12/06/2019 Purva Infotech: MBA-101 Behavior Organization JNU jaipur

Q.2 What is International Trade? Explain various Trade Reforms related to foreign trade MBAR-102(Organization
announced in India in recent times. Behaviour) JNU Jaipur
International trade is the exchange of goods and services between countries. This type of trade gives rise MBA-101 Behavior Organization
to a world economy, in which prices, or supply and demand, affect and are affected by global events. JNU jaipur
Political change in Asia, for example, could result in an increase in the cost of labor, thereby increasing
► July (4)
the manufacturing costs for an American sneaker company based in Malaysia, which would then result in
► June (5)
an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the
cost of labor, on the other hand, would result in you having to pay less for your new shoes. ► March (1)
Trading globally gives consumers and countries the opportunity to be exposed to good sand services not ► January (3)
available in their own countries. Almost every kind of product can be found on the international market:
food, clothes, spare parts, oil, jewelry, wine, stocks , currencies and water. Services are also traded:
tourism, banking, consulting and transportation. A product that is sold to the global market is an export,
and a product that is bought from the global market is an import. Imports and exports are accounted for in
acountry's current account in the balance of payments
The new foreign trade policy 2015-2020 is kept ready to make necessary shape after forming new
Government, on 1st of April, 2015. However, the validity of Foreign Trade Policy 2015-2020 will be with
effect from the first notification at the time of declaration of FTP 2015-20. The FTP 2015-20 comes in to
force with effect from 01st April 2015.Changes in schemes and incentives are expected in new Foreign
Trade Policy 2015-20.However, the status quo might be maintained under some of the schemes. The
priorities of policies taken by new government also are likely to be incorporated in new Foreign Trade
Policy 2015-2020 (FTP 2015-20).The new Foreign Trade Policy 2015-2020 (FTP 2015-20) is made
product wise and location wise and tried to maximize the foreign trade from the country. Although some
exporters could not make benefit out of Foreign Trade Policy of 2009 -14, those exporter scan contact
local office of Director General of Foreign Trade DGFT to get assistance. Pre policy suggestions to
Foreign Trade Policy 2015-2020 (FTP 2015-20)have been sent from different government departments
concerned, Export Promotion Councils, Commodity Boards, Manufacturer’s associations, Traders forum,
and other export promotion agencies of government and non government to the concerned authorities to
shape new Foreign Trade Policy 2015-2020. Customs and Banking related matters also have been updated
after discussing all concerned to mold Foreign Trade Policy 2015-2020 (FTP 2015-20) in such a way to
safeguard exporters of the county by resolving their previous issues under Foreign Trade Policy

Internal Assignment No. 2

Q. 1. Answer all the questions:

(i) Name two elements of external environment affecting business.
ANSWER- An organization must have the ability to examine and make changes based on internal and
external environmental factors that affect its performance. The use of tools to analyze these environmental
factors is the key to a successful organization.
External environmental factors are events that take place outside of the organization and are harder to
predict and control. External environmental factors can be more dangerous for an organization given the fact
they are unpredictable, hard to prepare for, and often bewildering. Some examples of external environmental
factors are:
1. Changes to the economy 2. Threats from competition

3. Political factors 4. Government regulations

4. The industry itself

(ii) What do you understand by globalization?

ANSWER- Globalization refers to the changes in the world where we are moving away from self-
contained countries and toward a more integrated world. Globalization of business is the change in a
business from a company associated with a single country to one that operates in multiple countries.
Market globalization is the decline in barriers to selling in countries other than the home country. This
change will make it easier for your company to begin selling products internationally, since lower tariffs
keep consumer prices lower and fewer restrictions when crossing borders makes it easier for a company to
enter a foreign market. It also means that companies must consider other cultures when developing their
business strategies and potentially adjust the product and marketing messages if they aren't appropriate in
the target country. This may not be an issue in the camera industry, but a hamburger company entering India
would definitely need to revisit their product and strategies to be successful!

(iii) What is monetary policy?

ANSWER- Monetary policy is how central banks manage liquidity to create economic growth. Liquidity is
how much there is in the money supply. That includes credit, cash, checks and money market mutual
funds. The most important of these is credit. It includes loans, bonds and mortgages.
In India, monetary policy of the Reserve Bank of India is aimed at managing the quantity of money in order
to meet the requirements of different sectors of the economy and to increase the pace of economic growth.
For instance, liquidity is important for an economy to spur growth. To maintain liquidity, the RBI is
dependent on the monetary policy. By purchasing bonds through open market operations, the RBI
introduces money in the system and reduces the interest rate.

(iv) What is Disinvestment?

ANSWER- In business, disinvestment means to sell off certain assets such as a manufacturing plant, a
division or subsidiary, or product line. Disinvestment is sometimes described as the opposite of capital
expenditures. Some people use the term divestiture, or to divest when discussing disinvestment.

For example is a consumer products company selling off a profitable division that no longer meets its long
range goals. The proceeds from this disinvestment are then used to improve the company's financial position
by reducing its debt.

(v) What is International Trade?

ANSWER- International trade is the exchange of goods and services between countries. This type
of trade gives rise to a world economy, in which prices, or supply and demand, affect and are
affected by global events. Political change in Asia, for example, could result in an increase in

https://purvainfotech.blogspot.com/2017/09/mba-101-behavior-organization-jnu-jaipur.html 2/4
12/06/2019 Purva Infotech: MBA-101 Behavior Organization JNU jaipur
the cost of labor, thereby increasing the manufacturing costs for an American sneaker company
based in Malaysia, which would then result in an increase in the price that you have to pay to buy
the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result
in you having to pay less for your new shoes.
Trading globally gives consumers and countries the opportunity to be exposed to goods and services not
available in their own countries. Almost every kind of product can be found on the international market:
food, clothes, spare parts, oil, jewelry, wine, stocks, currencies, and water. Services are also traded: tourism,
banking, consulting and transportation. A product that is sold to the global market is an export, and a
product that is bought from the global market is an import. Imports and exports are accounted for in
a country's current account in the balance of payments.

Q. 2. Explain various challenges to disinvestment programme.

ANSWER- While over the years many countries have implemented successfully the strategy of
disinvestment and privatisation of public sector units (PSUs), this tool of public policy still
continues to remain elusive and contentious in India. Unfortunately, in India the process of
disinvestment has remained stalled for the past over two years. Most strident opposition to
disinvestment is from the Left allies of the United Progressive Alliance Government.
Reviving privatisation policy-But proponents of reform think that such criticism should not deter
the Government from reviving its disinvestment policy, and they think the time is ripe to do so.
Economic resurgence- It is essential that the Government sends a powerful message of its
ability to push through some challenging reforms such as disinvestment and/or strategic sale of
PSUs. The opportunities afforded by the excellent valuations, based on the performance of many
profit-making PSUs, must be leveraged.
Capital raising activity on rise- Capital raising activities of the private corporate sector are on
the rise and in the coming year major companies together are expected to raise a
whopping Rs. 100,000 crorefrom the capital market. Why should profit-making PSUs shy away or
be denied the opportunity of raising new equity and in the process also divest a part of the existing
equity capital is a moot question.
Expanding equity base- Is the issue of expanding the equity base of the economy on a
continuous basis, given that now there is a robust capital market infrastructure and the need to
make available an increased quantity of quality equity to investors. In fact, a reactivated
disinvestment programme will provide a powerful thrust to spread the equity culture and
strengthen the capital market.

Q. 3. What is Foreign Direct Investment? Explain its importance. Explain government policies
regarding FDI.
ANSWER- Foreign direct investment (FDI) is an investment made by a company or individual in one
country in business interests in another country, in the form of either establishing business operations or
acquiring business assets in the other country, such as ownership or controlling interest in a foreign
company. Foreign direct investments are distinguished from portfolio investments in which an investor
merely purchases equities of foreign-based companies. The key feature of foreign direct investment is that it
is an investment made that establishes either effective control of, or at least substantial influence over, the
decision making of a foreign business.
FDI has a major role to play in India’s economic development. The total FDI inflow in our country was
US$27 billion in 2010-11. Over the past few years, many sectors have seen the growth of foreign
investment. The Government is also coming out with new reforms to promote more and more of this
investment.
Investment policy of India can be broadly classified into two periods – 1948-1990 and 1991
onward. Till 1990, there were only restricted policies and regulated inflows. But from 1991 onward,
India witnessed liberalization of foreign investment laws.
The Government announced in 1991, a list of industries in which Foreign Direct Investment would
be automatically allowed up to 51 percent (Foreign Equity).
These industries ranged from the capital goods and metallurgical sector to the entertainment,
electronic, food processing and service sectors with significant export potential. Hotels and tourist-
related areas were also allowed foreign equity holdings by international trading companies of up to
51 percent.
In order to accelerate the progress of the power sector, 100 per cent foreign equity participation was allowed
for setting up power plants. Such equity participation allowed free repatriation of profits and other
incentives.

at September 20, 2017

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