Business Environment

Business Environment-Text and Cases, Cherunilam Francis, Himalaya Publishing House, Twentieth Revised Edition, 2011

Business Environment
An overview of Business Environment Constituents of Business Environment Business and Society

Industrial Policies
Regulatory Framework Financial System

Labour Environment
Economic Planning & Development Global Environment

Latest Changes in Business Environment

Business Environment
Def: The aggregate of all conditions, events, and influences that surround and effect it can be referred to as business environment Determines the role of the enterprise and the nature of task. Determines role of the top management and also its business policies.

Components of Business Environment

Different environmental variables exist internally and externally to the business enterprise

Environmental variables have a positive or negative influence on the enterprise

Business environment consists of two sub-environments: Internal environment External environment consists of :Micro/Operating environment Macro/General environment Mutual relationships exist between these environments

Importance
Helps an organization to develop its broad strategies and long term plans. Analyze competitors strategies. Keeps the organization dynamic in approach.

Foresee the impact of socio economic changes at the national and international level.
Adjust to the prevailing conditions.

Internal factors
Factors contributing to Strength or weakness : Organizational resources R & D ,and Technological capabilities

Financial capability
Marketing capability

Operations capability

External Factors
Social Economic

Cultural
Technological Legal

Geographic
Political Ecological

Govt. Policies Condition

Locational

Competitive Market

Environmental factors
Social Factors business is a social institution.
Social responsibility Satisfy the needs and wants of society goals Culture, Values, Tastes and Preferences, Social Integration and Disintegration and so on.are part of agenda of an organization.

Economic Factors
Per Capita Income, National Income, Resource Mobilization Exploitation of Natural Resources, Infrastructure Development, Capital Formation

Employment Generation, Propensity to Consume (Luxury or Economic goods), Industrial Development

Cultural Factors
Social and religious practices, education, knowledge and cultural factors
Norms and beliefs

Social stratification (rural parts)

Geographic Factors
important for global business managers Geographic Location, Seasonal Variations, Climatic Conditions Industrial location policies of Government

Technological Factors Rapidly changing R & D Activity (India must invest) e.g. Foreign Investment upto 100% in Industries with sophisticated technology. Political Factors Philosophy and approach of political party Government interventions Legal Factors Industrial Licensing, Company formation laws Laws regarding Industrial disputes, payment of wages, trade unionism, Monopoly control, Foreign Exchange Regulation

Ecological Factors Ecological Imbalance due to change in environment and biotic factors Environmental protection and Preservation Pollution Free Industrial Activity (Carbon Credit) Legislations Government Policies Industrial Policy resolutions and Licensing Policies Trade Policies, Labor Policies, Location Policies, Export Import policies, Forex Policies, Taxation policies (Arab Countries)

Competitive Market Condition

Socialist centralized authority Capitalist competitive forces India a Mixed Economy

Location Factors
Taxation Policies Subsidies

Political Risk Stability

Government Effectiveness risk hindrance to reforms Legal & Regulatory Risk slow Macroeconomic Risk inflation, prices Foreign Trade and Payment Risk Export / import duties, tariff barriers Tax Policy Risk VAT, GST Labor Market Risk Financial Risk Currency appreciation / depreciation Infrastructure Risk Country Risk changes in monetary / fiscal policy

Internal Environment
Within the organization

Factors controlled by the organization

Technology Advancement

Employee Attitude
5Ms Machine, Manpower, Money, Materials, Management

Business system/ process

a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focuss emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. ... Taking a process approach implies adopting the customers point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers.

Organisation of factors of production

Processing

Marketing of output

Logistics

There are three types of business processes:

Management processes, the processes that govern the operation of a system. Typical management processes include "Corporate Governance" and "Strategic Management". Operational processes, processes that constitute the core business and create the primary value stream. Typical operational processes are Purchasing, Manufacturing, Advertising and Marketing, and Sales. Supporting processes, which support the core processes. Examples include Accounting, Recruitment, Call center, Technical support.

The Four Major Process Improvement Areas

Effectiveness Efficiency Internal control

Compliance to various policies

Classification of business, industries

Agriculture and mining Financial

Information businesses
Manufacturers Real estate Retailers and distributors Service businesses

Transportation
Utilities

Classification of Industries
Based on nature of activity
Extractive Industries Genetic Industries

Manufacturing Industries
Construction Industries Service Industries IT Industries

 Based on Competitive Structure

Monopoly(Monopsony/ bilateral monopoly) Duopoly

Oligopoly
Monopolistic Competition (product differentiation) Perfect Competition

Based on Size

 Based on Use
Basic Industries Capital Goods Industries

Intermediate Industries
Consumer Goods Industries

Based on Input
Agro
Marine Chemical

Forest
Metal

 Based on Proprietary
Public Private Joint Co-operative

Characteristics and goals of business

Advises on and supports decision making throughout the organization.

Supports the management of risk and complexity.

Is valued by other parts of the organization for the support it gives to their activities.

Is usually involved in the development and implementation of strategy.

Always advises managers on the business implications of data it produces. Plays an active role in decisions on the business portfolio.

continued
Originates cost reduction strategies for the whole organization. Is proactive in generating forward looking information to influence business strategy. Directly communicates with external stakeholders concerning business performance. Is involved in the organization's environmental, social and governance performance. Initiates and leads change.

Leads in the identification and assessment of new business opportunities.

Characteristics of Business
Exchange of goods and services for Income Recurring activities Profit motive

Risks

Goals of Business
Justify the organization
Provide direction Basis for management by objectives Help strategic planning Help coordination

Provide standards for assessment and control

Help decentralisation

Environmental Analysis

Techniques for environmental analysis

Scanning Monitoring Forecasting Assessment
(Verbal And written information)

(Spying / in-depth study)

(anticipating the future )

Steps in Environmental Forecasting

Identification of relevant Environmental Variable Collection of Information

Selection of forecasting Technique

Monitoring

Types of Forecasting
Economic Forecast
GDP growth rate Structural changes in GDP Investment & output trends distribution of income per capita income price trends

Social Forecasts
population growth/decline
Rural/ urban distribution Factors related to family Expenditure pattern

age structure
migration ethnic composition social attitudes

 Political Forecasts
changes in political power/ political ideologies Technological Forecast (TIFAC)

Techniques for Environmental Forecasting

Econometric Techniques

use casual relationship

casual relationships then specified by using domain knowledge

While extrapolations assumes that everything continues as in the past, econometric model assume that only the relationship remains the constant

 Trend Extrapolation
Simple linear relationship Non linear relationship

Scenario Development
Premising Method System Diagram Method

Critical Site Method

The newspaper Headline Method

Logical Possibilities Method

 Judgment Models
Brain Storming Delphi Method Strategic Issues Analysis

Importance of Business Environmental Analysis

Awareness SWOT Transformation of Industry Risk identification

Strategy Formulation
Information

Limitations of Environmental Forecasting

Errors in selecting variable in the predictive model Errors in selection of the functional forms for linking the variables Time & cost factor

Economic Environment
Business fortunes and strategies are influenced by the economic characteristics and economic policy dimensions. The economic environment includes the structure and nature of the economy, the stage of development of the economy, economic resources, the level of income, the distribution of income and assets, global economic linkages, economic policies etc

Nature of the Economy

On the basis of per capita income
Low income High income $975 $11,906

Middle income $3,856

Developed/ developing economies

High income (oil exporting) Inequalities in distribution of income Income elasticity of demand

 Transition economies
Liberalization Macroeconomic stabilization Restructuring and privatization Legal and institutional reforms

Structure of The Economy

Contributing sectors
primary, secondary, large, medium, small

Integration with the global economies

Economic policies
Industrial Policy
liberalization in 1991/ MRTP Act Trade Policy liberalization of import policy Foreign Exchange Policy

Fiscal Policy
Monetary policy

Economic Conditions

POLITICAL AND GOVERNMENT ENVIRONMENT

The political environment includes factors such as the characteristics and policies of the political parties, the nature of the Constitution and government system and the government environment encompassing the economic and business policies and regulations.

Government consisting of three distinct sets of powers

Legislature
Executive Judiciary

Functions of state
Opportunities for trade
Distributions of powers Core functions such as Law and order Role of the State in development of industries
environment , financial and monopolies

Expansion in role play not only in the infrastructure and utilities but also in education and healthcare

Classification of functions of State

Impact of State

Economic Role of the Government

Depend upon the type of role the govt. is playing
Capitalist Communist

Regulatory
reservation of the industries (IDR Act 1951) ceilings on the profit margins, dividend Indirect controls fiscal n monetary policy Direct control are discretionary in nature

 Promotional Role
Building up the infrastructure in the developed / developing countries

Entrepreneurial Role
Redefining role from public to the private sector SOEs

Putting up capital-intensive projects

e.g. steel, capital goods, petrochemicals, fertilizers

Planning Role
utilization of the resources on the basis of available

Trends in Political philosophies

Political and economic changes
USSR (Union of Soviet Socialist Republics) Eastern Europe

Hostilities b/w countries affecting the business of firm in the 3rd countirs e.g Arab with Israel

Government and Legal Environment

Standards for the products to be marketed
Children in the commercial advertisements Advertisement of alcoholic liquor Packaging containing statutory warning Advertisement of baby foods

Economic roles of Government of India

The Preamble

The Fundamental Rights

Fundamental duties Directive principles Freedom of Trade, Commerce and Intercourse Separation of Powers

Division of Power
Expansion in State Intervention

Natural and Technological Environment

Natural Environment

resource available
location of business climatic and weather conditions Technological Environment Hard/ Soft Technology

International communication
e- commerce

Innovation
Radical
Incremental Next- Generation

Major reasons for new product failure

The better mousetrap no one wanted
Me- too product Lack of marketing Environmental ignorance Technological Dog product

Price crunch

Product and Process Innovation

To make the product cheaper

It generally varies with the time

Because until the product design has been standardized manufacturer cannot focus on improving the production process that produce such design

Technology S-Curve
Technology Leadership and Followership

Technology and competitive advantage

Source of Technological Dynamics

Innovation Drive of the company Customer need

Demand condition
Suppliers offerings Competitive Dynamic

Substitutes
Social Factors Technical Facilities Government Policy

Time lags in Technology

Developing and developed
Obsolete technology

IT revolution in Business Environment

Impact of Technology on Globalization ICT and Marketing

Transfer of Technology
Promotion and Regulation

Importance of Demographic Environment

Age structure Income Distribution Family Life cycle Gender Family Size Occupation

Education
Religion Nationality
e.g formation of EU

Social Class
Race Population size

Falling Birth Rate and Changing Age Structure

Affecting the growth of the developed/developing markets

Shrinking the various types of markets, e.g. Baby product

Increasing the market for various industries such as Hotels, airlines and restaurants

Large share of disposable income available

Type of labour homogeneous/ heterogeneous Implications for the government Depends upon the amount of population below the poverty line

Migration and Ethnic Aspects

Situation of different countries e.g. USA and Japan
Detroit, Miami, Silicon Valley Changing economic shapes from Melting Pot to Salad Bowl

Societal Environment
Business and Society
Professionalization Business Ethics Business and Culture Technological Developments and Social Changes

Business and Society

Social Institution, performing a social mission and having a broad influence on the way people live and work together
Values Viability

Public Visibility

Professionalization
Acquiring specialized knowledge and skill for management
Acquiring authority and freedom to take the right decision No ideological bias in the discharge of the functions Decisions and actions guided by certain ethical consideration

Business Ethics
Not deceiving the customers
No Black-marketing Not distorting or destroying the competition

Sincerity and accuracy in advertising, labeling and packaging

No unfair practices Making accurate business records Pay taxes and discharge other obligations Ensure payment of fair wages Refrain from secret payoffs to customers, suppliers, administrators, politicians

Role of Trade Associations in Maintaining Business Ethics

Education and persuasion
Forming code of Ethics Moral Sanctions

Business and Culture

Cultural differences are the most significant and troublesome variables encountered by the multinational company Meaning of culture
human product of social interaction

acceptable patterns for meeting biological and social needs

cumulative learning patterns symbolic quality, and basic determinant of personality

Elements of culture
Knowledge and beliefs
Ideals Preferences

Organization of culture
Social structure and integration of traits, complexes and patterns Stratification Common institutes of Modern Culture
economic system, political administrative system, education system, religion, family,

Cultural Adaptation
Manner in which a social system or an individual fits into the physical or social environment adaptation to the oil prices

adaptation to the diseases

adaptation of a worker to the organization

Cultural Shock Cultural Transmission

dropping some ideas and acquiring new traits transmission is horizontal as well as vertical

Importance in the business

The role of advertising in the transmission
Media communication Formulating promotional strategy Identifying the reference group and their influence

Cultural Conformity
Either conform or deviate
Required knowledge and appropriate skill Blind conformity

Cultural Lag

Cultural Traits
Low- Context and High- Context Cultures
importance of facts and figures importance of relationships, atmosphere and attitude Masculine and Feminine Cultures Monochronic and Polychronic Society trends of the changing society

Universalism vs. Particularism

Cultures with high universalism, focus on rules than relationship

Deal is deal, no relationship

Individualism vs. Communitarianism

Neutral vs. Emotional

Specific vs. Diffuse Achievement vs. Ascription

Religion
Marketing of Beef products, type of food (slaughtered
animal/ bird for Muslims, Christians rituals)

Religion influencing the attitude towards work and wealth Religion deciding the working hours and the holidays and finding some days to be religious to launch a new products Introduction of promotional schemes

Handing of different industries in specific countries

e.g. Banking Industry in Islamic regions

Ethnodomination
Domination of certain type of ethnic groups in some particular trade

Languages
Problems of having different languages in one country, e.g. three languages in Switzerland
40 languages in South America 200 languages in Zaire 40 ethnic groups in Kenya

Some of the same words having different meanings or connotation in the different places
Fiera by Ford, Nova by Chervorlet

Cultural and Organizational Behavior

Centralized vs. Decentralized Decision making
Safety vs. Risk Individual vs. Group Reward Informal vs. Formal Procedure High vs. Low Organizational Loyalty

Cooperation vs. Competition

Short-term vs. Long-Term Horizon Stability vs. Innovation

Other Social/Cultural Factors

Consumer preferences, habits and beliefs
share of Nescafe and Bru use of bicycle eating habits, preferences b/w countries nature of use, occasion of use

values and beliefs associated with colour

 Etiquettes
hugging and kissing while embracing laughter handshake properly responding to a guests invitation/treat

gift giving/ the way of giving it

 Some Social Trends

number of working women number of double income households unmarried couples living together high divorce rate/ remarry

person living alone

 Impact of development and the industrial age

Technological Development and Social Changes

Changing social life and status of women

Changing the way we communicate and transport Change in the cast system because of industrialization Use of the natural resources Adverse effects on society

Social Responsibility of Business

Classical and Contemporary Views
Social Orientation of Business Factors Affecting Social Orientation Responsibilities to Different Sections The Indian Situation

Arguments for and Against Social Involvement

Social Audits

Classical and Contemporary Views

Contemporary view of business is an ecological one Meeting stakeholders expectations Business is an economic entity and cannot jeopardize its profitability meeting social needs Long term benefit for the society Social power of the business to influence outcomes Related to the size of the company and to the industry it is in Tackle only those social problems in which it has competence Willingness to absorb the burden and the cost

Social Orientations of Business

Social Responsibility Models
A firm has the following four categories of obligations of corporate performance

Economic Ethical
Anti- Social Peripheral

Legal Discretionary
Indifferent Socially Oriented

Extent of Social Orientation and Involvement

Committed and Very Active

Factors affecting Social Orientation

Promoters and Top Management Board of Directors Stakeholders and Internal Power Relationship Societal Factors

Industry and Trade Association

Government and Laws Political Influences

contined.
Competitors
Resources

Ethical Influences
The Golden Rule The Utilitarian Principle Kants Categorical Imperative The Professional Ethic

The TV Test

Responsibilities to Different Sectors

Responsibilities to Shareholders develop and improve business providing dividends innovation and growth

brand image
Responsibilities to Employees fair wages best possible working condition welfare facilities training and education

Proper system for accomplishment and promotions Proper recognition, appreciation and encouragement of special skills Efficient grievance handling system Opportunity for participating in managerial decisions

Responsibility to Consumers
to be efficient to do R & D

remove the imperfections in distribution

continued
stability in Price and after sale services the product supplied with no adverse effects to provide sufficient information to avoid misleading the customers

redress genuine grievances

understand customer needs and to take necessary measures

continued
Responsibility to the community to prevent environmental pollution

to maintain ecological balance

rehabilitating the population displaced by the operation of the business

overall development of the locality

to conserve scarce resources and developing alternatives

continued.
to improve the efficiency of the business operation
contribution to research and developments development of backward areas promotion of ancillarization and small scale industries furthering social causes contribution to the national effort to build up a better society

Arguments For and Against Social Environment

For To use of the resources of the society, need to be responsible for the society To become an integral part of social system, need to care for the need of the society Social involvement maintain healthy relationship Have favorable financial effects e.g. recycling

Sometime discourage additional govt. regulation

Public image

continued
Against
Business should confine to its own business Involvement of social activities could affect the economic health High cost ultimately passed on to the consumer Affecting the competitiveness of the company Avoiding tax brackets Dominance of business over the society

Social Audit
Identification of the firms activities having potential social impact
Assessment and evaluation of the social cost and social benefits of such activities Measurement of the social costs and benefits Reporting

Objectives and Benefits of Social Audit

Evaluate the social the social dimensions of the performance of the company Accurate identification of requirements Prioritization of developmental activities as per requirements To take measures to improve the social performance of the company

Public Visibility
Boost the public image

Methods of Social Audit

Social Process Audit
Financial Statement Format Audit Macro-Micro Social Indicator Audit Constituency Group Audit Partial Audit

Comprehensive Audits
Corporate Rate approach

Obstacles to Social Audits

Yet to gain wide acceptance and appreciation
Non availability of well accepted methodology available

No agreement as to the items to be included

Impossible to quantify the social costs and benefits of different activities

May be resistance within the company

Fear of dismal or unsatisfactory picture that may be presented by the social audits

The Indian Situation

Responsibility of the corporate sectors Public vs. Private sector

Consumer Rights
The increase in the consumer awareness leads to growth of consumerism and growing demand of consumer protection
Right against exploitation by unfair trade practices Right to protection of health and safety from the goods and services the consumer received Right to be heard if there is any grievance or suggestion

Right to get the genuine grievances redressed

 Right to be informed about quality and performance standard ingredients of the products

operational requirements
possible adverse effects

other relevant facts concerning the product

right to choose the best from a variety of offers Right to a physical environment that will protect and enhance the quality of life

Exploitation of Consumer
By stimulating the weak points and the soft corners of their mind
Misleading, false or deceptive advertisements

Deliberately giving the half truths

Projecting the potency of the drug, without elaborating the risks

Consumerism
The dedication of those activities of both public and private organizations which are designed to protect individuals from practices that impinge upon their rights as consumers
has the following important role to play Consumer Education

Product Rating
Liaison with Government and with Producers

Utility of Consumerism
Producers and the sellers will not take the consumer for granted
Provide feedback for the business

Minimize the imperfections on the distribution front

Make the government more responsive

Consumer Protection
The Business
The Government
UN Guidelines Different Government Acts
Sherman Act and the Clayton Act of the USA

Federal Act of Switzerland

Act Against Restraint of Competition of Spain Federal Trade Commission (FTP)

The consumer
Non-Governmental Organizations

UN Guidelines for the Consumer Protection

Objective
to assist countries in protecting the consumers
to facilitate production and distribution to encourage high level of ethical conduct

to assist countries in curbing abusive business practices

to facilitate the development of independent consumer groups to further international cooperation to encourage the development of market conditions

continued..
General Principles & Guidelines
Physical safety Promotion and protection of consumers economic interest Standards for safety and quality of consumer goods and services Distribution facilities for essential consumer goods and services Consumer redresses Education and information Programs

Consumer Protection and Consumerism in India

Plight of the Indian Consumer
Short supply of many goods and services Lac of effective competition Unfamiliarity of the consumer with product features Low literacy and unsatisfactory information Legal system in India Consumerism not well organized and developed

Poor performance of Public Sector monopolies

Implementation of standards

continued. Government Measures

Statutory regulations
Competition Act Essential commodities Act Industries Act Prevention of food Adulteration Act

Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act Trade Marks and Merchandise Marks Act Indian Patents and Design Act Indian Standard Institutes Certification Act Import and Export Control Act Price and Stock Display Order Sale of Goods Act Agricultural Products Grading and Marketing Act Standard Weights and Measures Act Packaged Commodities Order Consumer Protection Act

Growth of Public Sectors

Consumerism

Continued.. Opportunity for Industry

Importance of Marketing Sharing of information with the consumers Testing the safety of the products Dealing with the consumers complaints

Overplaying the claims

Investments in R & D

Consumer Protection Act, 1986

Consumer Protection Councils Consumer Disputes Redressals Agencies A District Forum A State Commission

A National Commission
Consumer complaints Remedial Action Penalties

Corporate Governance
Governance is the process whereby people in power makes decisions that create, destroy or maintain social system, structures and processes To make the balance between economic and social goals and between individual and communal goal
To align as nearly as possible the interest of individuals, corporations and society Corporate Governance is concerned with the value, vision and the visibility

Reasons for the Growing demand of Corporate Governance

While companies grew phenomenally, accounting standards went haywire Investors suffers on account of unscrupulous management of the companies

To pay adequate attention to redress investors grievances

Timely dissemination of information Securities market regulations Necessitating/Facilitating set of factors

 Importance of Corporate Governance

Prerequisite

Regulatory and Voluntary Actions

Organization for Economic Cooperation and Development (OECD)

Fairness,
Transparency, Accountability and

Responsibility

Recommendation of Birla Committee

Mandatory recommendations Applicability Board of Directors combination of executive and non-executive
non-executive at least 30% (if one of them is chairman)
non-executive at least 50% (if one of them is MD and chairman)

Independent Directors

 Audit Committee and Remuneration Committee Accounting Standards and Financial Reporting Management
assisting in the decision making process
implementation of policies and code of conduct day to day affairs

Information System
compliance to all regulation Services to shareholders

Effective internal control

 Shareholder General Body Meetings Rights of the shareholders

Conclusion
various steps taken by SEBI
Disclosure of the IPO Information in directors reports Declaration of quarterly results Mandatory appointment of compliance Officer

Copy of complete balance sheet

Guidelines for preferential allotment Providing fare and transparent framework

Industrial Policies and Regulations

Indicate the restrictive role of the public, private, joint and cooperative sectors and underlined the national priorities and the economic development

Industrial development and thereby the economic development to a very significant extent

Industrial policy upto 1991

Reservation of industries
Dominance of public sector Industrial Policy Resolution of 1956

Entry and growth restrictions

Restrictions on foreign capital and technology

The new industrial policy

Objectives
Redefinition of public sector Liberalization of foreign investment Related measures

Evaluation of the New Policy

Government stand on the privatization is not clear
Policy and the procedural systems in India are very complex for foreign businesses Process of deregulation and decontrol by the governments

Industries Development and Regulation Act (IDRA)

Objectives
to take necessary steps for the development of industries
to regulate the pattern and direction of development control of the activities, performance and results of industrial undertakings

continued..
Main Provisions Development Measures

Regulation of Entry and Growth

Supervision and Control

Take over of Management

Price and Distribution Control Exemptions

Industrial Licensing
Issuance of letter / letter of intent
Level of investments The New Policy - Industries for which the licensing is
compulsory
Distillation and brewing of alcoholic drinks Industries using Tobacco/ Tobacco substitute Electronic Aerospace and defense equipment Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches

certain specified hazardous chemicals

Locational Policy

Public, Private, Joint and Co-operative Sectors

Public Sectors
Objectives
To help in rapid growth and industrialization

To earn ROI and thus generate resources for development

To promote distribution of income and growth

To create employment opportunities

To promote balance regional development To assist development of small scale and ancillary To promote import substitute

continued..
Growth and performance of Public Enterprises

Industrial Policy Resolution

Major of the Central public Sector investment was in steel, coal, minerals & metals, power and petroleum sectors Comparison of Investment vs. Profit in PSEs Factors involved in the unsatisfactory growth of Public sector

New Public Sector Policy

Many public enterprises becoming a burden
Withdrawal of public sector from
industries based on low technology

small scale and non- strategic area

inefficient and unproductive areas areas with low social responsibility areas where private sector has developed sufficient enterprise and purpose

continued
The main element of current Government Policy
Bringing down the government equity in PSU to 26% Restructure and revive potentially viable PSUs Close down PSUs which cannot be revived Fully protect the interest of workers

Set up of the new department for Disinvestments

Better utilization of national resources

Public Sectors Rathnas

Organization of Public Enterprises

Ministry

Departmental Undertaking
financing from treasury governmental control on budget, accounting and audit civil servants as staffing suit against the government

continued
Government Company
51% ownership directors appointed by the government

a body corporate created under a general law

can sue and can be sued, enter into contract created by executive decision of government funding by the government exempt from the personnel, budget, accounting and audit employees are not civil servants

continued..
Principal defects attributed to a government company
evading state owned enterprise responsibilities

regulating laws are reserved to government

declaration of profits and appointments reserved extent of autonomy can be materially affected by government agencies

Public Corporation
Created by special laws defining its objectives, powers and privileges and its relationship with government Is a body corporate and can cue and can be sued, enter into contracts and acquire property in its own name Usually independently financed
Not subject to the budget, accounting and audit laws and procedures applicable to government departments Mostly employees are not civil servants