The economic environment in India has undergone several changes since 1991 when the new industrial policy was announced by the central government to give when the industrial policy was announced by the central government to give a boost to the processes of liberalisation and globalisation. The term liberalisation means removal of entry and growth restrictions on the private sector enterprise. this has been done by the government through :
1. Abolishing licensing requirement in most of the industries except a short list.
2Ffreedom in deciding the scale of business activities i.e. no restrictions on expansion or contraction of business activities
3.Freedom in fixing the prices of goods and services
4.Removal of restriction on the movement of goods and services
5.Reduction in tax rates an lifting of unnecessary controls over the economy
6.Simplifying procedures for imports and exports and
7. Making it easier to attarct foreign capital and technology to india .
ECONOMIC liberlaisation is a pre-condition for the globalisation of business for the speedy growth of the national growth of the national economy.
THE process of globalisation started with various national governments following economic and trade policies that merge either rest of the world.GLOBALISATION involves an increased level of interaction and interdependence among various countries. There is a free exchange of not only goods and services , but also of technology has been able to shrink the distance of time and space between people and countries, the physical geographical gap is no longer a barrier for a firm to service a customer in a distant geographical market.
Over the last few years, the Indian government has followed the policy of economic liberalisation . The impact of this policy has been:
1.Reduction of barriers in international trade (e.g. reduction of import duty and liberal permission to imports )
2.Increased flow of capital from foreign countries and vice versa
3.Free flow of latest technology. This has encouraged the process of globalisation.T he aim of globalisation is to look upon the world as a ‘GLOBAL VILLAGE’ which would allow free flow of goods, capital, technology and labour between different countries.
RESPONSES OF INDIAN COMPANIES TO LIBERLISATION AND GLOBALISATION
The fact that indian economy now described as INDIA inc. is a beginning to shed its insularity and is going global is clearly brought out a number of signals. Among these the more important are as follows :
1. Indian companies are entering into joint ventures with MNCs.
2.Indian companies ares steeping to exports, and even shopping for companies .
3. Indian corporates are increasingly responding to competitive price pressures from abroad by adopting competitive pricing policies .
4. Developments elsewhere in the world are starting to set off tremors at home (for eg. the surges and declines in london metal prices are influencing indian metal prices )
5. The Sensex and the other stock market indices have stated moving in line with the fluctuations in similar indices in other parts of the globe like JAPAN’s NIKEI and HONG KONG’SHANG SENG
6. Airlines are sechduling oF flights to and from India. Business travellers are accounting for an an increasingly larger proportion of ovrseas visitors .
PRIVATISATION means the transfer of ownership , management and control of public sector enterprises to the entreprenuers in the private . It implies a greater role of the private sector in the economic activites of the country. Another term that is relevant here is ‘Disinvestment’.DISINVESTMENT means the transfer of a part of government shareholdings in the public sector enterprises to the private sector.It results in dilution of a stake of the government in the public enterprise . If there is a dilution of government ownership beyond 51%, it would result in the transfer of ownership and mangement of the enterprise to the private sector .
Under the industrial policy 1956, the public sector had been given a dominant role while the sphere of operation of the private sector was severly curtialed but the industrial policy of 1991 sought to reverse this position through various policies that limit the area of the public sector and give way to the expansion of the private sector.
The SWOT analysis is a distillation of the steps and consideration that should be taken to formulate an effective strategic plan . The term SWOT is the acronmy for strengths, weakness, opportunies, and threats which are discussed below :
|STRENGTHS :1.Latest technology
2.large finacial resources
3.competent human resorces
2.poor financial position
3.lack of trianed human resources
2.availability of cheaper substitutes