ASSIGNMENT BBA 103-BUSINESS ENVIRONMENT

1 The External Analysis examines opportunities and threats that exist in the
environment. How is it done? What should business managers do to access the business
environment?
One part of the SWOT analysis, involves managers identifying the business' opportunities
and threats. In other words, managers are to conduct an external analysis. The manager's
starting point will be to analyse the industry that the business operates in. There are various
factors within the industry that may pose as opportunities or threats to your business are:

The intensity of rivalry among established companies within an industry:

Competing with other businesses to gain a market share may involve tactics that
require your business to either increase costs or lower prices, which will affect
profitability. This poses a threat to your business.

The risk of entry by potential competitors: new competitors in the industry

The bargaining power of buyers: If your buyers have the power to bargain prices or
demand higher quality products and services, this will pose a threat to your business
and it will result in a decrease in profits. However, if buyers have little power, this
may present some opportunities for your business.

The bargaining power of suppliers: Similarly to the bargaining power of buyers, if

suppliers have the power to demand higher input prices, this poses a threat to your
business' profits. Conversely, if suppliers have little power, your business may have
the opportunity to demand lower prices and thus increase profits.

The closeness of substitutes to a product: if there are various products available in

the market that can substitute your product, by satisfying the customers' needs and
want, then this is a threat to your business.

may lead to your business losing some of its market share, which will
result in a loss of profit. Therefore, new entrants pose a threat to your
business. On the other hand, if there is a minimal risk of new entrants into
the market, this may present your business with new opportunities.

What kind of framework can assist the management in understanding the business
environment complex answers often lie in their simplicity of approach. Here are 3 steps that
can help:
1. Understand where your company is: Really understand. Taking complete stock of a
companys current situation as regard to product innovation, customer buying
patterns, PR branding, what are you selling and what you can sell.
2. Compare the company with the leader in the business: A critical comparison with
the market leader will bring out the areas where most attention needs to be paid,
because most often, the leading business has read the business environment right.

3.

Engage with stakeholders: Constant dialogue with all stakeholders will lead to
understanding the companys niche and positioning in the competitive market.

2 Write short notes on:

a. Fiscal policy
b. Monetary policy
Fiscal policy means the use of taxation and public expenditure by the government for
stabilisation or growth. According to Culbarston, By fiscal policy we refer to government
actions affecting its receipts and expenditures which we ordinarily taken as measured by the
governments receipts, its surplus or deficit. The government may offset undesirable
variations in private consumption and investment by compensatory variations of public
expenditures and taxes. Fiscal policy has to decide on the size and pattern of flow of
expenditure from the government to the economy and from the economy back to the
government. So, in broad term fiscal policy refers to that segment of national economic
policy which is primarily concerned with the receipts and expenditure of central government.
In other words, fiscal policy refers to the policy of the government with regard to taxation,
public expenditure and public borrowings.
The importance of fiscal policy is high in underdeveloped countries. The state has to play
active and important role. In a democratic society direct methods are not approved. So, the
government has to depend on indirect methods of regulations. In this way, fiscal policy is a
powerful weapon in the hands of government by means of which it can achieve the objectives
of development.
Monetary policy refers to the credit control measures adopted by the central bank of a
country. Johnson defines monetary policy as policy employing central banks control of the
supply of money as an instrument for achieving the objectives of general economic policy.
G.K. Shaw defines it as any conscious action undertaken by the monetary authorities to
change the quantity, availability or cost of money.
The objectives of a monetary policy in India are similar to the objectives of its five year
plans. In a nutshell, planning in India aims at growth, stability and social justice. After the
Keynesian revolution in economics, many people accepted significance of monetary policy
in attaining following objectives.
1. Rapid Economic Growth
2. Price Stability
3. Exchange Rate Stability
4. Balance of Payments (BOP) Equilibrium
5. Full Employment

6. Neutrality of Money
7. Equal Income Distribution
These are the general objectives which every central bank of a nation tries to attain by
employing certain tools (Instruments) of a monetary policy. In India, the RBI has always
aimed at the controlled expansion of bank credit and money supply, with special attention to
the seasonal needs of a credit.

3 What is a mixed economy? Discuss the merits and demerits of mixed economy.
Mixed Economy is neither pure capitalism nor pure socialism but a mixture of the two
system. In this system we find characteristics of both capitalism and socialism. Mixed
economy is operated by both, private enterprise and public enterprise.
That is private enterprise is not permitted to function freely and controlled through price
mechanism. On the other side, the government intervenes to control and regulate private
enterprise in several ways. It has been realised that a free functioning of private enterprise
results in several types of problems.
According to J. W Grove, One of the presuppositions of a mixed economy is that private
firms are less free to control major decisions about production and consumption than they
would be under capitalist- free enterprise, and that public industry is free from government
restrains than it would be under centrally directed socialist enterprise.
Merits of Mixed Economy:
(1) Best Allocation of Resources:
Since a mixed economy incorporates the good features of both capitalism and socialism, the
resources of the economy are utilised in the best possible manner. The price mechanism, the
profit motive, and the freedoms of consumption, production, and occupation lead to the
efficient allocation of resources within the economy.
(2) General Balance:
A mixed economy maintains a general balance between the public sector and the private
sector. There is competition as well as cooperation between the two sectors which are
conducive for achieving a high rate of capital accumulation and economic growth
(3) Welfare State:
A mixed economy contains all the features of a welfare state. There is no exploitation either
by the capitalists as under a free enterprise economy or by the state as under a socialist
economy. The workers are not forced to work, Workers are provided monetary incentives in
the form of bonus and cash rewards for inventions.

Demerits of Mixed Economy:

(1) Non-Cooperation between the Two Sectors:
The experience of the working of mixed economies reveals that the public sector and the
private sector do not see eye to eye with one another. The private sector is treated like a stepchild and groans under the various restrictions imposed upon it by the state.
(2) Inefficient Public Sector:
The public sector of a mixed economy is a big burden on the economy because it works
inefficiently. Bureaucratic control brings in inefficiency. There is over-staffing of the
personnel, corruption and nepotism. As a result, production falls and losses emerge.
(3) Economic Fluctuations:
The experience of the working of the mixed economic system in the developed countries also
reveals that they have not been able to remove economic fluctuations. This is because of the
improper mixture of capitalism and socialism. The private sector is allowed to operate freely
under a loose system of government regulations and controls.
4 Write a note on the three pillars of free economy namely liberalization, privatization
and globalization.
The term Globalization was first coined in 1980s. But even before this there were
interactions among nations. But in the modern days Globalization has touched all spheres of
life such as economy, education, technology, cultural phenomenon, social aspects etc.
Effect of Globalization on India:
1. Access to Technology:

Globalization has drastically, improved the access to technology. Internet facility has enabled
India to gain access to knowledge and services from around the world. Use of Mobile
telephone has revolution used communication with other countries.
2. Growth of international trade:

Tariff barriers have been removed which has resulted in the growth of trade among nations.
Global trade has been facilitated by GATT, WTO etc.
The term liberalization in this context implies economic liberalization. Economic
liberalization constitutes one of the basic elements of the new Economic policy (NEP)
which the Indian Government launched in the middle of the year 1991.
Effects of liberalization are:
-Promotes competition, which leads to lower costs and prices for consumers

-Competition promotes efficiency, so resources are wasted much less

-Liberalization removes government regulations on the economy, which promotes jobs, lower
prices, higher incomes and lowers inflation
-Promotes technological advancement, again creating jobs and growing incomes

In the event of globalization privatisation has become an order of the day. Privatisation can
be defined as the transfer of ownership and control of public sector units to private
individuals or companies. It has become inevitable as a result of structural adjustment
programmes imposed by IMF.
The effects of privatization include:
-better quality products
-lower priced products
-more efficient firms which have lower costs
-makes costs lower for other firms who use the product the privatized firm produces
-this increases employment and incomes across the economy
-Government no longer needs to subsidize product
-Government makes revenue from asset sale to spend on health, education etc
-Promotes technological advancement, again creating jobs and growing incomes

5 Describe the corporate social responsibility of business houses towards human

resources with an example of an Indian Company.
CSR means corporate initiative to assess and take responsibility for the company's effects on
the environment and impact on social welfare. The term generally applies to company efforts
that go beyond what may be required by regulators or environmental protection groups.
Corporate social responsibility may also be referred to as "corporate citizenship" and can
involve incurring short-term costs that do not provide an immediate financial benefit to the
company, but instead promote positive social and environmental change.
Human resource professionals have a key role to play to help a company achieve its CSR
objectives. Employee involvement is a critical success factor for CSR performance. Human
resource managers have the tools and the opportunity to leverage employee commitment to,
and engagement in, the firm's CSR strategy. For example:
Responsible Human Resource Management practices on equal opportunities, diversity
management, whistle blowing, redundancy, human rights, harassment shall give credibility to
the CSR initiatives of the organization. It is beyond doubt that protecting human rights such
as denial or prevention of legal or social rights of workers is a very important issue under
CSR. Companies like Wipro, Infosys, Dabur, and ICICI have even framed whistle blowing
policy, providing protection to the employees who come to know about any unethical practice
going on within the organization, covering a whole gamut of subjects and showing their
positive approach towards unethical practices.

The separation of employees during mergers, acquisitions, downsizing etc. should be

strategically aligned with the business strategy as well as Corporate Social responsibility.
Retraining, retention, redeployment of people can be worked out with aggressive
communication, information campaigns and outplacement services in place to assist the
transition of people from the organization. Hindustan Unilever Limited (HUL), for example,
provided outplacement services to the employees of its foods division at Bangalore when
they were unable to move to Mumbai in 2006. Over 60 firms and 25 placement agencies were
contacted by the company to arrange for multiple job interviews for a number of employees.
Social Reports or Sustainability Reports should be prepared to underline the organizations
commitment to social or sustainable practices. In India, the top management, in their
messages, speeches to shareholders and in annual reports has been resorting to social
reporting but it should be made more formal in nature. Tata Steel Limited, for example, has
been preparing Sustainability Reports under the stringent guidelines of Global Reporting
Initiatives, 2002 on economic, environment and social performance.
The service sector provides a service, not an actual product that could be held in your hand.
The service sector primarily consists of truck transportation, messenger services and
warehousing; information sector services; securities, commodities and other financial
investment services; rental and leasing services; professional, scientific and technical
services; administrative and support services; waste management and remediation; health
care and social assistance; and arts, entertainment and recreation services.
6 Explain the Indian economy with reference to the service sectors like Education and
Health Care.
There are clear indications that health care is going to be a major sector that stimulates
economic growth and contribute to employment.
Over 4 Crore new jobs are expected to be generated by 2020, as per a report titled 'India's
New Opportunities-2020' by the All India Management Association, Boston Consulting
Group and the Confederation of Indian Industries (CII). The Indian healthcare industry also
has advantages over other developing countries in becoming a global hub for medical
tourism. The medical treatment and educational services in India are a fraction of the cost in
developed countries.
While we may lag in molecule development and drug patents, an increasing disposable
income has led to a strong domestic market potential in India. This will result in significant
employment generation across various functions, such as sales, marketing, HR, IT and
operations, within the industry. Healthcare services are likely to be provided major
employment opportunities in the country.
The education and training sector in India is standing at $600 billion and also the higher
education system in India has witnessed remarkable growth in the past few years. India is
definitely ahead of other developed countries in the field of education and training.
The vocational education and training is fast emerging as an important area of focus, as
Germany and India enhance their strategic bilateral partnership. One of Indias biggest

challenges as well as advantages is its growing young population. India targets creation of
500 million skilled workers in 2022.
The need to train fresh graduates in new skills and ensure that they remain employable is
important since the US$ 118 billion Indian information technology (IT) industry added about
180,000 new employees in 2013-2014, 70 per cent of which were fresh hires, according to
Nasscom.
Indias IT firms are working with academic institutions and setting up in-house institutes to
groom the right talent as these companies move to social media, mobility, analytics and cloud
(SMAC) technologies. Tech Mahindras infrastructure management services academy set up
in 2014 has inked partnerships with five universities to hire students trained on a codeveloped curriculum and also various government initiatives are being adopted to boost the
growth of distance education market, besides focussing on new education techniques, such as
E-learning and M-learning.