o CONSTRUCTION
THE MAJOR LEGSLATIONS ARE
o THE FACTORIES ACT 1948
o MINES ACT, 1952
o DOCK WORKERS (SAFETY, HEALTH AND WELFARE) ACT, 1986
o PLANTATION LABOUR ACT, 1951
o EXPLOSIVES ACT 1884
o PETROLEUM ACT 1954
o INDIAN ELECTRICITY ACT 1910
o INDIAN ATOMIC ENERGY ACT 1962
•
COPYRIGHT AND PATENT
LAWS understanding WTO.pdf page 37
• COPYRIGHT IS THE LEGAL RIGHT OF CREATIVE ARTISTS
OR PUBLISHERS TO CONTROL THE USE AND
REPRODUCTION OF THEIR ORIGINAL WORKS LIKE
COMPUTER PROGRAMS
• PATENT IS AN EXCLUSIVE RIGHT OFFICIALLY GRANTED
BY A GOVERNMENT TO AN INVENTOR TO MAKE OR SELL
AN INVENTION.
• TRIPS: TYPES OF INTELLECTUAL PROPERTY
o COPYRIGHT AND RELATED RIGHTS
o TRADEMARKS: Types of signs
o GEOGRAPHICAL INDICATIONS: A place name identifies
the product like Champagne, Scotch.
o INDUSTRIAL DESIGNS
o PATENTS for both products and processes
o LAY-OUT DESIGNS OF INTEGRATED CIRCUITS
o UNDISCLOSED INFORMATION INCLUDING TRADE
SECRETS
ANTI-MONOPOLY LAW
• MRTPC IS AN IMPORTANT ORGAN OF THE
DEPARTMENT OF COMPANY AFFAIRS
• MRTPC ESTABLISHED U/S 5 OF THE MRTPA,
1969
• FUNCTION: ENQUIRE INTO AND TAKE
APPROPRIATE ACTION AGAINST UNFAIR
TRADE PRACTICES AND RESTRICTIVE TRADE
PRACTICES.
• IN REGARD TO MONOPOLISTIC TRADE
PRACTICES, THE COMMISSION CAN ENQUIRE
INTO SUCH PRACTICES UPON A REFERENCE
MADE TO IT BY THE CENTRAL GOVERNMENT
OR UPON ITS OWN KNOWLEDGE AND SUBMIT
COMPETITION LAWS
• CCI
• PROHIBITION OF ANTI-COMPETITIVE AGREEMENTS:
HORIZONTAL AND VERTICAL INTEGRATION. HORIZONTAL
AGREMMENT AMONG EXPORTERS EXEMPTED
• PROHIBITION OF DOMINANCE: Acquisition of significant market
power, which enables the enterprise to increase the price or limit
production independently of competitors as well as customers.
Dominance is not treated bad per se; it is the abuse of dominant
position which is prohibited. Predatory pricing is one of the abuses
which can be established against a dominant player if the selling
price is below cost and there is intent to oust competitors.
• REGULATION OF COMBINATIONS: Combinations include mergers,
amalgamations and acquisition of control, shares, voting rights or
assets. Combinations are classified into horizontal, vertical and
conglomerate combinations (Merger of unrelated business activities
for synergy, cross selling and increasing market share). If a proposed
combination causes or is likely to cause appreciable adverse effect
on competition, it cannot be permitted to take effect.
EXTERNAL MACRO
ENVIRONMENT
• TECHNOLOGY
o
EFFICIENCY OF INFRASTRUCTURE INCLUING ROADS,
PORTS, AIRPORTS, ROLLING STOCK (railroad and road
vehicles, wagons, locomotives) HOSPITALS,EDUCATION,
HEALTHCARE, COMMUNICATION
INDUSTRIAL PRODUCTIVITY
COST AND AVAILABILITY OF
ELECTRICAL POWER
o STATE OF INFORMATION
TECHNOLOGY
o
o
SOCIAL ENVIRONMENT
•
•
•
•
•
•
•
•
•
•
•
Attitudes towards product innovations, lifestyles, occupational
distribution and consumer preferences
Concern with quality of life
Life expectancy
Expectations from the workforce
Shifts in the presence of women in the workforce
Birth and death rates
Population shifts
Educational system and literacy rates
Consumption habits
Composition of family
EXTERNAL MACRO
ENVIRONMENT
• SOCIO-CULTURAL
o
ATTITUDE TOWARDS
 MATERIALISM, CAPITALISM, FREE ENTERPRISE,
INIVIDUALISM, CONSUMERISM, IMPORTANCE OF
WORK.
o
DEMOGRAPHIC FACTORS SUCH AS





POPULATION SIZE AND DISTRIBUTION
EDUCATION AND INCOME LEVELS
RELIGIOUS AFFILIATIONS
ETHNIC ORIGINS
CULTURAL STRUCTURES INCLUDING DIET AND
NUTRITION AND HOUSING CONDITIONS
SOCIO-CULTURAL
FACTORS
• MATERIALISM: Devotion to material wealth and
possessions at the expense of spiritual or
intellectual values: Focus on possessions.
• CAPITALISM: An economic system based on the
private ownership of the means of production and
distribution of goods, characterized by a free
competitive market and motivation by profit.
• FREE ENTERPRISE: the doctrine or practice of
giving companies the freedom to trade and make a
profit without government control.
SOCIO-CULTURAL
FACTORS
• CONSUMERISM: An attitude that values the
acquisition of material goods: The belief that the
buying and selling of large quantities of consumer
goods is beneficial to an economy or a sign of
economic strength.
• INDIVIDUALISM: The pursuit of personal
happiness and independence rather than collective
goals or interests: The belief that society exists for
the benefit of individual people, who must not be
constrained by government interventions or made
subordinate to collective interests.
• DIGNITY OF LABOUR: Respect for all kinds of
labor
DEMOGRAPHIC FACTORS
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Population size and distribution: Birth Rate, Death Rate, Infant Mortality Rate,
Child Mortality Rate, Female Fertility rate, Distribution by age, residence,
occupation, Dependency ratio
Education and Income Levels: Middle Class: Companies that fail to
understand the unique desires and tastes of the new Indian consumer will
miss out on a half-billion-strong market that along with China ranks as one of
the most important growth opportunities of the next two decades.
INCOME GROUPS
DEPRIVED: INCOME<RS 90000/PER ANNUM/PER FAMILY (CONSISTING
OF 5 MEMBERS) (54% OF THE POPULATION)
ASPIRERS: RS 90000-200000/PER ANNUM/PER FAMILY (CONSISTING
OF 5 MEMBERS) (CURRENTLY FORMS 40 PERCENT OF THE
POPULATION)
SEEKERS: Rs 200000-500000 /PER ANNUM/PER FAMILY (CONSISTING
OF 5 MEMBERS)
STRIVERS: Rs 500000-1000000 /PER ANNUM/PER FAMILY (CONSISTING
OF 5 MEMBERS)
MIDDLE CLASS ARE SEEKERS AND STRIVERS: PURCHASING POWER
PARITY WOULD PUT THEM INTO MORE LIKE $23000-$118000 WHICH IS
MIDDLE CLASS BY MOST DEVELOPED COUNTRY STANDARDS.
THANK YOU
DR RAMAKANT AGRAWAL
XISS
RANCHI
ramakantagrawal@yahoo.com
9431109076