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Techniques for Environmental Forecasting

Casual models to predict major


Econometric Techniques economic indicators. Prediction of
relationship between two or more
variables e.g. demand & consumer
income, regression equations

Time Series Model – Linear


Trend Extrapolation relationship, Extrapolation of future
based on past trend

Alternative scenario – If actual


forecasting is not easy-Optimistic,
Scenario Development Pessimistic, Most likely
Tax planning Commission of India
– Alternative scenarios regarding
growth rates of different sectors,
poverty ratios, etc.
Techniques for Environmental Forecasting
Opinion of people who have intimate
Judgement Models knowledge of relevant factors e.g.
sale force’s opinion of the sales
potential, customer behaviour,
competitive challenges, etc.

Creative method of generating ideas


Brain Storming by group of knowledgeable people –
1. Generation 2. Discussion 3.
Evaluation. Popular technique of
technological forecasting.

Common technique of
Delphi Method technological forecasting. Opinions
of panel of experts are gathered
through questionnaire/interview
and documented then feedback
Advantages of Environmental Forecasting

Economical
Limitation
 Social
 Political  Sample size

Demographical  Selection of techniques

Technological  Expertise in Analysis

Others – Efficient & User requirements


Effective Control
Economic Environment
Per capita income, Developing /
Nature of The Economy : Developed economies, Demand
and Supply, etc.

Contribution of different sectors


Structure of Economy : like primary (agriculture),
secondary (industrial), large,
medium and small sectors to the
economy and their linkages with
the world economy.

1. Industrial Policy :- Defines


Economic Policies : scope and Role of different sectors
like private, public, joint & co-
operative, large, medium, small
and tiny. Also influence the
location of industrial undertakings,
choice of technology, scale of
operation, product mix and so on.
E.g. Liberalisation – O & T
Economic Environment
2. Trade Policy :- e.g. a restrictive
Economic Policies : import policy, policy of protecting
the home industries from
liberalisation, etc.
3. Foreign Investment &
Technology policy
4. Fiscal Policy :- Govt. strategy
for public expenditure and
revenue. Tax structure.

Business Cycle – Boom &


Economic Condition:
Recession
Political Environment
Govt. Functions :
- Basic Function : development, macro-economic stability,
control of infectious diseases, safe
water, roads, and protection of natural
resources.

- Intermediate Function : These include pollution control,


regulation of monopolies and the
provision of social insurance – pensions,
unemployment benefits

- Activist Function : Measures to stabilize and promote


markets and to redistribute
assets/income.
Political Environment Natural Environment
Role of Govt. :
-Regulatory Role – The Natural Factors :
reservation of industries to small
scale, public and co-operative -Geographical Condition –
sectors, licensing system, etc. Flood, availability of RM,
earthquakes
-Entrepreneurial Role –
establishing and operating business -Weather & Climatic Condition
enterprises and bearing the risks. – Cooler, heater, cotton textiles
industries,etc
-Planning Role – Planning of
resources or development -Topographical Factors – Jeep
-Promotional Role – To build up & Car
and strengthen the necessary -Ecological Factors –
development infrastructure – preservation of environmental
Power, Transport, Finance,
purity, Pollution
Marketing, Training and guidance,
Incentives - Fiscal Policies, etc.
Technological Demographic
Environment Environment
- Innovative Drive of the Demographic Factors :
Company
-Age structure
-Customer
needs/Expectations -Gender

-Demand Conditions -Income Distribution

-Suppliers Offerings -Family Size

-Competitive Dynamics -Occupation

-Substitutes -Education

-Social Forces - Religion

-Technical Facilities
-Govt. Policy
Societal Environment
Business is an integral part of the social system and it is influenced
by other elements of society which, in turn, is affected by the
business.

Old Concept – Business is only for Profit.


Current Concept – Business is not only concerned with profit. It is a
sub-system of the total system.

Objective of The Business :


2. Economic Objectives :
a) Survival – A business cannot achieve its objective unless
it survives.
b) Return on Investment – The level of profit a private
enterprise aims at is likely to be influenced by its social outlook
and a number of environmental factors like govt. policy, attitude
of society, competitive and other conditions of the industry, etc.
Objective of The Business :
2. Economic Objectives :
c) Growth – Horizontal, Vertical, Diversification into new
area. Growth is for the benefit of all i.e. business and society.
d) Innovation – Better and more economic ones.
e) Increase Market Share

2. Social Objective :
a) To Protect consumer interest
b) To Protect interest of workers
c) To protect interest of the society.
There must be relationship between these two type of objectives.
Objectives are affected by following factors : 1. Forces in the
environment, 2. Internal Forces, and 3) The value system.
Business and Culture
Culture of civilisation is that complex whole which includes
knowledge, belief, art, morals, law, custom, and other capabilities
and habits acquired by man as a member of society.
In simple word “ It is the total life way of a people.”
-It is the characteristically human product of social interaction.
-It is cumulative, for it is handed down from generation to generation
in a given society.
-It is learned by each person in course of his development in a
particular society.
-It is therefore basic determinant of personality.
Social Responsibility of Business
What the business does over and above the statutory requirement
for the benefit of the society.

Responsibility – Moral obligations to the Society.

Social Responsibility –
-The manner in which a business carries out its own business activity.
-The welfare activity that it takes upon itself as an additional function.

Social Responsibility –
2. Economic Responsibility 2. Legal Responsibility
3. Ethical Responsibility 4. Discretionary
The above four categories are not mutually exclusive.
Claimants of Social Responsibility
of Business

Shareholders Employees

Local
Government
Community Social
Responsibility
of Business

Consumers Society
Social Responsibility of Business

Responsibility to shareholders : protection of Interest


-Primary business of a business is to stay in Business
-To safe gaurd the capital of the shareholders
-To pay a reasonable dividend
-To improve business – New technology and ways
-To create and maintain an image of the company
-Support from shareholders – proper guidance
Social Responsibility of Business

Responsibility to Employees : protection of Interest


-Fair wages
-Best Possible Working Condition
-Fair Work standards & Norms
-Labour Welfare Facilities
-Proper Training & Education
-Proper system for growth / promotion
- Proper recognition, appreciation and encouragement of
special skills and capabilities
- Efficient grievance Handling System
-Opportunity for participating in managerial decisions
Social Responsibility of Business
Responsibility to Consumers : protection of Interest
-To improve efficiency of the functioning of the business –
increase productivity and reduction in price, quality
improvement.
-Research & development – Quality, New product, Cost, etc.
-To supply goods at reasonable prices
-Proper distribution system –No black marketing, middlemen,
etc
-To ensure that the product supplied has no adverse effect on
the consumer.
-Proper information about the adverse effects of the product
- To avoid misleading the customers by improper
advertisement or otherwise.
- Efficient grievance Handling System
Social Responsibility of Business

Responsibility to Community : protection of Interest


-Appropriate steps to prevent environmental pollution
-Rehabilitation of the population displaced by the operation of
business
-Assisting in the overall development of the locality.
-Taking steps to conserve scarce resources and developing
alternatives.
-Making possible contribution to furthering social causes like
the promotion of education and population control.
Corporate Governance
Reason for the birth of CG – In response to Corporate failures and
dissatisfaction with the way many corporates function.
Meaning : Narrow Sense : It is a formal system of accountability of
senior management to the shareholders.
Wider Sense : CG includes the structure, process, cultures and systems
that helps in the successful operation of the organisation.

Corporate Management – is concerned with the efficiency of the


resource use, value addition and wealth creation within the broad
parameters of the corporate philosophy established by CG.
Corporate Governance : is concerned with the values, vision and
visibility. It is about the value orientation of the organisation, ethical
norms for its performance, the direction of development and social
accomplishment of the organisation and the visibility of its performance
and practices.
Characteristics of Corporate Governance –
- balance between economic & social goals
- balance between individual & communal goals.
- to direct, monitor and lead corporations.
- transparency – openness, integrity and accountability
- efficient use of resources
- to strengthen the economy and discourage fraud and
mismanagement
- greater focus on investor protection and public interest.
- According to the Kumar Mangalam Birla Committee, the
fundamental objective of CG is the “enhancement of long-
term shareholder value while, at the same time, protecting
the interests of other stakeholders.
- for the effective organisation of the corporate.
Why CG – Due to mismanagement in corporate sectors-
misutilisation of funds, poor investor’s grievances system,
delay in issue of share certificates, delay in transfer of
shares, lack of information to investors, etc.
SEBI – Kumar Mangalam Birla Comittee
Prerequisites for good CG :
4. A proper system consisting of clearly defined and
adequate structure of roles, authority and responsibility
5. Vision, principles and norms which indicate development
path, guidelines and norms for performance.
6. A proper system for guiding, monitoring, reporting and
control.
7. Govt. interventions for Fairness, Transparency,
Accountability and Responsibility.