Author: Dr. Ravindra Saini

ISBN: 978-81-8220-346-4

Edition: 2010

Price INR: 475.00

About the Book

The book entitled Business Environment is a comprehensive study and critical analysis of the roles of the various types of environment—natural and technological, economic, political, social, industrial, financial, legal and international—in the establishment and operation of the business in comparative perspective. Taking into account the complex and complicated nature of business, the author has presented an overall review of the business environment in the very first chapter of the book. Part I of the book deals with environmental analysis and forecasting.Role of the economic, political and social environment has been examined in part II, III and IV of this book respectively. Industrial, financial, legal and international environment have been covered in part V, VI, VII and VIII respectively.The book is the most original, comprehensive and critical investigation of business environment in the age of information technology. It is hoped that it would work as a very important source of information for the student of business, commerce and management.

Contents

PREFACE (V)
1. A GLIMPSE OF BUSINESS ENVIRONMENT 1
Types of Environment 2 • Internal Environment 3 • External Environment 6 Global Environment 11 Competitive Structure of Industries 13 • Threat of Entry 13 • Rivalry among Existing Competitors 14 • Threat of Substitutes 15 • Strategic Group 16 • Limitations of Porterian Models 18 • Competitor Analysis 18 • Competitor Response Profile 19 • Future Goals 19 • Benefits of Structural Analysis 20 Environmental Analysis and Strategic Management 20 • Formulation of Mission and Objectives 21 • SWOT Analysis 22 • Strategic Alternatives and Choice of Strategy 24 • Implementation 24 • Evaluation 25 Summary 26 Questions 27 Case Study 27

Part—I: Analysis and Forecasting

2. ENVIRONMENTAL ANALYSIS AND FORECASTING 31
Stages of Environment Analysis 31 • Scanning 31 • Monitoring 32 • Forecasting 32 • Assessment 32 Approaches to Environmental Analysis 32 Techniques for Environmental Analysis 33 • Verbal and Written Information 33 • Search and Scanning 34 • Spying 34 F Steps in Environment Forecasting 34 • Identification of Relevant Environmental Variables 34 • Collection of Information 35 • Selection of Forecasting Technique 35 • Monitoring 35 Types of Forecating 36 • Economic Forecast 37 • Social Forecasts 37 • Political Forecasts 38 • Technological Forecast 38 Techniques for Environmental Forecasting 39 • Econometric Techniques 39 • Trend Extrapolation 39 • Scenario Development 39 • Methods of Scenario Building 40 • Judgement Models 41 • Strategic Issues Analysis 41 Benefits/Importance of Environmental Analysis 41 Limitations of Environmental Forecasting 42 Summary 42 Questions 42 Case Study 43
3. NATURAL AND TECHNOLOGICAL ENVIRONMENTS 45
Natural Environment 46 Technological Environment 47 • Innovation Economic Development 47 • Technology S-Curve 50 Technological Leadership and Followership 51 Technology and Competitive Advantage 52 • Sources of Technological Dynamics 53 • Government Policy in Technological Development 55 Time Lags in Introduction of Technology 56 Appropriate Technology and Technology Adaptation 57 • IT Revolution and Business Environment 57 Impact of Technology on Globalisation 58 • IT and Marketing 59 • Transfer of Technology 61 Summary 65 Questions 66 Case Study 66
4. DEMOGRAPHIC ENVIRONMENT 68
Population Size 69 Migration and Ethnic Aspects 73 The Surging Indian Market 74 Summary 74 Questions 74 Caste Study 75

Part—II: Economic Environment

5. ECONOMIC ENVIRONMENT 79
Nature and Development of the Economy 79 Structure of the Economy 82 Economic Policies 83 • Industrial Policy 84 • Trade Policy 84 • Foreign Exchange Policy 85 • Fiscal Policy 86 • Monetary Policy 87 Economic Conditions 87 Summary 89 Recent Economic and Financial Environment 90 Questions 91 Case Study 92
6. PLANNING IN INDIA 93
Planning Commission 93 • National Development Council 93 • States Plans 94 • Formulation of Plan 94 • Review of the Planes 95 • Objectives 96 • New Environment, New Role 96 Tenth Five-year Plan (2002–07) 97 Performance 100 Summary 102 Questions 104 Case Study 104
7. PLANNING AND DEVELOPMENT OF AGRICULTURE 106
Phases of Development 106 Expansion and Development of Inputs and Services 107 Agricultural Marketing 109 • Directorate of Marketing and Inspection 109 • Regulated Markets 110 • Co-operative Marketing 110 Agricultural Price Policy 111 • Populist Fodder 111 Commudity Exchange 112 • Spot and Futures Trading 113 • Regulation of the Commodity Exchange 114 • The Forward Markets Commission 116 Summary 117 Questions 119 Case Study 119
8. PRIVATISATION AND DISINVESTMENT 121
• Expansion of Public 121 • The Privatisation Reaction 122 • Ways of Privatisation 122 • Obstacles 123 • Conditions for Success of Privatisation 123 • Benefits of Privatisation 124 • Arguments Against Privatisation 125 • Sins and Pitfalls of Privatisation 125 Privatisation/Disinvestment in India 126 • Disinvestment Policy 127 • Rangarajan Committee 128 • Progress 130 Summary 131 Questions 132 Case Study 132
9. EXIT POLICY 137
Need for Exit Policy 138 Extent of Over manning 139 Voluntary Retirement Scheme and Golden Handshake 140 National Renewal Fund 141 Summary 141 Questions 142 Case Study 142
10. QUALITY CIRCLES 145
Origin and Development 145 Meaning and Nature 146 Objectives/Philosophy 146 Structure of Quality Circles 146 The Process of Quality Circles 147
• Conditions for Success of QCs 148 • Reasons for Failure of Q.Cs 148 Research Findings of Quality Circles 148 • Impact of Quality Circles 148 • Determinants of Success 150 • Reasons for Failure of Quality Circles 150 Summary 150 Questions 152 Case Study 152

Part—III: Political Environment

11. POLITICAL ENVIRONMENT 155
Political Environment and Economic Reform • Politicians Lobby over Fixed Versus Mobile Services Function of the State 158 • The State and the Government 158 • Classification of Function of the State 160 • Reinvigorating the State’s Capability 161 The State, Institutions and Economic Outcome 161 • Economic Role of the State in India 161 • Impact of the State 163 • Economic Roles of the Government 163 • Economic Systems 165 • Economic Conditions 166 • Indian Economic Reforms: a Hostage to Coalition Politics 167 Government and Legal Environment 168 • Constitutional Environment 169 • Hurdles of Controls 177 Summary 178 Questions 180 Case Study 180
12. CORPORATE GOVERNANCE 182
Aim and Purpose 182 Public and Private Perspectives 183 • Reasons for the Growing Demand for Corporate Governance 184 Importance of Corporate Governance 185 • Prerequisites 187 • Regulatory and Voluntary Actions 187 Report and Recommendations of the Birla Committee 188 • The Birla Committee Report 188 • The Recommendations of the Birla Committee 189 • National Corporate Governance Award 193 Summary 194 Questions 194 Case Study 195 13. TRADE UNIONS 197
• Meaning and Functions 197 Social Responsibilities of Trade Unions 198 Trade Union Movement in India 199 • Factors which Contributed to Growth 199 • Some Important Developments 199 • Impact of Political and Social Forces 200 • Limitations and Problems of Trade Unionism in India 202 Regulation Of Trade Unions–The Trade Unions Act 203 • Registration of Unions 204 • Rights and Responsibilities of Registered Unions 204 Summary 206 Questions 207 Case Study 207

Part—IV: Social Environment

14. SOCIETAL ENVIRONMENT 211
Business and Society 211 • Changing Concept and Objectives of Business 211 • Objectives and Importance of Business 213 • Reconciliation of Social and Economic Objectives 214 Professionalisation 217 • Professionalisation of Management of Family Owned Companies 218 Business And Culture 221 • Meaning of Culture 221 • Elements of Culture 221 • Organisation of Culture 222 Cultural Environment and Technology 223 • Cultural Adaptation 224 • Cultural Shock 224 • Cultural Transmission 225 • Cultural Conformity 226 • Cultural Lag 226 • Cultural Traits 226 Religion 229 Language 232 Culture and Orgasational Behavior 233 Other Social/Cultural Factors 234 • Consumer Preferences, Habits and Beliefs 234 • Etiquettes 236 • Some Social Trends 237 Technological Development and Social Change 238 Summary 239 Questions 240 Case Study 240
15. SOCIAL RESPONSIBILITY OF BUSINESS 242
• Social Expectations 242 Classical and Contemporary Views 243 • Business Leaders on Corporate Social Responsibility 244 Social Orientations of Business 244 • Social Responsibility Models 244 • Extent of Social Orientation and Involvement 246 Responsibilities to Different Sections 248 • Responsibility to the Community 250 The Indian Situation 251 Arguments for and Against Social Involvement 253 • Arguments for Social Involvement Business 253 • Arguments Against Social Involvement of Business 253 Social Audit 254 • Meaning 254 • Objectives and Benefits of Social Audit 254 • Methods of Social Audit 255 • Obstacles to Social Audit 255 • Social Audit in India 256 Cement Corporation of India Ltd. 257 • Social Accounts 257 Summary 258 Questions 258 Case Study 259
16. CONSUMER RIGHTS AND CONSUMERISM 262
Consumer Rights 263 • Responsibilities of Consumers 263 • Exploitation of Consumers 263 Consumer Products 264 Consumerism 265 • Consumer Protection 266 • Utility of Consumerism 268 • UN Guidelines for Consumer Protection 269 Consumer Protection and Consumerism in India 272 • Plight of the Indian Consumer 272 • Government Measures 273 • Consumerism 274 • Opportunity for Industry 275 Consumer Protection Act, 1986 276 • Consumer Protection Councils 276 • Consumer Disputes Redressal Agencies 277 • Remedial Action 278 • Penalties 278 • Conclusion 279 Summary 279 Questions 279 Case Study 280
17. LABOUR WELFARE AND SOCIAL SECURITY 282
• Welfare and Amenities within the Establishment 283 • Welfare Outside the Establishment 284 Social Security 286 • Legislative Enactments 287 • Maternity Benefits 288 • Employees’ State Insurance Scheme 288 • Provident Fund 289 • Lay-off and Retrenchment Compensation 290 • Gratuity Scheme 290 • Employees’ Pension Scheme 291 Summary 291 Questions 292 Case Study 292
18. WORKER’S PARTICIPATION IN MANAGEMENT 295
• Objectives 295 • Problems and Limitations 296 • Forms of Participation 296 Workers’ Participation Schemes in India 298 • Works Committees/Joint Committees 298 • Reasons for Failure 300 • Suggestions 300 • Joint Management Councils 300 • Shop/Departmental Councils and Joint Councils 301 Summary 302 Questions 304 Case Study 304

Part—V: Industrial Environment 19. INDUSTRIAL POLICY 309
Meaning and Objectives of Industrial Policies 310 • Meaning 310 • Objectives 310 Industrial Policy up to 1991 311 • Reservation of Industries 311 • Dominance of Public Sector 311 • Entry and Growth Restrictions 311 • Restrictions on Foreign Capital and Technology 311 The New Industrial Policy 312 • Objectives 312 • Redefinition of the Role of Public Sector 312 • Expansion of the Scope of Private Sector and Dismantling of Entry and Growth Restrictions 312 • Liberalisation of Foreign Investment 313 • Related Measures 313 An Evaluation of the New Policy 313 • Outward Bound 314 Summary 315 Questions 315 Case Study 316
20. INDUSTRIAL RELATIONS 323
Industrial Disputes 324 • Causes of Industrial Disputes 324 Industrial Disputes in India 326 Prevention of Industrial Disputes 326 • Employer-Employee Relations 327 • Tripartite Machinery 327 • Code of Discipline and Industrial Truce Resolution 327 • Works Committee 328 Settlement of Disputes 328 • Voluntary Arbitration 328 Settlement of Disputes Under the Industrial Disputes Act 329 • Grievance Settlement Authority 329 • Conciliation Officers 329 • Board of Conciliation 330 • Courts of Inquiry 330 • Labour Courts 330 • Tribunals 331 • National Tribunals 331 • Reference and Awards 331 • Prohibition of Strikes and Lock-outs 332 • Other Important Provisions of the Act 332 Summary 332 Questions 334 Case Study 334
21. INDUSTRIAL DEVELOPMENT STRATEGY 335
The Strategy and Pattern for Industrial Development 336 • Capital Goods vs. Consumer Goods 336 • Roles of Public and Private Sectors 337 • Village and Small Industries 338 • Comparative Cost Dynamics 339 • Import Substitution and Export Contribution 339 • Capacity Utilisation 340 • Regional Disparities 340 An Evaluation 340 Areas Needing Attention 342 Summary 343 Questions 343 Case Study 344
22. INDUSTRIAL FINANCE 347
• Short-term Finance 347 • Medium-term Finance 347 • Long-term Finance 347 Corporate Securities 348 • Ownership Securities 348 Creditorship Securities 349 • Debentures 350 • Classes of Debentures 350 New Issue–Marketing of Securities 350 Underwriting of Securities 351 • Methods of Underwriting 352 • Importance and Advantages of Underwriting 352 • Underwriting in India 353 Interval Financing 354 • Ploughing Back of Profits 354 • Benefits to the Company 354 • Benefits to the Shareholders 354 • Benefits to Society 355 • Dangers of Ploughing Back Profits 355 • Determinants of Retained Earnings 356 Public Deposits 356 • Reasons for Popularity 356 • Limitations 356 • Regulation of Public Deposits 357 Summary 358 Questions 359 Case Studies 360
23. INDUSTRIAL FINANCIAL INSTITUTIONS 362
• Types of Institutions 362 • Types of Assistance 363 Industrial Development Bank of India 363 • Subsidiary Organisations 364 • Products 365 Industrial Finance Corporation of India 366 • Principal Activities 366 • Lending Policies 367 • Problems 367 • Recommendations for Improvement 369 ICICI Bank 370 • Diversifications 371 Industrial Investment Bank of India 372 Discount And Finance House of India 373 State Financial Corporations 373 • Types of Assistance 373 State Industrial Development / Investment Corporations 373 • Functions 374 Investment Institutions 374 • Unit Trust of India 374 • Life Insurance Corporation of India 375 • General Insurance Corporation of India 375 Institutions For Small Industry 375 • SIDBI 375 • Business Domain 376 • Objectives 376 • Operational Emphasis 376 • Financial Assistance 377 • Promotional Orientation 377 • NSIC 380 • SSIDCs 380 • KVIC 381 Commercial Banks 381 Summary 382 Questions 383 Case Study 383
24. INDUSTRIAL SICKNESS 388
Symptoms of Industrial Sickness 389 • Weak Units 389 • Magnitude 389 Causes of Sickness 389 Preventive and Curative Measures 392 Sick Industrial Companies Act 393 Summary 394 Questions 395 Case Study 395
25. INDUSTRIAL LICENSING 397
Objectives of Industrial Licensing 398 Industrial Licensing Policy 398 • The Industries (Development and Regulation) Act (1951) 399 The New Industrial Policy 401 • Locational Policy 402 • Conclusion 402 Summary 402 Questions 403 Case Study 403
26. VILLAGE AND SMALL INDUSTRIES 405
Introductory Measures 405 • Definition 405 • SMEs in Other Countries 407 • Important Role in the Indian Economy 408 Promotional Measures 411 • Integrated Infrastructual 412 • Cluster Development 413 • Industrial Growth Centres Schemes 414 Institutional Support Structure 414 • Women Entrepreneurs 415 • Marketing 416 State Industrial Policies 417 Khadi and Village Industries 418 • KVIC 418 Ancillary Industries 419 Drawback and Problems 420 • Reservations’ Against Reservation 421 Summary 424 Questions 425 Case Study 425
27. PUBLIC, PRIVATE, JOINT AND CO-OPERATIVE SECTORS 429
Public Sector 429 • Imperatives of Public Sector 429 • Objectives 430 • Growth and Performance of Public Enterprises 431 • The New Public Sector Policy 433 • Public Sector Rathnas 435 Organisation of Public Enterprisesor 435 • Ministry 435 • Departmental Undertakings 435 • Government Company 436 • Public Corporation 438 • Holding Company 439 Pricing Policy in Public Enterprises 440 • Marginal Cost Pricing 441 • Average Cost Pricing 442 • No-Profit, No-Loss Pricing 442 • Profit-Making Pricing 443 • Indian Public Sector and Profit Objective 443 • Influences and Guidelines on Pricing Policy 445 • Pricing Practices 447 Government and Parliamentary Controls Over Public Enterprises 447 • Parliamentary Control and Public Accountability 449 Department of Public Enterprises 451 • Role and Tasks 452 Nationalisation 452 Private Sector 454 Joint Sector 455 • Formation of Joint Sector Enterprises 455 • Rationale of Joint Sector 456 Co-opertative Sector 458 • Processing and Industrial Co-operative 459 • Storage, Distribution and Marketing Co-operatives 460 • Functional Co-operative 460 • Multi-Purpose Co-operative 460 • Problems 461 Summary 461 Questions 461 Case Study 462

Part—VI: Financial Environment

28. PRICE AND DISTRIBUTION CONTROLS 465
• Objectives of Price and Distribution Controls 465 Price Policy in India 466 Price Controls 468 • Indirect Controls 468 • Direct Controls 469 • Administered Prices 469 • Dual Pricing 470 • Subsidisation 471 • The Essential Commodities Act, 1955 471 • Other Laws to Control Production, Distribution and Prices 472 The Public Distribution System 472 • Evolution of the PDS in India 472 • Performance Appraisal of PDS 474 Summary 475 Questions 477 Case Study 477
29. MONETARY AND FISCAL POLICIES 480
Monetary Policy 481 • Measures of Money Stock 481 • Monetary Policy and Money Supply 481 • Instruments of Monetary Policy 482 Fiscal Policy 486 • The Union Budget 487 • The Structure of the Budget 487 • State Budget 488 Finance of the Union And States 488 • Sources of Revenue for the Union 488 • Sources of Revenue for the State 488 • Concurrent List 489 Importance of the Budget 490 Summary 491 Questions 493 Case Study 493
30. FINANCIAL MARKET STRUCTURE 495
• Credit Market 496 • Foreign Exchange Market 498 • Debt Market 500 • Derivatives Market 503 • Bank-assurance 503 Summary 504 Questions 505 Case Study 506
31. MONEY AND CAPITAL MARKETS 508
Money Market 508 • Constituents of Money Market 508 • Functions of Money Market 509 The Indian Money Market 509 • Money Market Instruments and Constituents 511 Capital Market 515 • Nature and Constituents 515 • Importance of Capital Market 515 • Nature of the Indian Capital Market 516 • Development of the Market 516 Questions 518 Case Study 519
32. STOCK EXCHANGE AND ITS REGULATION 521
Meaning, Importance and Functions 521 • Dealings on Stock Exchange 522 • Speculation on the Stock Exchange 522 • Organisation of Stock Exchange in India 523 OTCEI 525 • Distinguishing Features 525 • Benefits to the Investors 526 • Benefits to the Companies 526 • Listing on the OTCEI 526 National Stock Exchange of India 527 • Objectives 527 • Features of NSE 528 • Types of Market 528 Stock Holding Corporation of India 529 Regulation of Stock Exchange 529 Securities Contracts of Stock Exchange 529 Objectives of the Act 529 • Main Provisions 530 • Recognition to Stock Exchanges 530 • Power of Recognised Stock Exchange to Make Rules Restricting Voting Rights, etc. 531 • Bye-laws of Stock Exchanges 531 • Power to Obtain Information and to Conduct Inquiry 531 • Power to Supersede Governing Body 532 • Power to Suspend Business of Stock Exchange 532 • Listing of Securities 532 SEBI 533 • Management 533 • Objectives 533 • Powers and Functions 533 Capital Market Reforms and Developments 534 • Free Pricing 534 • Introduction of Book Building 535 • Electronic Trading 535 • Instruments and Market Participants 536 • Improvements in Trading, Clearing and Settlement 536 • Increased Dematerialisation 536 • Near Elimination of Counter-party Risk 536 • Circuit Breakers/Price Bands 537 • Structure of Informational Flows 537 • Emphasis on Fair Trading Practices 538 Summary 538 Questions 540 Case Study 541

Part—VII: Legal Environment
33. INDIAN COMPANY LAW 545 Brief History of Company Law in India 545 The Companies Act, 1956 546 Classification of Companies 546 Unlimited Companies 547 Guarantee Companies 548 Limited Companies 548 Government Company 549 Holding and Subsidiary Companies 549 Foreign Company 550 Formation of Companies 550 Name of the Company 551 Memorandum of Association 551 Articles of Association 552 General Provisions with respect to Memorandum and Articles and Registration 553 Board of Directors 554 Disqualifications 555 Vacation of Office 556 Meetings of the Board 556 Powers of Directors 556 Restriction on Powers 557 Audit Committee 558 Board of Company Law Administration 559 • Structure of the Board 559 • Powers and Functions 559 Investigation by Central Government 560 • Investigation of Affairs of Company 560 • Investigation of Ownership of Company 561 Winding up of Companies 562 • Winding up by the Court 563 • Voluntary Winding Up 564 • Winding Up Subject to Supervision of Court 564 Buy-back of Shares 565 • Methods of Buy-back 566 • Risk Factors in Buy-backs 567 • Indian Scenario 567 • SEDI Regulations 568 Companies (Amendment) Act, 2000 569 • Provisions Added 569 • Provisions Amended 572 • Conclusion 573 Companies (Amendment) Act, 2002 574 Companies (Second Amendment) Act, 2002 574 Summary 574 Questions 576 Case Study 576
34. PATENTS AND TRADE MARKS 579
Patterns 580 • Indian Patent Law and the UR Agreement 580 Trade Marks 582 • The Trade Marks Act, 1999 583 • Objectives 583 • Registrar and Trade Marks Registry 583 • Registration of Trade Marks 584 • Grounds for Refusal of Registration 585 • Effect of Registration 585 • Assignment and Transmission 586 • Appellate Board 586 • Offences and Penalties 586 Summary 586 Annexure 588 Questions 589 Case Study 589
35. COMPETITION POLICY AND LAW 595
Nature and Scope 595 • Selected Restrictive Business Practices Addressed by Competitive Law 597 Competition Act, 2002 601 • Competition Commission 601 • Anti-Competitive Agreements 602 • Abuse of Dominant Position 603 • Regulation of Anti-Competitive Agreements and Abuse of Dominance 604 • Regulation of Combinations 606 • Power to Exempt 607 Summary 607 Annexture 609 Questions 610
36. LABOUR LEGISLATION 611
• Principles of Labour Legislation 612 • Postulates and Evolution of Labour Policy in India 612 • Classification of Labour Legislation 613 • Laws Relating to Weaker Sections 614 • Laws Relating to Specific Industries 614 • Laws Relating to Specific Matters 616 • Laws Relating to Trade Unions and Industrial Relations 616 • Labour Regulations and Rigidities in the Labour Market 617 Summary 618 Questions 618
37. DEVELOPMENT AND REGULATION OF FOREIGN TRADE 619
Regulation of Foreign Trade 619 The Foreign Trade (Development and Regulation) Act, 1992 620 • Objective 620 • Main Provisions 620 Export-import Policy 621 • Exim Policy, 2002–2007 621 • An Evaluation of the Policy 623 • Export Promotion 625 • Organisational Set Up 625 • Public Sector Undertakings 627 • Attached and Subordinate Offices 628 Incentives 628 • Duty Exemption/Drawback 628 • Awards 629 • Other Incentives 629 Production Assistance/Facilities 630 Marketing Assistance 630 • Market Development Assistance 630 • Market Access Initiative 630 • Trade Fairs and Exhibitions 630 • Export Risk Insurance 631 • Finance 631 • Quality Control and Pre-shipment Inspection 631 • Institutional Assistance 631 • India Brand 631 • EPZs, EOUs, TPs & SEZs 631 • Export Processing Zones/EOUs 631 • SEZs 633 Export Houses and Trading Houses 634 An Evaluation 635 Summary 635 Questions 637 Case Study 638
38. FOREIGN EXCHANGE MANAGEMENT ACT 639
• Objectives 639 • Dealing in Foreign Exchange etc. 639 • Holding of Foreign Exchange etc. 640 • Current ‘Account Transactions 640 • Capital Account Transactions 640 • Export of Goods and Services 641 • Realisation and Repatriation of Foreign Exchange 641 • Contravention and Penalties 641 • Administration of the Act 642 • FERA and FEMA: A Comparison 642 Summary 642 Annexure 644 Questions 646 Case Study 646

Part—VIII: Globalisation/International Environment

39. GLOBALISATION 651
Globalisation of World Economy 651 Globalisation of Business: Meaning and Dimensions 652 Features of Current Globaliasation 653 • New Markets 654 • New Actors 654 • New Rules and Norms 654 • New (Faster and Cheaper) Tools of Communication 655 Stages of Globaliasation 655 Essential Conditions for Globalisation 656 Foreign Market Entry Strategies 656 • Exporting 657 • Licensing and Franchising 658 • Contract Manufacturing 659 • Management Contracting 660 • Turnkey Contracts 660 • Assembly Operations 661 • Joint Ventures 661 • Third Country Location 663 • Mergers And Acquisitions 663 • Strategic Alliance 663 • Counter-trade 664 Pros and Cons of Globalisation 667 Policy Options 670 Globaliasation of Indian Business 671 • Obstacles to Globalisation 671 • Factors Favouring Globalisation 672 The Opportunities of Globalisation 673 Summary 675 Questions 676 Case Study 676
40. MULTINATIONAL CORPORATIONS 679
Conceptual Dimensions 680 Organisational Models 681 Dominance of MNCs and Global Economy 682 MNCs and International Trade 684 • Merits of MNCs 684 • Demerits of MNCs 685 • Perspective 686 • Code of Conduct 686 Multinationals in India 688 Summary 689 Questions 690 Case Study 690
41. GATT/WTO AND GLOBAL LIBERALISATION 692
The General Agreement on Tariffs and Trade (GATT) 692 • Objectives 693 • Evaluation of GATT 694 The Uruguay Round 695 • GATT and WTO 696 • Functions 696 Salient Feature of UR Agreement 697 • Liberalisation of Trade in Manufactures 697 • Liberalisation of Agricultural Trade 698 • Non-agricultural Export Subsidies 700 • Anti-dumping Measures 700 • Safeguard Actions 700 Evaluation of the Uruguay Round 700 UR Agreements and Developing Countries 701 • Unequal Participation 703 • Implementation Issues 704 UR Agreement and India 704 Summary 705 Doha Declaration 706 Questions 707 Case Study 708
42. FOREIGN INVESTMENTS 710
Types of Foreign Investment 710 Significance of Foreign Investment 711 • Foreign Private Investment 713 Limitations and Dangers of Foreign Capital 713 Factors Affecting International Investment 714 Growth of Foreign Investment 716 Dispersion of FDI 717 • Portfolio Investments 718 • Cross-Border M&As 718 Foreign Investment in India 720 • Government Policy 720 • The New Policy 721 • FII Investments 723 • Euro /ADR Issues 723 • An Evaluation of the New Policy 724 Foreign Investment by Indian Companies 725 Summary 726 Questions 727 Case Study 727
BIBLIOGRAPHY 729
Index 733

About the Author

Dr. Ravindra Saini is presently Assistant Professor, Deptt. of Management Studies, College of Engineering Roorkee, Uttrakhand. He is postgraduate in commerce and a Doctorate in the field of finance; his research interests include finance (banking problems and performance appraisal) and economic development. He has participated in a major research project sponsored by MHRD, Govt. of India at I.I.T. Roorkee. He served many institutions including Faculty of Management Studies, Gurukul Kangri University, Haridwar, Uttrakhand, as Visiting Faculty. Many articles in the areas of finance and economic development are to his credit.