Unit 3,4 Bbas

Subject Name/ Year or Semister:- - BFT Ist Year
Global Business Environment And Communication
Syllabus
Part A:
1. Macro and Micro Environment, Environmental Change,

Techniques for Environmental Analysis Strategic Management.
2. Global Environment - Political and Economic Environment,

Social and Technological Environment, Commercial Policy of
Governments.
3. Challenges of Multinational Corporation Problems and

Benefits, Joint Ventures, Liberalizationand Globalisation, Foreign
Direct Investment.
4. Globalisation-Emergence of Global Marketing, Business

Planning and Marketing Strategy Environment Approach,
Marketing Segmentation on a Global Scale.
5. International Financial Markets, Trends in World Trade und

Problems of Developing Countries, Balance of Payment, Euro
Currency, Transfer of Technology.
Part B:
1. Objective of Export Correspondence: Essentials of Successful

Letters, Advantages of Export Correspondence-Building
Confidence and Establishing Strong Trade Relations.
2. Terminology: Meaning of Special Terms Used in Export and

Import Business: Inco-Terms and Terms of Payment.
3. Market Reports: Reading, Comprehending and Writing of
Market Reports Relating to Export and Import of Different Goods
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4. Correspondence: Practice in Writing of Busines Letters

Relating to all Aspects ofExport and Import of Visible and Non-
Visible Items: Filing and Indexing.
5. Public Relations:Significance Art and Methods

Unit-1
Introduction
The global business environment refers to the various external
factors that affect a company's operations when it expands
beyond its home territory and enters an international market.
These factors include social, political, economic, regulatory, tax,
cultural, legal, and technological factors. Understanding and
adapting to the external environment is crucial for the success of
international companies. This also includes a company's ability to
adjust its internal variables to take advantage of opportunities
offered by the external environment .
Meaning of Global business environment:-
Global Business Environment is defined as a diversified and

centralised international market. Large multinational
corporations are carrying out the production of goods,
distribution of raw materials, servicing, and marketing activities.
It is one of the critical entities in the Globalisation process. The
world has a diverse business environment that has been actively
championed by some great organisations like World Business
Council for Sustainable Development (WBCSD). The global
business environment is a complex and constantly changing
industry. There are two significant issues that the current global
business environment has:
•Economic instability or recession
•Achieving sustainability as an ingredient of future economic

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growth and prosperity
Features
The global business environment refers to the external factors
that affect businesses and their operations worldwide. These
factors include economic, political, social, technological, legal, and
environmental conditions in different countries and regions. Here
are the key features of the global business environment:
Globalization: The world is becoming increasingly

interconnected, with businesses operating across borders and
consumers having access to products and services from around
the world.
Diverse cultures: Different countries and regions have unique

cultures, customs, and traditions that businesses must
understand and respect to succeed in those markets.
Economic conditions: The global economic environment is

constantly changing, with fluctuations in exchange rates, interest
rates, and inflation affecting businesses' ability to operate and
compete.
Political stability: Political instability, corruption, and conflict in
different regions can have a significant impact on businesses
operating in those areas.
Technological advancements: Rapid technological

advancements are transforming the global business environment,
making it easier for businesses to operate internationally and
creating new opportunities for growth and innovation.
Legal and regulatory environment: Different countries have

their own laws and regulations, which can create challenges and
opportunities for businesses operating globally.
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Environmental concerns: Businesses must also contend with

growing environmental concerns, such as climate change and
sustainability, which can impact their operations and reputation.
Understanding these features of the global business environment

is crucial for businesses operating internationally. By staying
informed about external factors that affect their operations,
businesses can make informed decisions and adapt to changing
conditions to succeed in the global marketplace.
Importance of global business environment
The global environment plays a critical role in the sustainability

of global businesses and nations. The following are some of the
importance of the global business environment to businesses:
• The political environment helps execute an inter-border trade

in an international business environment through policies that
permit free trade in the global environment.
•The economic environment enables business management to

seek the country's potential to foster foreign trade in terms of a
country's GDP and economic capacity to grow.
•The technological environment helps international business

management demonstrate a country's technology and resource
potential required to manufacture products and gauge market
competitiveness based on technologies used in production.
•Understanding cultural environment informs the business on

the consumption patterns, lifestyles of a people, and societal
approach towards businesses which are vital in focusing on
production and marketing portfolios.
• For businesses and nations to experience sustainable growth,

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they need to be in line with the global business environment

because; The global environment creates the ease of achieving
organizational mission by recruiting each functional unit to
accomplish its mission and drive the overall organizational
mission.
The global environment enables businesses to exploit global
opportunities, combat their threats, mitigate weaknesses, and
ultimately achieve growth and development.
Global business environment is of two types:-
a) Micro environment or the internal environment
b) Macro environment or the external environment
Micro environment / Internal Environment of Business
Micro environment comprises of the factors in the immediate

environment of the company that affect the performance of the
company. In includes the suppliers, competitors, Marketing
intermediaries, customers, pressure groups and the general
public. Supplier forms an important factor of the micro
environment of business as the importance of reliable sources of
supply is obvious. Suppliers include the financial labor input.
Stock holders, banks and other similar organizations that supply
money to the organization are also termed as suppliers. Managers
always strive to ensure a study flow of inputs at the lowest price.
Customers are also an important factor in the internal
environment of business. The customers or the clients absorb the
output of an organization and a business exists to meet the
demands of the customers. Customers could be individuals,
industries, government and other institutions. Labor force is also
an important part of the internal environment of business. Other
than these the business associates, competitors, regulatory
agencies and the marketing intermediaries are also a part of the
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micro business environment.
Macro environment
The forces and institutions outside of the organization that can

potentially affect the performance of the organization come
under the external environment of Business. The macro
environment of business consists of the economic, demographic,
natural, cultural and political forces. The external
environment of business is often categorized into the economic
environment, political and government environment, socio
cultural environment and the international environment.
The business has to make the necessary changes to adapt itself to
the new policies. Similarly, a change in the technology may
render the existing products obsolete, as we have seen that the
introduction of computer has replaced the typewriters; the
colour television has made the black and white television out of
fashion. Again, a change in the fashion or customers’ taste may
shift the demand in the market for a particular product, e.g., the
demand for jeans reduced the sale of other traditional wear. All
these aspects are external factors that are beyond the control of
the business. So, the business units must have to adapt
themselves to these changes in order to survive and succeed in
business. Hence, it is very necessary to have a clear
understanding of the concept of business environment and the
nature of its various components.
The term ‘business environment’ connotes external forces,

factors and institutions that are beyond the control of the
business and they affect the functioning of a business enterprise.
These include customers, competitors, suppliers, government,
and the social, political, legal and technological factors etc. While
some of these factors or forces may have direct influence over the
business firm, others may operate indirectly. Thus, business
environment may be defined as the total surroundings, which
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have a direct or indirect bearing on the functioning of business. It

may also be defined as the set of external factors, such as
economic factors, social factors, political and legal factors,
demographic factors, and technical factors etc., which are
uncontrollable in nature and affects the business decisions of a
firm.
1). Micro Environment:
Micro external forces have an important effect on business

operations of a firm. However, all micro forces may not have the
same effect on all firms in the industry. For example, suppliers, an
important element of micro level environment, are often willing
to provide the materials at relatively lower prices to big business
firms.
They do not have the same attitude towards relatively small

business firms. Similarly, a competitive firm will start a price war
if its rival firm in the industry is relatively small. If the rival
firm is a big one which is a capable of retaliating any adverse
action from its rival, a competitive firm will hesitate to start a
price war. We explain below important factors or forces of micro-
level external environment.
Suppliers of Inputs:
An important factor in the external environment of a firm is the

suppliers of its inputs such as raw materials and components. A
smooth and efficient working of a business firm requires that it
should have ensured supply of inputs such as raw materials. If
supply of raw materials is uncertain, then a firm will have to keep
a large stock of raw materials to continue its transformation
process uninterrupted. This will unnecessarily raise its cost of
production and reduce its profit margin.To ensure regular supply
of inputs such as raw materials some firms adopt a strategy of
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backward integration and set up captive production plants for

producing raw materials themselves.
Further, energy input is an important input in the manufacturing
business. Many large firms such as Reliance industries have their
own power generating plants so as to ensure regular supply of
electricity for their manufacturing business. However, small firms
cannot adopt this strategy of vertical integration and have to
depend on outside sources for supply of needed inputs.
Further, it is not a good strategy to depend on a single supplier of
inputs. If there is disruption in production of the supplier firm
due to labour strike or lock-out, it will adversely affect the
production work of a firm. Therefore, to reduce risk and
uncertainty business firms prefer to keep multiple suppliers of
inputs.
Customers:
The people who buy and use a firm’s product and services are an
important part of external microenvironment. Since sales of a
product or service is critical for a firm’s survival and growth, it is
necessary to keep the customers satisfied. To take care of
customer’s sensitivity is essential for the success of a business
firm.
A firm has different categories of customers. For example, a car

manufacturing firm such as Maruti Udyog has individuals,
companies, institutions, government as its customers. Maruti
Udyog, therefore, has catered to the needs of all these types of
customers by producing different varieties and models of cars.
Besides, a business firm has to compete with rival firms to attract
customers and thereby increase the demand and market for its
product. In the present day of intense competition, a firm has to
spend a lot on advertisements to promote the sales of its product
by creating new customers and retaining the old ones. For this
purpose, a business firm has also to launch new products or
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models.
With increasing globalisation and liberalization the customers’
satisfaction is of paramount importance because the consumers
have the option of buying imported products. Therefore, to
survive and succeed a firm has to make continuous efforts to
improve the quality of its products.
Marketing Intermediaries:
In a firm’s external environment marketing intermediaries play
an essential role of selling and distributing its products to the
final buyers. Marketing intermediaries include agents and
merchants such as distribution firms, wholesalers, retailers.
Marketing intermediaries are responsible for stocking and
transporting goods from their production site to their
destination, that is, ultimate buyers. There are marketing service
agencies such as marketing research firms, consulting firms,
advertising agencies which assist a business firm in targeting,
promoting and selling its products to the right markets.
Thus, marketing is an important link between a business firm and
its ultimate buyers. A dislocation of this link will adversely affect
the fortune of a company. A few years ago, chemists and druggists
in India declared a collective boycott of a leading pharma
company because it was providing a low retail margin. They
succeeded in raising this margin. This shows that a business firm
must take care of its intermediaries if it has to succeed in this age
of intense competition.
Competitors:
Business firms compete with each other not only for sale of their
products but also in other areas. Absolute monopolies in case of
which competition is totally absent are found only in the sphere
of what are called public utilities such as power distribution,
telephone service, gas distribution in a city etc. More generally,
market forms of monopolistic competition and differentiated
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oligopolies exist in the real world.

In these market forms different firms in an industry complete
with each other for sale of their products. This competition may
be on the basis of pricing of their products. But more frequently
there is non-price competition under which firms engage in
competition through competitive advertising, sponsoring some
events such as cricket matches for sale of different varieties and
models of their products, each claiming the superior nature of its
products.The readers will be witnessing how intense is the
competition between Coca Cola and Pepsi Cola. Sometimes there
has been price war between them to capture new markets or
enlarge their market share. Likewise, there is severe competition
between the manufacturers of Aerial and Surf washing powders,
between manufacturers of various brands of colour TV. This type
of competition is generally referred to as brand competition as it
relates to producing and selling different brands of a product.
Publics:
Finally, publics are an important force in external micro

environment. Public, according to Philip Kotler “is any group that
has an actual or potential interest in or impact on a company’s
ability to achieve its objective”. Environmentalists, media groups,
women associations, consumer protection
groups, local groups, citizens associations are some important
examples of publics which have an important bearing on
environment of the firms.
For example, a consumer protection firm in Delhi headed by
Sunita Narain came out with an amazing fact that cold drinks
such as Coca Cola, Pepsi Cola, Limca, Fanta had a higher content
of pesticides which posed threat to human health and life. This
produced a good deal of adverse effect on the sale of these
products in 2003-04. The Indian laws are being amended to
ensure that these drinks must not contain pesticides beyond
European safety standards.Similarly, environmentalists like
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Arundhi Roy have been campaigning against industries which

pollute the environment and cause health hazards. Women in
some villages of Haryana protested against liquor shops being
situated in their localities.
Many citizen groups are actively campaigning against cigarette

manufactures for their advertising campaigns luring the people
to indulge in smoking. Thus, the existence of various types of
publics influences the working of business firms and compels
them to be socially responsible.
External Macro Environment
Apart from micro-environment, business firms face large external

environmental forces. The external macro environment
determines the opportunities for a firm to exploit for promoting
its business and also presents threats to it in the sense that it can
put restrictions on the expansion of business activities. The
macro-environment has thus both positive and negative
aspects.An important fact about external macro-environmental
forces is that they are uncontrollable by the
management of a firm. Because of the uncontrollable nature of
macro forces a firm has to adjust or adapt itself to these external
forces.
External macro-environmental factors are classified into:
a) Economic,
b) Social,
c) Technological,
d) Political and legal
e) Demographic.
Economic Environment
Economic environment includes the type of economic system that
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exists in the economy, the nature and structure of the economy,

the phase of the business cycle (for example, the conditions of
boom or recession), the fiscal, monetary and financial policies of
the Government, foreign trade and foreign investment policies of
the government. These economic policies of the government
present both the opportunities as well as the threats (i.e.
restrictions) for the business firms.
The type of the economic system, that is, socialist, capitalist or
mixed provides institutional framework within which business
firm have to work. For example, before 1991, the Indian
economic system was of the type of a mixed economy with
pronounced orientation towards the public sector. Prior to 1991
private sector’s role in India’s mixed economy was greatly
restricted.
Many industries were reserved exclusively for investment and
production by the public sector.Private sector operations were
limited mainly to the consumer goods industries. Even in these
goods the private sector production and operation was controlled
by industrial licensing system, Monopolistic and Restrictive
Trade Practices (MRTP) Commission. The private sector was also
subjected to various export and import-restrictions. High tariffs
were imposed to protect domestic
industries and to pursue import substitution strategy of
industrial growth.Now, there have been significant changes in the
economic policies since 1991 which have changed the
macroeconomic environment for private sector firms. Far-
reaching structural economic reforms were carried out by Dr.
Manmohan singh during the period 1991-96 when he was the
Finance Minister. Industrial licensing has been abolished and
private sector can now invest and produce many industrial
products without getting license from the government.
Many industries, except only a few industries of strategic
importance, which were earlier reserved for the public sector
have been thrown open for the private sector. Import duties have
been greatly reduced due to which domestic industries face
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competition from the imported products. Incentives have been

given to boost exports. Rupee has been made convertible into
foreign currencies on current account. It is thus evident that new
economic reforms carried out since 1991 has significantly
changed the business environment.
Social and Cultural Environment:
Members of a society wield important influence over business

firms. People these days do not accept the activities of business
firms without question. Activities of business firms may harm the
physical environment and impose heavy social costs. Besides,
business practices may violate cultural ethos of a society. For
example, advertisement by business firms may be nasty and hurt
the ethical sentiments of the people.
Businesses should consider the social implications of their
decisions. This means that companies must seriously consider the
impact of its actions on the society. When a business firm in their
decision making take care of social interests, it is said to be
socially responsible.
Social responsibility is the felt obligation or self-enforced duty of
business firms to serve or protect social interests. By doing so
they promote social well-being. Good corporate governance
should be judged not only by the productivity and profits earned
by a business firm but also by its socialwelfare promoting
activities.It is worth noting that in modern management science a
new concept of social responsiveness has been developed. By
social responsiveness we mean “the ability of a corporate firm to
relate its operations and policies to social environment in way
that are mutually beneficial to the company and society at large”.
It may be noted that social responsibility or social responsiveness
is related to ethics. The discipline of ethics deals with what is
good and bad, or right and wrong or with moral duty and
obligation.
Further, even if managers enjoy full freedom to adopt actions and
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policies in accordance with the conceived notion of social

responsibility, they may not do so if standards applied to evaluate
their performance are quite different.
Every manager would like its performance to be positively
appraised. Therefore, if the performance of managers of business
firms are judged by the amount of profits. they make for the
owners of the firms, it is then not proper to expect socially
responsible actions from them.
Political and Legal Environment:
Businesses are closely related to the government. The political

philosophy of the government wields a great influence over
business policies. For example, after independence under the
leadership of Jawahar Lal Nehru India adopted ‘democratic
socialism as its goal.In the economic sphere it implied that public
sector was to play a vital role in India’s economic
development. Besides, it required that working of the private
sector were to be controlled by a suitable industrial policy of the
government. In this political framework provide business firms
worked under various types of regulatory policies which sought
to influence the directions in which private business enterprises
had to function.
Thus, Industrial Regulation Act 1951, Industrial Policy Resolution
1956, Foreign Exchange Regulation Act (FERA), Monopolistic and
Restrictive Practices (MRTP) Act were passed to control the
business activities of the private sector. Besides, role of foreign
direct investment was restricted to only few spheres.
However, since 1991 several structural economic reforms have
been undertaken following a change in political philosophy in
favour of a free market economy. The collapse of socialism in
Soviet Russia, China and East European Countries has brought
about a change in political thinking about the roles of public and
private sectors in India’s industrial development.
To encourage the growth of the private sector in India, licensing
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has now been abolished, role of public sector greatly reduced and
foreign capital, both direct and portfolio, is being encouraged to
raise the rate of capital formation in the Indian economy. FERA
has been replaced by FEMA (Foreign Exchange Management Act)
It is evident from above that with the change in the nature of
political philosophy business environment for private firms has
greatly changed.
Technological Environment:
The nature of technology used for production of goods and

services is an important factor responsible for the success of a
business firm. Technology consists of the type of machines and
processes available for use by a firm and the way of doing things.
The improvement in technology raises total factor productivity of
a firm and reduces unit cost of output.The use of a superior
technology by a firm gives it a competitive advantage over its
rival firms. The use of a particular technology by a firm for its
transformation process determines its competitive strength. In
this age of globalisation the firms have to compete in the
international markets for sales of their products. The firms which
use outdated technologies cannot compete globally. Therefore,
technological development plays a vital role in enhancing the
competitive strength of business firms.It has been generally
observed that the competition between firms in the domestic
economy and in international markets ensures that the firms will
try to improve the technology they use because failure to do so
would pose a threat to their survival. In the protected markets,
technological
improvements are slow and firms are able to survive for a long
period without making technological changes.
This is quite evident from the experience of automobileindustry
in India. Manufacturers of Ambassadors and Fiat Cars not only
made no significant changes in their models, but also did not
make any improvement in technology for decades because of
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absence of competition. The users had no choice and Ambassador

and Fiat cars survived for decades in the protected
environment.It is when Maruti Udyog Ltd. was started in India
using superior technology and introducing more
attractive models that there has been a significant improvement
in car manufacturing. With liberalisation of the Indian economy
new car manufacturing firms have entered the industry and are
producing different verities and models of cars with improved
technology.Besides, the cotton textile industry is another
important example of an industry which due to protection
provided to it by imposing high tariffs on imports of cotton
textiles became sick.
Following trade liberalisation many cotton textile firms have
closed down because they could not withstand competition.
Technological environment affects the success of firms and the
need for technological advancement cannot be ignored.
Demographic Environment:
Demographic environment includes the size and growth of

population, life expectancy of the people, rural-urban distribution
of population, the technological skills and educational levels of
labour force. All these demographic features have an important
bearing on the functioning of business firms. Since new workers
are recruited from outside the firm, demographic factors are
considered as parts of external environment.
The skills and ability of a firm’s workers determine to a large
extent how well the organisation can achieve its mission. The
labour force in a country is always changing. This will cause
changes in the work force of a firm. The business firms have to
adjust to the requirements of their employees. They have also to
adapt themselves to their child care services, labour welfare
programmes etc.The demographic environment affects both the
supply and demand sides of business organisations. Firms obtain
their working force from the outside labour force. The technical
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and education skills of the workers of a firm are determined

mostly by human resources available in the economy which are a
part of demographic environment.
On the other hand, the size of population and its rural-urban

distribution determine the demand for the products of industrial
firms. For example, when there is good monsoon in India causing
increase in incomes of rural population dependent on agriculture,
demand for industrial products greatly increases.In the wake of
economic reforms initiated in the early nineties when foreign
investors were allowed to make investment in India, they were
prompted to invest in India by pointing out that the size of Indian
market was quite large. They were told that 200 million Indian
people could afford to buy the industrial products and this
constituted quite a large market which could be profitably
exploited.
Besides, the growth rate of population and age composition of
population determine the demand pattern of goods. When the
population of a country is growing at a high rate, its child
population will be relatively large. This means demand for
products such as baby food which cater to the needs of children
will be relatively high.
On the other hand, if population of a country is stable and life
expectancy of the people is high,this will cause greater
proportion of elderly aged people in the population of a country.
This means different demand pattern of goods. Thus business
firms have to consider all these demographic factors in their
planning for production of goods and services and formulation of
marketing strategies for sale of their products.
Demographic environment is also important for business firms as
it determines the choice of technology by them. Other things
being equal, if labour is abundant and relatively cheaper than
capital, business firms will prefer relatively labour-intensive
techniques for production of goods.
However, for various reasons such as rigid labour laws and low
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productivity of labour, various tax concessions on investment in

capital equipment and machinery, business firms in India are
generally seem to be using capital-intensive technologies
imported from abroad. This has resulted in the increase in
unemployment of labour, especially among the young workers.
Therefore, social and government pressure is increasing on the
business firms to create more employment opportunities for
labour so as to render help in solving the problem of
unemployment. It is quite interesting to note here that to take
advantages of relatively cheap labour in India and China that
foreign MNCs are setting up manufacturing plants in these
countries. It is evident from above that demographic factors play
a crucial role in determining the productive activity of business
firms.
Natural Environment:
Natural environment is the ultimate source of many inputs such

as raw materials, energy which business firms use in their
productive activity. In fact, availability of natural resources in
region or country is a basic factor in determining business
activity in it. Natural environment which includes geographical
and ecological factors such as minerals and oil reserves, water
and forest resources, weather and climatic conditions, port
facilities are all highly significant for various business activities.
For example, the availability of minerals such as iron, coal etc. in a
region influence the location of certain industries in that region.
Thus, the industries with high material contents tend to be
located near the raw material sources. For example, steel
producing industrial units are set up near coal mines to save cost
of transporting coal to distant locations.Besides, certain weather
and climatic conditions also affect the location of certain business
units. For example, in India the firms producing cotton textiles
are mostly located in Bombay, Madras, and West Bengal where
weather and climatic conditions are conducive to the production
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of cotton textiles.
Natural environment also affects the demand for goods. For
example, in regions where there is high temperature in summer
there is a good deal of demand for dessert coolers, air
conditioners, business firms set up industrial units producing
these products. Similarly, weather and climatic conditions
influence the demand pattern for clothing, building materials for
housing etc. Furthermore, weather and climatic conditions
require changes in design of products, the type of packaging and
storage facilities.It may however be noted that resource
availability is not a sufficient condition for the growth of
production and business activities. For instance, India through
rich in natural resources remained poor and underdeveloped
because available resources had not been put to use due to lack of
dequate capabilities of Indian business class. Thus, it is not the
availability of natural resources alone but also the technology and
ability to being them into use that determines the growth of
business and the economy.
Enviornmental change
Global business environmental change refers to the significant

alterations in the natural environment that have an impact on the
global business landscape. These changes can be caused by both
natural and human factors and can have a wide-ranging impact
on businesses and their operations. Such changes include climate
change, deforestation, pollution, depletion of natural resources,
and more.
Climate change, in particular, is a significant environmental

change that affects global business. It can result in extreme
weather events, such as floods and droughts, which can disrupt
supply chains, damage infrastructure, and affect the availability
and quality of natural resources.
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Moreover, businesses that rely on natural resources or

ecosystems, such as agriculture, forestry, and fisheries, are
particularly vulnerable to environmental change. Changes in
temperature, precipitation, and sea levels can affect crop yields,
fish populations, and forest growth, leading to losses and reduced
profits.
In response to these challenges, global businesses are

increasingly adopting sustainable practices and reducing their
carbon footprint to mitigate the impact of environmental change.
Such steps include investing in renewable energy, reducing waste
and emissions, promoting sustainable sourcing, and adopting
circular economy principles. By doing so, businesses can ensure
their operations are resilient to environmental change, remain
profitable, and contribute to a sustainable future.
Techniques For Environmental Analysis:-
Meaning of environmental analysis

An environmental analysis is a strategic technique used to
identify all internal and external factors that could affect a
company’s success. Internal components reveal the strengths and
shortcomings of a company, while external components
represent the opportunities and risks. This exists outside of the
company.Trends and high-level factors are considered in it;
another name for this is environmental scanning.
Interest rates, for example, and how they may affect a company’s
operations. These analyses can help businesses achieve
attractiveness in their market.
Importance of environmental analysis
Organizations need to do environmental analysis because it helps

them:
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Find opportunities: By looking at the outside world,

organizations can find new trends and chances to enter new
markets or make new products or services.
Identify threats: It helps businesses find threats to their

business, such as new competitors, changes in regulations, or a
slowing economy.
Create effective strategies: Organizations can create effective

strategies that are in line with their goals and objectives when
they understand how the outside world affects their business.
Anticipate change: Environmental scanning helps organizations

plan ahead for changes in the outside world and create strategies
to deal with them.
Make informed decisions: It helps organizations learn more

about the outside factors that affect their business so that they
can make better decisions.
Organizations that want to stay competitive and successful in a

business world that is changing quickly need to do environmental
analysis. It helps them take advantage of opportunities, lower
risks, and come up with good plans that lead to growth and
success.
Environmental analysis process
Environmental analysis is the process of assessing and evaluating

the internal and external factors that can have an effect on an
organization’s performance and strategy. This analysis aims to
find opportunities, threats, strengths, and weaknesses so that the
organization can make a good strategy that fits its goals and
objectives.
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The environmental analysis process usually involves the

following steps:
1. Determine the effects on the environment

To begin a business environmental analysis procedure, select
environmental factors evaluating. Your industry determines this.
For example, if you work in a medical facility, you might want to
think about legal implications. Regulations managing healthcare
experience and safety, for example. Choose factors that have the
potential to influence how you make deals.
2. Obtain information
Collect information about your chosen environmental factors
once you decide which ones to evaluate. You can observe your
factors and conduct research here. There are two types of
information to gather: verbal and written data. Hearing is how
people obtain verbal information.
As an example, consider listening to a radio broadcast. They
obtain written information from sources such as newspapers and
magazines. Using the preceding example, this would involve
conducting research online and in medical magazines.
It will assist you in determining whether or not there have been
any changes to health and safety regulations because this may
have an impact on your healthcare facility.
3. Consider your competitors

You may want to gather information about your competitors. To
see if they pose any threats. You can accomplish this by
employing a technique known as spying. This involves unusually
gathering information.Using the same example, you could spy on
a nearby health facility to learn about recent activity.
4. Examine your strategies

Finally, evaluate your present and prospective strategies to
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determine how future environmental changes will impact your

organization. This assists you in resolving potential issues. These
factors could have been to blame.
For example, the health facility may wish to develop a new

strategy. It will clearly show how they aim to deal with the
decrease in clients caused by their competitor’s new branch.
Environmental analysis tools
Environmental analysis is frequently used to assist businesses. It

is used before launching a new product or service.
For example, survey the landscape of competitors, customers,
economic conditions, market conditions, and so on. PESTEL is a
popular project management tool for performing this analysis.
It refers to the factors that are political, economic, social, and

technological. The various components of a PESTEL analysis are
listed alphabetically below.
Political
Political issues refer to the level of government intrusion into an
organization’s operations. Primary concerns include taxes, tariffs,
regulations, elections, and political stability.
For example, different political parties hold divergent viewpoints

on raising the minimum wage. Small businesses may be affected
by an election.
When one candidate proposes raising the minimum wage, it may

impact their product/service prices and ability to retain current
employees.
Economic
Businesses in the United States first consider the overall health of
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the American economic factors. Growth, employment, inflation,

and interest rates are just a few examples. Organizations
operating outside of the United States will concentrate on
exchange rates.
A startup, for example, may assess the current state of the
economy to determine whether or not it will be able to survive.
The long-term revenue and expenses of a company are affected
by economic conditions.
Social
Shifts in age, demographic changes, changing attitudes toward
safety and health, customer preferences, and technical
improvements. All are examples of social challenges. 86 percent
of young people, for example, use social media.
As a result, of successful business strategies, millennials are more
likely to run promotional ads, especially on social media
platforms.
Technology
The technology involves research and development, robotics,
automation, and any other type of technological advancement.
New technologies are referred to as “technological disruption.” It
has the ability to change the cast of leading competitors
dramatically.
For example, the popularity of Facebook was a technological
challenge for Myspace. It was once the most popular social media
network in the early 2000s.
Environmental
Climate change, weather, air quality, and natural disasters are
examples of environmental factors. Changes in the environment
threaten some industries more than others.
Farmers, for example, could watch the Weather Channel or read
the Farmer’s Almanac. Because pesticide treatment, irrigation
schedule, planting dates, and fungicide application are all affected
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by the weather.
Legal
Legal factors involve employment, health, and safety policies.
Customer safety and discrimination laws can also have an impact
on a company’s capacity to operate.
Congress, for example, passed the Dodd-Frank Act in 2009.
Following the Great Recession, banks were subjected to strict
requirements to protect customers.
Environmental Analysis Techniques
PESTLE Analysis
This is essentially a bird’s eye view of corporate behavior.

Because we take a broad look at some macro issues that
significantly impact the health of a particular business or
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industry, this study is used by managers and strategists to

determine where their market is right now. It also assists in
evaluating the company’s future position.
The PESTLE study considers several factors that have an impact

on the business environment. It is a macroeconomic instrument
that is used to understand the external environment through
more extensive environmental analysis.
Each letter in the acronym represents a different component.

These factors can directly or indirectly impact any sector or
organization.
SWOT Analysis
SWOT stands for strengths, opportunities, weaknesses, and

threats. These four factors are utilized to determine where a
company stands regarding strategy.
These four elements are divided into two groups.
Internal Factors
Internal factors in this type of analysis are strengths and
weaknesses. Because they can be affected and even controlled
by the organization, they are referred to as internal analysis if a
corporation has a firm brand name.
This is a strength because it was made possible by the

organization’s efficient use of resources. As a result, this is an
internally generated element that highlights one of the causes of
the company’s success.
External Factors
External considerations in this type of environmental assessment
include threats and opportunities. Unlike the elements listed
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above, the company cannot control them in any way. In fact, these
circumstances frequently occur on their own.
Competition is a concern to all businesses since it is impossible to
eliminate it. As a result, external factors function in this manner.
Now that you know how to do a SWOT analysis, you can include
your findings in your environmental study. Strengths may be
enhanced, weaknesses can be eliminated by taking advantage of
opportunities when they arise, and threats can be minimized by
remaining vigilant.
Benefits of environmental analysis
Environmental evaluations help organizations in detecting

potential effects. That could pose a hazard or an opportunity. This
assists them in anticipating changes in their environment.
The internal insights from the environmental analysis are used to
evaluate things like how well employees are doing their jobs, how
happy customers are, how much maintenance costs, etc., so that
corrective action can be taken where needed.
Also, the external metrics help the organization positively
respond to its environment and ensure its strategies align with its
goals.
This helps to find threats early on, which helps the organization
come up with plans for how to stay alive. On top of that, it looks
for opportunities, like potential customers, new products,
segments, and technologies, so that it can take up the most
market share possible compared to its competitors.
Using environmental factors analysis has several advantages,
including the following
Enviromental Analysis Advantages
• Predicting the future

• Recognizing threats and allowing them to develop a response
strategy
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•Assisting in the achievement of business goals

• Increasing organizational effectiveness
Global Strategic management

A global strategy is a plan to help a company grow from an
international business (which sells products or services in other
countries) to a global business that operates facilities like
factories and distribution centres around the world. A global
strategy typically focuses on growing sales, profits and earnings,
all of which are key to helping a company achieve its expansion
goals.
Why is global business strategies important?

Developing a global strategy is essential to a successful global
business. This strategy will increase sales, increase resources,
increase brand awareness, lower cost, let the company take
advantage of economies of scale, diversify risk, and increase
flexibility
Four Global business strategies
A major concern for managers deciding on a global business

strategy is the tradeoff between global integration and local
responsiveness. Global integration is the degree to which the
company is able to use the same products and methods in other
countries. Local responsiveness is the degree to which the
company must customize their products and methods to meet
conditions in other countries. The two dimensions result in four
basic global business strategies: export, standardization,
multidomestic, and transnational. These are shown in the figure
below.
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Export Strategy
An export strategy is used when a company is primarily focused

on its domestic operations. It does not intend to expand globally
but does export some products to take advantage of international
opportunities. It does not attempt to customize its products for
international markets. It is not interested in either responding to
unique conditions in other countries or in creating an integrated
global strategy.
Standardization Strategy
A standardization strategy is used when a company treats the

whole world as one market with little meaningful variation. The
assumption is that one product can meet the needs of people
everywhere. Many business-to-business companies can use a
standardization strategy. Machines tools and equipment or
information technologies are universal and need little
customization for local conditions. CEMEX, the Mexico-based
cement and building materials company, was able to expand
globally using a standardization strategy. Apple uses a
standardization strategy because its products do not have to be
customized for local users. An iPod will look the same wherever
you buy it. Domino’s Pizza also uses a standardization strategy.
Although toppings may vary to meet local tastes, the basic recipes
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are the same and the store model of carryout or delivered pizza is
the same everywhere. A standardization strategy produces
efficiencies by centralizing many common activities, such as
product design, gaining scale economies in manufacturing,
simplifying the supply chain, and reducing marketing costs.
Multidomestic Strategy
A multidomestic strategy customizes products or processes to the

specific conditions in each country. In the opening example,
Lincoln Electric should have used a multidomestic strategy to
customize its manufacturing methods to the conditions in each
country where it built factories. Retailers often use multidomestic
strategies because they must meet local customer tastes. 7-
Eleven is an example of a company using a multidomestic
strategy. It tailors the product selection, payment methods, and
marketing to the values and regulations in each country where it
operates. For example, in Japan, 7-Eleven allows customers to
pay their utility bills at the store. In a company with a
multidomestic strategy, overall management is centralized in the
home country but country managers are given latitude to make
adaptations. Companies sacrifice scale efficiencies for
responsiveness to local conditions. Companies benefit from a
multidomestic strategy because country managers understand
local laws, customs, and tastes and can decide how to best meet
them.
Transnational Strategy
A transnational strategy combines a standardization strategy and

a multidomestic strategy. It is used when a company faces
significant cost pressure from international competitors but must
also offer products that meet local customer needs. A
transnational strategy is very difficult to maintain because the
company needs to achieve economies of scale through
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standardization but also be flexible to respond to local conditions.

Ford Motor Company is adopting a transnational strategy. Ford is
producing a “world car” that has many common platform
elements that accommodate a range of add-ons. That way Ford
benefits from the standardization of costly elements that the
consumer does not see but can add custom elements to meet
country laws, can customize marketing to local standards, and
can provide unique products to meet local tastes.
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UNIT -2
Economic Environment
The totality of economic factors, like employment, income,

inflation, interest rates, productivity and wealth that affect the
setting up of new enterprise or existing ones constitute the
economic environment. It refers to all those economic factors
which have a bearing functioning of the business unit. Business
largely depends on economic environment for all the needed in-
puts and to sell the finished goods.
For example, When an economy is doing good, entrepreneurs will

set up new ventures expand and modernize existing ones to
increase output and profitability.
Economic environment of business has reference to the broad

characteristics of the economic system in which the business
operates.
The dependence of business on the economic environment is

total and it is not surpris- ing because, as it is rightly said,
"Business is one unit of the total economy." It includes all
economic institutions and their framework, nature of the
economic system, fiscal and monetary policies and Government
policies and programs. Since business is an economic activity
and business decision making is an economic process, the
economic environment is mainly related with business policies
and strategies.
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ECONOMIC SYSTEMS
Economic system is a social organism through which people

make their living. It is constituted of all those individuals,
households, farms, firms, factories, banks and government, which
act and interact to produce and consumer goods and services.
Individuals and households put their resources (land, labour,
capital and skill) to one or more of their alternative uses and
make their living; firms buy factors of production and organize
them in the process of production, produce
goods and services, and sell them to their users to make projects.
Consumers are able to get the goods and services of their

requirement; producers are able to produce and sell various
kinds of products in appropriate quantities and so on. The system
is operated by, What Adam Smith called “invisible hands”, the
market forces of demand and supply.
A modern economic system is enormously complex. Millions of

people participate and contribute to its working in different
capacities – as producers, traders, workers, consumers and
financers and so on. Thousands of people are involved in
production and distribution of single commodity. A
community, before it reaches its final consumer, passes through a
complex process of production and through a number of
intermediary hands.
Kinds of economic systems

Free Enterprise Economy
Government Controlled Economy
Mixed Economy
Free Enterprise Economy
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This economic system works on the principle of Laissez Faire

system, i.e., the least interference by the government or any
external force. The primary role of the government, if any, is to
ensure free working of the economy by removing obstacles to
free competition.
A free Enterprise Economy is characterized as follows:
a) Means of production are privately owned by the people who

acquire and posses them
b) Private gains are the main motivating and guiding force for
carrying out economic activities
c) Both consumers and firms enjoy the freedom of choice;
consumers have the freedom to consume what they want to and
firms have the choice to produce what they want to
d) The factor owners enjoy the freedom of occupational choice,
i.e., they are free to use their resources in any legal business or
occupation;
e) There exists a high degree of competition in both commodity
and factor markets and
f) There is least interference by the government in the economic
activities of the people; the government is in fact supposed to
limit its traditional functions viz, to defense, police,
justice, some financial organizations and public utility services.
Government Controlled Economy
The government-controlled economies are also called as

Command, Centrally planned or Socialist economies. Such
economies are, in contradistinction to the free enterprise
economies, controlled, regulated and managed by the
government agencies.
The other features of a pure socialist economy are:
a) Means of production are owned by the society or by the state

in the name of the community private ownership of factors and
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property is abolished;
b) Social welfare is the guiding factor for economic activities –
private gains, motivations and initiatives are absent,
c) Freedom of choice for the consumers is curbed to what society
can afford for all, and
d) The role of market forces and competition is eliminated by
law.
Mixed Economy
A mixed economy is one in which there exist both government

and private economic systems. It is supposed to combine good
elements of both free enterprise and socialist economies. A mixed
economy is widely known as one, which had both “public sector”
(the government economy) and “private sector” (the private
economy). The private sector has features of a free enterprise
economy and the public sector has features of socialist economy.
It is important to note here that most
economies in the world today are Mixed Economies.
There are two different forms of the Mixed Economies.
Mixed Capitalist Economies

Mixed Socialist Economies
Mixed Capitalist Economies

A mixed Capitalist economy is a variant of the free enterprise
economic system. To this category fall the highly developed
nations like the United States, U.K., France, Japan etc. though
these economies have a very large government sector, their
private sectors work on the principles of the free enterprise
system. The government plays a significant role in preserving
capitalist mode of production, ensuring a workable competition
in factor and product markets, providing infrastructure for
promotion of private sector economic activities.
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Mixed Socialist Economies

To the category of the Mixed Socialist Economies belong the
countries which have adopted “socialist pattern of society: and
economic planning as he means of growth and social justice (e.g.
India) and the former communist countries (eg. Russia and china)
which have of late carried out drastic economic reforms and
liberalized their economies for private entrepreneurship. The
government of these countries takes upon themselves to control
and regulate the private sector
activities in accordance with the plan objectives.
BASIC PROBLEMS OF AN ECONOMY AND THE ROLE OF

GOVERNMENT
Whatever the nature of the economic system, all types of

economies have been faced with certain common basic problems.
The major economic problems faced by an economy may be
classified into two broad groups:
a) micro-economic problems called basic problems, which are
related to the working of the constituents of the economic
system; and
b) macro-economic problems related to the growth, stability, and
management of the economy as a whole.
The way the basic problems of an economy are solved depends

on the nature of the economy.
While in a socialist economy they are solved by the government
agencies, like central planning authority, in a free enterprise or
mixed capitalist economy this task is performed by the Price
Mechanism or Market Mechanism.Though free enterprise system
is capable of bringing economic growth, it does not ensure a
stable, sustained, and balanced growth. It becomes therefore
inevitable for the government to intervene fair competition, and
help the economy in achieving its goals efficiency, stability,
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growth and economic justice.
Now, the question arises as to what should be the appropriate

role of the government in economic management of the country
or what should be the form, nature and extent of government’s
interference with market mechanism. Nevertheless, the economic
role of the government can be broadly categorized on the basis of
the three economic systems which presently prevail in the world,
viz., Capitalist System or Free Enterprise System,Socialist System,
and the MixedEconomy System.
Capital Society
In this system, the primary role of the government are:

a) To preserve and promote free market mechanism wherever it
is possible to ensure a workable competition,
b) To remove all unnecessary restrictions on the free operation of
competitive market, and
c) To provide playground and rules of the market game through
necessary interventions and controls so that free competition can
work effectively.
It may be inferred that the government’s role in a capitalist

society is supposed to be limited to
a) Restoration and promotion of necessary conditions for
efficient working of free market mechanism; and
b) To enter those areas of production and distribution in which
private entrepreneurship is lacking or is inefficient.
Socialist Economy:
In contract with the capitalist system, the role of government in a

Socialist economy is much more exhaustive. While in the former,
the government is supposed to play a limited role in the economic
sphere, in the latter, it exercises comprehensive control on almost
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all economic activities. In the socialist system, not only there is a

complete disregard for free enterprise and market mechanism
but also these systems are abolished by law. The private
ownership of factors of production is replaced by the State
ownership. All economic activities are centrally planned,
controlled and regulated by the State. All decisions regarding
production resources, allocation, Employment, pricing etc., are
centralized in the hands of government or the Central Planning
Authority.
Mixed Economy:
In this system, a major part of the economy, the private sector, is

allowed to function on the principles of free enterprise system or
free market mechanism within a broad political and economic
policy framework. The other part of the economy, the public
sector, is organized and managed along the socialist pattern. The
public sector is created by reserving certain industries, trade,
services, and activities for the government control and
management. The government prevents by an ordinance the
entry of private capital into the industries reserved for the public
sector. Another way of creating or expanding the public sector is
nationalization of existing
industries. The promotion, control and management of the public
sector industries is the sole responsibility of the State.
Apart from controlling and managing the public sector industries

the government controls and regulates the private sector through
its industrial, monetary and fiscal policies. If necessary, direct
controls are also imposed.
The survival and success of each and every business enterprise

depend fully on its economic environment. The main factors that
affect the economic environment are:
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Economic Conditions:
The economic conditions of a nation refer to a set of economic

factors that have great influence on business organizations and
their operations. These include gross domestic product, per
capita income, markets for goods and services, availability of
capital, foreign exchange reserve, growth of foreign trade,
strength of capital market etc. All these help in improving the
pace of economic growth.
Economic Policies:
Economic policy refers to the actions that governments take in

the economic field. It covers the systems for setting levels of
taxation, government budgets, the money supply and interest
rates as well as the labour market, national ownership, and many
other areas of government interventions into the economy.
All business activities and operations are directly influenced by
the economic policies framed by the government from time to
time. Some of the important economic policies are:
Industrial policy
Fiscal policy
Monetary policy
Foreign investment policy
Export –Import policy (Exim policy)
The government keeps on changing these policies from time to

time in view of the developments taking place in the economic
scenario, political expediency and the changing requirement.
Every business firm has to function strictly within the policy
framework and respond to the changes therein.
Important Economic Policies
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Industrial policy: The Industrial policy of the government covers

all those principles, policies, rules, regulations and procedures,
which direct and control the industrial enterprises of the country
and shape the pattern of industrial development.
Fiscal policy: It includes government policy in respect of public

expenditure, taxation and public debt.
Monetary policy: It includes all those activities and

interventions that aim at smooth supply of credit to the business
and a boost to trade and industry.
Foreign investment policy: This policy aims at regulating the

inflow of foreign investment in various sectors for speeding up
industrial development and take advantage of the modern
technology.
Export–Import policy (Exim policy): It aims at increasing

exports and bridge the gap between expert and import. Through
this policy, the government announces various duties/levies. The
focus now-a-days lies on removing barriers and controls and
lowering the custom duties.
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Political Environment
The political environment in international business consists of a

set of political factors and government activities in a foreign
market that can either facilitate or hinder a business' ability to
conduct business activities in the foreign market. There is often a
high degree of uncertainty when conducting business in a foreign
country, and this risk is often referred to as political risk or
sovereign risk. Political environment refers political and
government and legal environment. It has close relationship with
the economic system and economic policy. For instance; the
Communist countries had a centrally planned economic system.
Communist government countries laws are control investment
and related matters. There are number of laws that regulates the
conduct of the business. These laws cover such matter as
standards of business and its production and service.
Common Political Factors

Let's look at some common political factors that influence the
international business landscape. The type of economic system a
country builds is a political choice. Foreign countries often will
have different economic systems from your domestic market and
adjustments often need to be made to take these differences into
account.
For example, a country may operate in a market economy where
private individuals own most of the property and operate most of
the businesses. A market economy is usually the best economic
environment for a foreign business because of the protection of
private property and contract rights.
Some countries lean more towards a socialist economy where

many industries and businesses are owned by the state.
Operating businesses in this environment will be more difficult
but products can still be produced and sold as people still pick
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their jobs and earn money.A few countries operate under a

communistic economic system where the state pretty much
controls all aspects of the economy. Conducting business in this
environment ranges from difficult to impossible.
Of course, the reality is that all economies are mixed economies

that take parts from two or more of the 'pure' economic systems.
For example, you can conduct business in communist China in
Hong Kong and other special areas where a market economy is
allowed to operate.Businesses also must often contend with
different governmental systems. Examples include democracies,
authoritarian governments, and monarchies. Some governments
are easier to work with than others. Democracies, for example,
are answerable to their citizens and the rule of law.
Authoritarian regimes are usually answerable to no one,
including the law. It is less risky to conduct business in
democracies and constitutional monarchies, a monarchy with a
constitution that protects the public and subjects the monarch to
the rule of law, than in countries with authoritarian regimes. The
next major factor is trade agreements. Countries often enter into
trade agreements to help facilitate trade between them. If your
country has entered into a trade agreement with another country,
conducting business in that country will usually be easier and
less risky because the trade agreement will provide some
predictability and protection. One great advantage, for example,
is that your products will be subjected to fewer trade barriers
that serve as obstacles to exporting your products into the
country.A barrier to trade is a government-imposed restraint on
the flow of international goods or services. The most common
barrier to trade is a tariff—a tax on imports. Tariffs raise the
price of imported goods relative to domestic goods (goods
produced at home).
a) The democratic governments countries law’s / act are passed

in the parliament. Then they are regulating rules and regulation
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of business according to the act.

b) Political stability, responsibility, political ideology and level of
political morality, the law and order situation, and practice of the
ruling party and major purposefulness and efficiency of the
government agencies.
c) Political agency’s nature, its influence to economic and
industrial act ivies in the country.
d) Government policies like fiscal, monetary, industrial, labour,
and export and importpolicies which are influenced to specific
legal enactments and framework towards the business
organisation political legal function and degree of the
effectiveness which are influenced to formulate and implement
policy in the legislature.
The political environment is based on the uncertainty, therefore,

demographic countries consist of number of political parties.
Political parties aren’t got clear majority to form a government. In
this situation, industry and commerce collapsed their business
activities due to hung government. The political parties are
unable to formulate stable government, it affect and fluctuate the
government policies. Therefore, business organisation and public
are needed to the stable government.
Elements of Political and legal Environment

There are three important elements are associated with the
political and legal environment as listed below:
a) Government
b) Legal
c) Political
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Government:
Government policies, rules and regulation are controlling and

monitoring the business enterprises and its activities in the state.
Secondly, the type of government administration of the state and
what is the business policy of state? These things should be
evaluated by the strategist from point of view of business.
Strategist should study about the changes in the regulatory
framework of the government and impact on the business.
Government tax policies are critical and affect to the
business organisation.
Legal:
Sound legal system is the basic requirement for running of the

business operating within the state.Strategist should aware of
various business laws which are protecting consumers,
competitors, and organisation. Business organisation should
aware of the laws which relevant to companies,competitors,
intellectual property, foreign exchange, labor and so on.
Political
a) Political system is also influenced to business and its activities.

b) Political pressure groups influence to government and in this
way some extent to control and regulate business activities with
in the country.
c) Recently, special interest groups and political action committee
put pressure to business organisation and to pay more attention
towards consumer’s rights, minority rights and
women rights.
Role of Government in Economic Development of a Country
The government enhances growth and stability of the economy. It

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provides the infrastructure and systems that facilitate economic

activity while formulating regulations and controls to ensure
order and fairness in businesses operations. The government
may directly chip in to prop up the economy.
The government supports the economy when it facilitates
transport and communication via the postal service and
highways and establishes the police and military to safeguard life
and property.
Local or state governments support the economy by funding
education and building roads.Governments devise rules that
ensure businesses operate in the best interests of the public. For
instance, the government may allow a monopoly to operate in a
market or industry with little competition, such as in utility
services, but limit the company’s freedom to increase prices to
avoid hurting consumers who would have no recourse.
A government devises monetary policies to keep the economy
growing at the desired pace. By controlling circulation of money,
adjusting interest rates and tax rates, and controlling access to
credit, the government can control the inflation or the decline of
the economy. Likewise, the economy is affected when the
government gives certain businesses preferential treatment, such
as by limiting foreign competition in a specific market or
imposing higher taxes on imports to boost domestic production.
In modern times, State participation in economic activity can
hardly be a matter of disagreement.The free play of
economicforces, even in highly developed capitalist countries, has
often meant large unemployment and instability of the economic
system.
In the advanced countries, State intervention has been invoked to
ensure economic stability and full employment of resources. State
action is all the more inevitable in under-developed economies
which are struggling hard to get rid of poverty and to attain
higher living standards.
Accordingly, Governments are playing a vital role in the
development of under-developed economies.
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Their role is all the more remarkable in the following respects:
Comprehensive Planning:
In an under-developed economy, there is a circular constellation

of forces tending to act and react upon one another in such a way
as to keep a poor country in a stationary state of under-
development equilibrium. The vicious circle of under-developed
equilibrium can be broken only by a comprehensive government
planning of the process of economic development. Planning
Commissions have been set up and institutional framework built
up.
Institution of Controls:
A high rate of investment and growth of output cannot be

attained, in an under-developed country, simply as a result of the
functioning of the market forces. The operation of these forces is
hindered by the existence of economic rigidities and structural
disequilibria. Economic development is not a spontaneous or
automatic affair.On the contrary, it is evident that there are
automatic forces within the system tending to keep it moored to a
low level. Thus, if an underdeveloped country does not wish to
remain caught up in a vicious circle, the Government must
interfere with the market forces to break that circle. That is why
various controls have been instituted, e.g., price control, exchange
control, control of capital issues, industrial licensing.
Social and Economic Overheads:
In the initial phase, the process of development, in an under-

developed country, is held up primarily by the lack of basic social
and economic overheads such as schools, technical institutions
and research institutes, hospitals and railways, roads, ports,
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harbours and bridges, etc. To provide them requires very large

investments.Such investments will lead to the creation of external
economies, which in their turn will provide incentives to the
development of private enterprise in the field of industry as well
as of agriculture. The Governments, therefore, go all out
inbuilding up the infrastructure of the economy for initiating the
process of economic growth.Private enterprise will not undertake
investments in social overheads. The reason is that the returns
from them in the form of an increase in the supply of technical
skills and higher standards of education and health can be
realised only over a long period. Besides, these returns will
accrue to the whole society rather than to those entrepreneurs
who incur the necessary large expenditure on the creation of
such costly social over-heads.
Therefore, investment in them is not profitable from the
standpoint of the private entrepreneurs, howsoever productive it
may be from the broader interest of the society. This indicates the
need for direct participation of the government by way of
investment in social overheads, so that the rate of development is
quickened.
Investments in economic overheads require huge outlays of

capital which are usually beyond thecapacity of private
enterprise. Besides, the returns from such investments are quite
uncertain and take very long to accrue. Private enterprise is
generally interested in quick returns and will be seldom prepared
to wait so long.Nor can private enterprise easily mobilize
resources for building up all these overheads. The State is in a far
better position to find the necessary resources through taxation
borrowing and deficitfinancing sources not open to private
enterprise. Hence, private enterprise lacks the capacity to
undertake large-scale and comprehensive development. Not only
that, it also lacks the necessary approach to development. Hence,
it becomes the duty of the government to build up the necessary
infrastructure.
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Institutional and Organisational Reforms:
It is felt that outmoded social institutions and defective

organisation stand in the way of economic progress. The
Government, therefore, sets out to introduce institutional and
organisational reforms. We may mention here abolition of
zamindari, imposi¬tion of ceiling on land holdings, tenancy
reforms, introduction of co-operative farming, nationalisation of
insurance and banks reform of managing agency system and
other reforms introduced in India since planning was started.
Setting up Financial Institutions:
In order to cope with the growing requirements for finance,

special institutions are set up for providing agricultural,
industrial and export finance. For instance, Industrial Finance
Corporation, Industrial Development Bank and Agricultural
Refinance and Development Corporation have been set up in
India in recent years to provide the necessary financial-
resources.
Public Undertakings:
In order to fill up important gaps in the industrial structure of the

country and to start industries of strategic importance,
Government actively enters business and launches big
enterprises, e.g., huge steel plants, machine-making plants, heavy
electrical work and heavy engineering works have been set up in
India.
Economic Planning:
The role of government in development is further highlighted by

the fact that under-developed countries suffer from a serious
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deficiency of all types of resources and skills, while the need for
them is so great. Under such circumstances, what is needed is a
wise and efficient allocation of limited resources. This can only be
done by the State. It can be done through central planning
according to a scheme of priorities well suited to the country’s
conditions and need.
What Is Law?
Law is a word that means different things at different times.

Black’s Law Dictionary says that law is “a body of rules of action
or conduct prescribed by controlling authority, and having
binding legal force. That which must be obeyed and followed by
citizens subject to sanctions or legal consequence is a law.”
Functions of the Law

a) Keep the peace,
b) Maintain the status quo,
c) Preserve individual rights,
d) Protect minorities against majorities,
e) Promote social justice, and
f) Provide for orderly social change.
Some legal systems serve these purposes better than others.

Although a nation ruled by an authoritarian government may
keep the peace and maintain the status quo, it may also oppress
minorities or political opponents (e.g., Burma, Zimbabwe, or Iraq
under Saddam Hussein).
Under colonialism, European nations often imposed peace in
countries whose borders were somewhat arbitrarily created by
those same European nations. Over several centuries prior to the
twentieth century, empires were built by Spain, Portugal, Britain,
Holland, France, Germany, Belgium, and Italy. With regard to the
functions of the law, the empire may have kept the peacelargely
with force—but it changed the status quo and seldompromoted
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the native peoples’ rights or social justice within the colonized

nation.
In nations that were former colonies of European nations, various
ethnic and tribal factions have frequently made it difficult for a
single, united government to rule effectively. In Rwanda, for
example, power struggles between Hutus and Tutsis resulted in
genocide of the Tutsi minority. (Genocide is the deliberate and
systematic killing or displacement of one group of people by
another group. In 1948, the international community formally
condemned the crime of genocide.)
In nations of the former Soviet Union, the withdrawal of a central
power created power vacuums that were exploited by ethnic
leaders. When Yugoslavia broke up, the different ethnic
groupsCroats, Bosnians, and Serbians—fought bitterly for home
turf rather than share power. In Iraq and Afghanistan, the
effective blending of different groups of families, tribes, sects, and
ethnic groups into a national governing body that shares power
remains to be seen.
Law and Politics
In India, legislators, judges, administrative agencies, governors,

and presidents make law, with substantial input from
corporations, lobbyists, and a diverse group of nongovernment
organizations (NGOs). In the states, judges are often appointed by
governors or elected by the people. The process of electing state
judges has become more and more politicized in the past
fifteen years, with growing campaign contributions from those
who would seek to seat judges with similar political leanings.In
the federal system, judges are appointed by an elected official
(the president) and confirmed by other elected officials (the
Senate). If the president is from one party and the other party
holds a majority of Senate seats, political conflicts may come up
during the judges’ confirmation processes. Such a division has
been fairly frequent over the past fifty years.In most nation-states
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(as countries are called in international law), knowing who has

power to make and enforce the laws is a matter of knowing who
has political power; in many places, the people or groups that
have military power can also command political power to make
and enforce the laws. Revolutions are difficult and contentious,
but each year there are revolts against existing political-legal
authority; an aspiration for democratic rule, or greater “rights”
for citizens, is a recurring theme in politics and law.
Social Environment
Meaning of social environment
True it is that man lives in particular geographical conditions and

that he has for his society a definite pattern of economic
activities; yet social man is as much the product of his social
environment as he is of physical surroundings and economic
conditions. The social environment has been equated with his
culture and writers like Graham Wallas have termed it as his
‘social heritage’.
According to McIver, man lives under a ‘total environment’, a
concept of his ecology that comprehends his total existence. As he
lives in the plains or in the hills, and as he engages in
agricultural or industrial activities, he lives a life that has been
shaped by his social heritage. He is born under it and, in his
family; he learns first to get conditioned to customs and practices,
beliefs and norms that are of his community.
In India, he first learns the “meaning of the festival of ‘Diwali’ or
‘Id-ul-fitr’; and later he comes to know of the practices prevalent
in foreign countries. In a way, social norms sit so heavy upon his
understanding that, while he is at work, he semi-consciously
responds to their dictates. In India, the belief is transmigration of
souls and the doctrine of ‘Karma’, according to which the
conditions of his present life are to be determined by his work in
the previous life, brings to his mentality a feeling of detachment
and an attitude of resignation which is so unique to our
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indigenous population. No matter how far we industrialize

ourselves, this attitude remains at the back of all
our activities.It cannot be forgotten that in the soil of India a
luxurious prince Siddhartha changes himself into the lofty
Buddha, a Chandashoka gets transformed into Dharmashoka, and
the Chambal dacoits offer their ferocity and tyranny at the feet of
a Lokanayaka. Not all our conquerors at all times could free
themselves of his tendency, as the pages of history tell us.
According to McIver, environment has both its physical and social
aspects. A section of the physical environment remains
uncontrolled by him, while another part he modifies to his
advantages. He improves the soil that he cultivates, domesticates
the animal that he uses, and makes tools and equipments suiting
his knowledge and technical skill.
The social aspects cover the shape of the community of which we

become members, and the norms and standards that we accept as
our folkways, mores and customs. Graham Wallas states that,
after socialising himself, man takes to his social heritage so
closely and intently that, if he were to be removed from it, he
would perhaps perish.Socialization of an individual as discussed
in an earlier chapter, will show that he must learn to live not
merely as an individual, but as a member of the society to which
he belongs. Yet there is another aspect of socialization which
demands that he should learn to adjust himself to the material
conditions that his society offers.Our speech and our manners we
acquire in the course of time without much of a difficulty and
there is an element of generality in these matters. In certain
respects, however, as in our attempts to participate in the
traditions relating to art, literature, philosophy, music and
religion, the demands upon our ability are exacting, and it cannot
be said that our identification without our social heritage has
become complete. There lies the difference between an artist and
students of art; the former comprehends his cultural heritage
while the latter merely make attempts at realizing it.
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The social environment presents to every individual the problem

of adjustment. Primitive man did not find a variety of conditions
before him to which he was required to adjust himself; but
modern man has a complex social set-up before him which makes
greater demands for adjustment.
Features of Social Environment
1. Customs and Traditions : This decides the celebration of

various festivals like Diwali, Id, Christmas and its effect on
business.
2. Social Institutions and Groups or Social Aspects: Literacy

level, educational system, cultural heritage standard of living of
the various groups of people affect the social environment of
business.
3. Social Values : Cultural and social justice, national integration

affect the business. Beliefs also help the business to meet the
customer needs.
4. Social Trends : Now a days people have become health

conscious and therefore there is a sale of various types of goods
like organic food, sugar free products etc.
Social Environment Affect a Business
• Culture determines goods and services

• Culture determines attitude to work
• Culture and global business
• Education and business
• Religion and business
• ethics and business marriage and business
•family system and business
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•Languages and barriers

• consumer tastes, preferences and habits
What Is Organizational Culture?
Organizational culture refers to a system of shared assumptions,

values, and beliefs that show employees what is appropriate and
inappropriate behaviours. These values have a strong influence
on employee behaviours as well as organizational performance.
In fact, the term organizational culture was made popular in the
1980s when Peters and Waterman’s best-selling book In Search
of Excellence made the argument that company success could be
attributed to an organizational culture that was decisive,
customer oriented, empowering, and people oriented. Since then,
organizational culture has become the subject of numerous
research studies, books, and articles. However, organizational
culture is still a relatively new concept. In contrast to a topic such
as leadership, which has a history spanning several centuries,
organizational culture is a young but fast-growing area within
organizational behaviours.Culture is by and large invisible to
individuals. Even though it affects all employee behaviours,
thinking, and behavioural patterns, individuals tend to become
more aware of their organization’s culture when they have the
opportunity to compare it to otherorganizations. If you have
worked in multiple organizations, you can attest to this. Maybe
the first organization you worked was a place where employees
dressed formally. It was completely inappropriate to question
your boss in a meeting; such behaviours would only be
acceptable in private. It was important to check your email at
night as well as during weekends or else you would face
questions on Monday about where you were and whether you
were sick. Contrast this company to a second organization where
employees dress more casually. You are encouraged to raise
issues and question your boss or peers, even in front of clients.
What is more important is not to maintain impressions but to
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arrive at the best solution to any problem. It is widely known that

family life is very important, so it is acceptable to leave work a bit
early to go to a family event. Additionally, you are not expected to
do work at night or over the weekends unless there is a deadline.
These two hypothetical organizations illustrate that
organizations have different cultures, and culture dictates what is
right and what is acceptable behavior as well as what is wrong
and unacceptable.
Factors Affecting Organization Culture
Culture represents the beliefs, ideologies, policies, practices of an

organization. It gives the employees a sense of direction and also
controls the way they behave with each other. The work culture
brings all the employees on a common platform and unites them
at the workplace.
There are several factors which affect the organization culture:
The first and the foremost factor affecting culture is the
individual working with the organization.
The employees in their own way contribute to the culture of the
workplace. The attitudes,mentalities, interests, perception and
even the thought process of the employees affect the organization
culture.
Example - Organizations which hire individuals from army or
defence background tend to follow a strict culture where all the
employees abide by the set guidelines and policies. The
employees are hardly late to work. It is the mindset of the
employees which forms the culture of the place.
Organizations with majority of youngsters encourage healthy
competition at the workplace and employees are always on the
toes to perform better than the fellow workers.The gender of the
employee also affects the organization culture. Organizations
where male employees dominate the female counterparts follow
a culture where late sitting is a normal feature. The male
employees are more aggressive than the females who instead
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would be caring and soft hearted.

The nature of the business also affects the culture of the
organization. Stock broking industries, financial services, banking
industry are all dependent on external factors like demand and
supply, market cap, earning per share and so on. When the
market crashes, these industries have no other option than to
terminate the employees and eventually affect the culture of the
place. Market fluctuations lead to unrest, tensions and severely
demotivate the individuals. The management also feels helpless
when circumstances can be controlled by none. Individuals are
unsure about their career as well as growth in such organizations.
The culture of the organization is also affected by its goals and

objectives. The strategies and procedures designed to achieve the
targets of the organization also contribute to its
culture.Individuals working with government organizations
adhere to the set guidelines but do not follow a procedure of
feedback thus forming its culture. Fast paced industries like
advertising, event management companies expect the employees
to be attentive, aggressive and hyper active.The clients and the
external parties to some extent also affect the work culture of the
place. Organizations catering to UK and US Clients have no other
option but to work in shifts to match their timings, thus forming
the culture.
The management and its style of handling the employees also
affect the culture of the workplace. There are certain
organizations where the management allows the employees to
take their own decisions and let them participate in strategy
making. In such a culture, employees get attached to their
management and look forward to a long term association with
the organization. The management must respect the employees
to avoid a culture where the employees just work for money and
nothing else. They treat the organization as a mere source of
earning money and look for a change in a short span of time.
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Socio-Cultural factors
Sociocultural factors are customs, lifestyles and values that

characterize a society or group. Cultural aspects include concepts
of beauty, education, language, law and politics, religion, social
organizations, technology and material culture, values and
attitudes. Social factors include reference groups, family, role and
status in society, time and available resources. An understanding
of sociocultural factors is crucial in developing marketing
strategies for businesses or organizations seeking action from
particular groups.
Cultural factors are the established beliefs, values, traditions,
laws and languages of a nation or society. These factors also
include the artistic values, marriage customs and religious beliefs
that are indigenous to a particular region The average level of
education in a community shapes the interests and sophistication
of consumers. A high percentage of potential customers with
some college education requires more details and explanations in
promotional material. A business must decide whether
advertising brochures should be printed in English alone or
English and a second language such as Spanish. If women are the
decision makers in this pool of potential customers, marketing
strategies must be adjusted to appeal to feminine values and
concerns.Reference groups are family members and relatives,
neighbours, friends and co-workers with whom individuals
compare themselves and who serve as examples in buying habits.
Awareness of the major reference groups, persons or family
structures in a community is essential when targeting marketing
campaigns toward them. Sociocultural factors such as disposable
income are important in deciding whether potential customers
are likely to buy luxury items or whether a marketing plan that
emphasizes low cost and high value for necessities might be more
successful.
CULTURAL AND SOCIAL FACTORS THAT AFFECT

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DEVELOPMENT
Discrimination
Sometimes there are social or cultural factors that hold back poor
countries. Discrimination is one of these. If there are certain
people groups that are discriminated against, the country’s
overall productivity can suffer. This may be a tribe, a caste, a
racial category or minority language group.
Another division may be the role of women. Jeffrey Sachs talks

about this in The End of Poverty:‘Cultural or religious norms may
block the role of women… leaving half the population without
economic or political rights and without education, thereby
undermining half of the population in its contribution to overall
development.’ If you don’t believe that women should work, you
have effectively halved the earning potential of your country.
Population
Closely linked to this is the population issue. If women see staying

at home and bringing up children as their chief role, they will
have more children than those who work. There is nothing wrong
with having lots of children, as long as you can provide for them.
Jeffrey Sachs again: ‘With fewer children, a poor household can
invest more in the health and education of each child, thereby
equipping the next generation with the health, nutrition, and
education that can lift living standards in future years.’
Culture
I’ve already mentioned the role of women, but culture can have
hidden effects in business, trade and development. China may be
a major power now, but it was the world’s most developed
country in the middle ages, and stagnated, or even went
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backwards, for centuries. Part of this was cultural, a pride and

sense of self-sufficiency that led to a closing of China’s borders.
‘China seems to have long been stationary’,
Materiality
Continuing industrial development has brought us into contact
with the one planet limit on material supply. Thus, material
resource scarcity is increasing, raisingsupply costs and shifting us
away from the old economic growth strategy based in continually
increasing resource consumption (more with more), to a new
growth strategy based in increasing resource performance (more
with less).
Sociality
Global adoption of digital communications and information

technology (CIT) has converged media, communications, and
information processing onto the Internet. Thus, CIT resource
abundance is increasing, lowering communication costs and
shifting us from the old coordination strategy based in
hierarchical messaging (chain of command) to a new
coordination strategy based in networked conversation (peer
teaming). Hundreds of millions have embraced new social media
tools such as Facebook and Twitter. As a result, a new social
business environment has emerged around our organizations in a
rising crescendo of change--transforming our whole conduct of
life, bringing new risks, new rules, and vast new opportunities for
economic growth.
If you have a proper understanding of the socio – cultural factors
that exist in the society where you aim to establish your own
business, you can be rest assured you would excel in your
business.
The Social Responsibility of Business

Businesses do not operate in a vacuum. A firm's actions have
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repercussions that echo throughout society. Corporate social

responsibility (CSR) is a form of corporate self-regulation
integrated into a business model. CSR policy functions as a built-
in, self-regulating mechanism whereby a business monitors and
ensures its active compliance with the spirit of the law, ethical
standards, and international norms. Corporate social
responsibility (CSR) is a form of corporate selfregulation
integrated into a business model. Ideally, CSR policy would
function as a built-in, selfregulating mechanism whereby
business would monitor and ensure its adherence to law, ethical
standards, and international norms. Business would embrace
responsibility for the impact of their activities on the
environment, consumers, employees, communities, stakeholders
and all other members of the public sphere.
The goal of CSR is to embrace responsibility for the company's

actions and encourage a positive impact through its activities on
the environment, consumers, employees, communities, and all
other members of the public sphere who may be considered
stakeholders.
The topics surrounding CSR have become more complex due to

globalization and the issues that arise from companies competing
in international markets. Companies are manufacturing goods,
hiring local labor, and utilizing raw materials and resources
extracted from the environment in international locations. This
heightened awareness of CSR and sustainable development has
been endorsed by an increased responsiveness to ethical, social,
environmental, and other global issues. In recent years,
companies have been the center of scandals regarding accounting
practices, damages to the environment, inadequate treatment of
employees and workers, and the effect of products on society.
This new global business environment is emerging from two
accelerating shifts that are transforming how we use natural
systems and material resources (materiality), andhow we
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coordinate human action (sociality).
Human resources: A CSR program can aid recruitment and

retention. Potential recruits often ask about a firm's CSR policy
during an interview, and having a comprehensive policy can
provide an advantage. CSR can also help improve the perception
of a company among its staff, particularly when staff can become
involved through payroll giving, fundraising activities, or
community volunteering. CSR has been found to encourage
customer orientation among frontline employees.
Risk management: Managing risk is a central part of many

corporate strategies. Reputations that take decades to build up
can be ruined in hours through incidents such as corruption
scandals or environmental accidents. These can also draw
unwanted attention from regulators, courts,governments, and
media. Building a genuine culture of "doing the right thing"
within a corporation can offset these risks.
Brand differentiation: In crowded marketplaces, companies

strive for a unique selling proposition that can separate them
from the competition in the minds of consumers. CSR can play a
role in building customer loyalty based on distinctive ethical
values.
License to operate: Corporations are keen to avoid interference

in their business through taxation or regulations. By taking
substantive voluntary steps, they can persuade governments and
the wider public that they are taking issues such as health and
safety, diversity, or the environment seriously as good corporate
citizens with respect to labour standards and impacts on the
environment.
Factors affecting the purpose of Corporate social responsibility

Ethical consumerism
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Globalization and market forces

Social awareness and education
Ethics training
Laws and regulation
Advantages
A CSR programmed can be an aid to recruitment and retention,

particularly within the competitive graduate student market.
Potential recruits often ask about a firm's CSR policy during
an interview, and having a comprehensive policy can give an
advantage. CSR can also help to improve the perception of a
company among its staff, particularly when staff can become
involved through payroll giving, fundraising activities or
community volunteering. Human resources
Advantages In crowded marketplaces, companies strive for a

unique selling proposition that can separate them from the
competition in the minds of consumers. CSR can play a role in
building customer loyalty based on distinctive ethical values.
Several major brands, such as The Cooperative Group, The Body
Shop and American Apparel are built on ethical values. Business
service organizations can benefit too from building a reputation
for integrity and best practice.
Brand differentiation
Corporations are keen to avoid interference in their business
through taxation or regulations. By taking substantive voluntary
steps, they can persuade governments and the wider public that
they are taking issues such as health and safety, diversity, or the
environment seriously as good corporate citizens with respect to
labour standards and impacts on the environment. License to
operate.
Barriers to CSR
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Corporate Level –
• Lack of leadership and vision

• Too much focus on short-term goals
• Inability to recognize opportunities
• Lack of entrepreneurial spirit and innovation
Country/Society Level –
• Lack of creative pressure from the government and civil society.

• Lack of support from the consumers
• Lack of peer support through business associations
• reluctance of other companies to follow
• Lack of economic/market incentives
Technological Environment
Meaning of Technological Environment
Technological environment refers to those methods, policies,

techniques and approaches which assist in production of
products/services as well as its distribution. Technological
environment affects the designing and packaging of goods and
services. Technological environment can be explained in
following ways:
1. The introduction of new and innovative products is possible
under technological environment.
2. It makes it possible to meet the demands and expectations of
customers. The research and development undertaken by
business a crucial step in this field.
3. The changes in technologies are encouraged by the suppliers of
company.
4. The increasing competition requires support of best
technologies and innovations.
5. The technological environment has made it possible for
companies to have new substi- tutes for product/services. This
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leads to technological improvements.

6. The technological environment also satisfy the demands of
social forces like reduction of environmental pollution through
eco- friendly products.
7. Government also contributes in technological development of
the country by several ways. This lead to the establishment of
research organizations.
Business and Technology
The relationship between business and technology is important

because business is the principal institution that translates
discovery into application for public use. As soon as new
knowledge edge exist, people want to apply it in order to reap the
benefits. Society depends on business to keep the flow of useful
goods and services for all people. Less developed nations have
learned that scientific discoveries mean very little to them unless
they have competent business systems. Similarly, developed
nations have learned that their progress stops unless they
operate a business system which translates technological
developments into useful goods and services.
Features of Technology
Following are the basic features of technology:
1. Wide spread effect: The dominant feature of technology is

that its effects are wide spread. Technology affect every people
and society. No one can escape from it. Even if a person moves
to a mountain, it is still there represented by airplanes flying
overhead, radio sigmals moving around and industrial pollution
in the air.
2. Rapid change: Another feature of technology is that it changes
rapidly. In modem soci ety it has brought so much changes that it
is beyond the limit of human tolerance and people are unable to
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cope with it successfully. Most of The changes that occur in

society are influenced by the technology directly or indirectly.
3. Self-reinforcing: An additional feature of technology it is self-
reinforcing. Technology feeds on itself. Technology makes more
technology possible. It acts with an other part of society so that
an invention in one place leads to a sequence of inventions in
other places. For example, Invention of the wheel led to several
additional invention that influenced society as multipliers. The
same principle holds for computer and for many other forms of
modem science and technology.
Significance of Technological Environment

1. It increases the productivity and capability of the business firm.
2. It allows the development of new and better products of
standardized quality.
3. It is possible in technological environment to make better and
effective use of available resources.
4. The business can expand and grow with rapid speed with
improved technology.
5. Various technological systems like Management Information
System (MIS), Decision Support System (DSS), etc help managers
in making quick and appropriate decisions related to business.
Economic Effects of Technology Following are some

economic effects of technology:
1. Higher productivity: The fundamental effect of technology is
higher productivity in terms of both quantity and quality. This is
the reason that most of the business and industries are adopting
latest technologies. With the help of Computer Aided Design
(CAD) systems, a factory can design and test new products on a
computer screen even before starting the production.
2. Availability of creative and intellectual workers: Advanced

technology has increased number of intellectual workers who
are motivated by opportunities that offer change, growth work
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schedule. Business is also to meet the needs of intellectual

workers. Some companies have established dual promotion
ladders so that distinguished technical people can receive salary
equivalent to managers.
3. More emphasis on research and development: With the

advancement in technology, research and development (R & D)
has become an essential activity in organizations. R & D has
become so important in some companies that it is ranked as a
primary activity along with production and sales. Many
companies now developed goods with latest technology and
then produce and sell them.
4. Capital requirements: Another effect of technology is that the

demand for capital increases. Large amounts of capital are
required to build the production system that save labour time
and provide other benefits of technology.
Social Consequences of Technological Change
Technological advances bring both, benefits and costs to society.

Economic growth-driven by the engine of technological progress
has conferred wide benefits to the mankind. The living standard
has improved. Various fields like medicine, health care,
transportation, communication, etc. have improved to an
unbelievable extent. However, in the same way that a life saving
antibiotic may have side effects, technology also has social side
effects. When they are negative, they become social costs. From
society's point of view, these social costs need to be calculated in
the cost benefit analysis of every proposed technological
change. Very often some of these social costs are overlooked
because the persons who work with technology do not think
broadly enough of its social effects.
However, it should be noted that technology can be used to

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correct the side effects that exist. For example, technology does
cause pollution, however, technology also can be used to reduce
pollution from both machine and human activities.
Business Responsibility for Technological Change
1. New technology should be introduced with greater care.

2. If the lives of individuals or groups is damaged due to
technological changes, they must be compensated.
3. Universities, professional groups and non- profit making
institutions must analyse the social costs of technological
advancements
Foreign Investment
Foreign investment refers to investment by foreign investors in

shares, debentures, bonds tof Indian companies. Foreign aid has
contributed to the development of our economy, but its avail-
ability has shrunk in recent times. We have reduced our
dependence on commercial borrowings because commercial
borrowings are raised at market rate of interest. It creates a
problem of debt servicing.
Because of this, our government has started encouraging the
entry of foreign capital from foreign private sector. Foreign
sector investment is made by individuals or companies of foreign
country in the private or public sector of India. This type of
investment is mainly in the form of equity capital, which has no
fixed interest burden.
Need/Purpose for Foreign Investment
The following points describe the needs of foreign investment in

country:
1. Raising the level of investment: Foreign investments raise
the level of investment in domestic country by filling the gap
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between desired investment and local savings.

2. Upgradation of technology: The foreign owned enterprise
comes into competition with the local firms, that forces to
improve their technology and standard of product quality. In this
way, the foreign companies support domestic industries to
upgrade their technology.
3. Exploitation of natural resources: A number of under
developed countries possess huge mineral resources, which
await exploitation. For that they have to depend upon foreign.
capital to undertake the exploitation of their mineral wealth.
4. Development of basic economic infrastructure:
Underdeveloped or developing countries require huge capital
investment for the development of basic economic structure as
their domestic capital is often inadequate.
5. Benefit to consumers: Consumers in developing countries
stand to gain from foreign investment through new products and
improved quality of goods at competitive prices.
6. Revenue to government: Profit generation by foreign
investment in the host country contributes to corporate tax
revenue in the latter.
Types of Foreign Investment
The foreign investment can be classified as follows:

1). Foreign Direct Investment
2). Portfolio Investment
•Investment by FIIS
•Investment by GDRs, FDRs,FCCBC etc
Foreign Direct Investment

Foreign Direct Investment refers to an investment made by an
investor of one country to acquire an asset in another country
with the intent to manage that asset (like factories, sales offices,
distribution channels, etc.)
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There are three economic motives of FDI i.e.

1. Resource seeking (exploiting the natural resources of the host
country).
2. Market seeking (to exploit the market opportunities of the host
countries).
3. Efficiency seeking (Like low cost of production deriving from
cheap labour).
The presence of all these determinant alone need not attract FDI.
Several other factors like the political environment, government
policies, bureaucratic culture, social climate, infrastru- ctural
facilities, etc. are also important determi- nants of FDI.
The characteristics of FDI are as follows:
1. It is an investment made by a foreign company in a home

country.
2. The foreign company may make an investment either by
opening its branch or by having a subsidiary or foreign controlled
company in home country. It may have wholly owned subsidiary
or joint venture or may acquire a stake in the existing business.
3. Profit is the prime motive of such an investment. It may be in
the form of a royalty and dividend payments.
4. Investor retains control over investment and management of
the firm concerned. In FDI Investor may obtain effective voice in
the management through other means such as subcontracting,
management contracts, turnkey arrangements, franchising,
license sharinging, trademarks and patents and product.
5. On the winding up of the firm, the assets may be repatriated to
the country of origin.
Portfolio Investment
Portfolio investment is an investment in the foreign country

where the investing party does not seek control over the
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investment. It takes the form of the purchase of equity in a

foreign stock market or credit or capital from private or official
sources.
The features of portfolio investment are as follows:
1. The investor purchases the equity in a foreign stock market i.e.,

he has a sort of property interest.
2. The equity includes shares (stock) and creditor's capital
(debentures/bonds/othersecurities).
3. The equity purchased is of a joint stock company.
4. The investor is a non-resident.
5. If it is creditor's capital, it may be from private or official
sources and is invested in recipient country's joint stock
companies.
6. The investor does not seek control over the investment if they
do not have involvement with promotion and management of
Joint
Stock Company.
7. Portfolio investment can be liquidated fairly easily.
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8. These investments are influenced by shortterm gains and are

more sensitive than FDI.
Advantages of Foreign Direct Investment
Economic Development Stimulation-

Foreign direct investment can stimulate the target country’s
economic development, creating a more conducive environment
for you as the investor and benefits for the local industry.
Easy International Trade.

Commonly, a country has its own import tariff, and this is one of
the reasons why trading with it is quite difficult. Also, there are
industries that usually require their presence in the international
markets to ensure their sales and goals will be completely met.
With FDI, all these will be made easier.
Employment and Economic Boost.

Foreign direct investment creates new jobs, as investors build
new companies in the target country, create new opportunities.
This leads to an increase in income and more buying power to the
people, Which in turn leads to an economic boost.
Development of Human Capital Resources.
One big advantage brought about by FDI is the development of

human capital resources, which is also often understated as it is
not immediately apparent. Human capital is the competence and
knowledge of those able to perform labor, more known to us as
the workforce. The attributes gained by training and sharing
experience would increase the education and overall human
capital of a country. Its resource is not a tangible asset that is
owned by companies, but instead something
that is on loan. With this in mind, a country with FDI can benefit
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greatly by developing its human resources while maintaining

ownership.
Tax Incentives.
Parent enterprises would also provide foreign direct investment
to get additional expertise, technology and products. As the
foreign investor, you can receive tax incentives that will be highly
useful in your selected field of business.
Resource Transfer.
Foreign direct investment will allow resource transfer and other
exchanges of knowledge, where various countries are given
access to new technologies and skills.
Reduced Disparity Between Revenues and Costs.

Foreign direct investment can reduce the disparity between
revenues and costs. With such, countries will be able to make
sure that production costs will be the same and can be sold easily.
Increased Productivity.
The facilities and equipment provided by foreign investors can
increase a workforce’s productivity in the target country.
List of Disadvantages of Foreign Direct Investment
Hindrance to Domestic Investment.

As it focuses its resources elsewhere other than the investor’s
home country, foreign direct investment can sometimes hinder
domestic investment.
Risk from Political Changes.
Because political issues in other countries can instantly change,
foreign direct investment is very risky. Plus, most of the risk
factors that you are going to experience are extremely high.
Negative Influence on Exchange Rates.

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Foreign direct investments can occasionally affect exchange rates

to the advantage of one country and the detriment of another.
Higher Costs.
If you invest in some foreign countries, you might notice that it is
more expensive than when you export goods. So, it is very
imperative to prepare sufficient money to set up your operations.
Economic Non-Viability.
Considering that foreign direct investments may be capital-
intensive from the point of view of the investor, it can sometimes
be very risky or economically non-viable.
Expropriation.
Remember that political changes can also lead to expropriation,
which is a scenario where the government will have control over
your property and assets.
Negative Impact on the Country’s Investment.

The rules that govern foreign exchange rates and direct
investments might negatively have an
impact on the investing country. Investment may be banned in
some foreign markets, which means that it is impossible to
pursue an inviting opportunity.
Modern-Day Economic Colonialism.
Many third-world countries, or at least those with history of

colonialism, worry that foreign direct investment would result in
some kind of modern day economic colonialism, which exposes
host countries and leave them vulnerable to foreign companies’
exploitations.
Definition of Foreign Collaboration
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In general, the definition of foreign collaboration can be stated as

follows.“Foreign collaboration is an alliance incorporated to carry
on the agreed task collectively with the participation (role) of
resident and non-resident entities.”
Alliance is a union or association formed for mutual benefit of

parties.Foreign collaboration is such an alliance of domestic
(native) and abroad (non-native) entities like individuals, firms,
companies, organizations, governments, etc., that come together
with an intention to finalize a contract on some tasks or jobs or
projects.
In finance, the definition of foreign collaboration can be specified

as follows.“Foreign collaboration includes ongoing business
activities of sharing information related to financing, technology,
engineering, management consultancy, logistics, marketing, etc.,
which are generally, offered by a non-resident (foreign) entity to
a resident (domestic or native) entity in exchange of cheap skilled
and semi-skilled labour, inexpensive high-quality raw-materials,
low cost hi-tech infrastructure facilities, strategic (favourable)
geographic location, and so on, with an approval (permission)
from a governmental authority like the ministry of finance of a
resident country.”
Foreign collaboration is thus an alliance (a union or an

association) formed for mutual benefit of collaborating parties.
Meaning of Foreign Collaboration
The meaning of foreign collaboration is depicted in the following

chart.
Following important points convey the meaning of foreign

collaboration:
a) Foreign collaboration is a mutual co-operation between one or
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more resident and nonresident entities. In other words, for

example, an alliance (a union or an association) between an
abroad based company and a domestic company forms a foreign
collaboration.
b) It is a strategic alliance between one or more resident and non-
resident entities.
c) Only two or more resident (native) entities cannot make a
foreign collaboration possible. For its formation and as per above
definitions, it is mandatory that one or more non-resident
(foreign) entities must always collaborate with one or more
resident (domestic) entities.
d) Before starting a foreign collaboration, both entities, for
example, a resident and nonresident company must always seek
approval (permission) from the governmental authority of the
domestic country.
e) During an ongoing process of seeking permission, the
collaborating entities prepare a preliminary agreement.
f) According to this preliminary agreement, for example, the non-
resident company agrees to provide finance, technology,
machinery, know-how, management consultancy, technical
experts, and so on. On the other hand, resident company
promises to supply cheap labour, low-cost and quality raw-
materials, ample land for setting factories, etc.
g) After obtaining the necessary permission, individual
representative of a resident and nonresident entity sign this
preliminary agreement. Signature acts as a written acceptance to
each other's expectations, terms and conditions. After signatures
are exchanged, a contract is executed, and foreign collaboration
gets established. Contract is a legally enforceable agreement. All
contracts are agreements, but all agreements need not
necessarily be a contract.
h) After establishing foreign collaboration, resident and non-
resident entity start business together in the domestic country.
i) Collaborating entities share their profits as per the profit
sharing ratio mentioned in their executed contract.
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j) The tenure (term) of the foreign collaboration is specified in

the written contract.
Examples of Foreign Collaboration
Some prominent examples of foreign collaboration are depicted

below.
The examples of foreign collaboration between an Indian and

abroad entity:
a) ICICI Lombard GIC (General Insurance Company) Limited is a

financial foreign collaboration between ICICI Bank Ltd., India and
Fairfax Financial Holdings Ltd., Canada.
b) ING Vysya Bank Ltd. is a financial foreign collaboration formed
between ING Group from Netherlands and Vysya Bank from
India.
c) Tata DOCOMO is a technical foreign collaboration between
Tata Teleservices from India and NTT Docomo, Inc. from Japan.
d) Sikkim Manipal University (SMU) from India runs some
academic programs through an educational foreign collaboration
with abroad universities like Liverpool School of Tropical
Medicine from UK, Loma Linda and Louisiana State Universities
from USA, Kuopio University from Finland, and University of
Adelaide from Australia.
Objectives of Foreign Collaboration
The main intention or prime goal or objective of foreign

collaboration is to:
a) Improve the financial growth of the collaborating entities.

b) Occupy a major market share for the collaborating entities.
c) Reduce the higher operating cost of a non-resident entity.
d) Make an optimum and effective use of resources available in
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the resident entity's country.

e) Generate employment in the resident entity's country
Types of Foreign Collaboration
a) Financial collaboration.
b) Technical collaboration.
c) Marketing collaboration.
d) Management consultancy collaboration.
Financial collaboration
In case of financial collaboration, the inflow of foreign investment
takes place in the domestic (host) country.Financial collaboration
is a summation of domestic and foreign investment.
In this method, the foreign company lends finance by:
Purchasing ownership shares

Here, foreign company purchases ownership shares of the
domestic company and in return gets the dividend for these
shares.
Giving long-term loans

Here, foreign company gives long-term loans to the domestic
company and in return gets interest from these loans.
Giving credit facility

Here, foreign company gives credit facility to the domestic
(native) company. The native company uses this credit facility to
purchase raw-materials, plant and machinery.
Thus, in this collaboration, there is an inflow of finance from

developed countries to developing countries.
Generally, it is seen that developing countries face fiscal
problems. Financial collaboration comes as an aid to solve these
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problems, and therefore, it is very popular in the developing

countries.
Technical collaboration
In case of technical collaboration, the inflow of foreign technology
takes place in the domestic (host) country.Technical
collaboration includes integration of foreign technology with
domestic (indigenous) technology.
In technical collaboration, the foreign company provides
technological know-how, professional services and expertise,
installs automated machineries, etc., in the domestic country.
Here, an inflow of modern technology takes place from the
developed country to the developing countryTechnical
collaboration helps to remove an existing technological gap.
Therefore, the governments
of developing countries encourage such collaborations. In

developing countries, most of the
foreign collaborations are technical in nature.
Marketing collaboration
In case of marketing collaboration, the inflow of foreign goods
and services take place in the domestic (host) country.
In marketing collaboration integration of domestic and foreign
market takes place.In marketing collaboration, foreign company
agrees to sell goods produced by the domestic company.The
foreign company sells these goods in its own country and/or in
the international market. It uses its distribution network to sell
the goods.From the viewpoint of a developing country, marketing
collaboration is very beneficial for increasing its exports of goods
and services.
Management consultancy collaboration
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In case of management consultancy collaboration, the inflow of

foreign management consultancy takes place in the domestic
(host) country.
In management consultancy collaboration integration of
domestic and foreign consultancy takes place.
In management consultancy collaboration, foreign company
provides management skills to the domestic company and
teaches it everything about management. In other words, it gives
advice and solves management problems of the domestic
company.
It teaches management skills for the following:
Production management
Marketing management.
Personnel management.
Financial management
The foreign company also helps the domestic company to

modernize and diversify its business process.
So, in management consultancy collaboration, the foreign
company increases the management efficiency of the domestic
company. This type of collaboration is found in both private and
public sector.
Multinational Companies/ Corporation
Concept of multinational Companies/ Corporation
A multinational company or corporation (MNC) is a company that

manages Its operations, production or service delivery from' and
'to more than one country In other words, Multinational
Corporations (MNCS) or Transnational Corporation (TNC), or
Multinational Enterprise (MNE) is a business unit which operates
simultaneously in different countries of the world. In some
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manufacturing unit may be in one country, while the marketing

and investment may be in other countries.
In other cases all the business operations are carried out in
different countries with the strategic headquarters in any part of
the world. The MNCs are huge business organizations which
extend their business operations beyond the country of origin
through a network of industries and marketing operations. The
few examples of MNCs are, Sony of Japan, IBM of USA, Siemens of
Germany. Videocon and ITC of India, etc. There are over 40,000
MNCs with over 2.50.000 overseas affiliates. The top 300 MNCs
control over 25 per cent of the world economy.
Defination -
Multinational corporations engaged with organizational activities
"By crossity national borders to acquire resources or to sell
products of these firms, become 112 involved in international
business." -C.L. Bovee, J.V. Thill and P Do
Leonard Gomes also defined MNCs as "a corporation that

controls productio facilities in more than one country and such
facilities having been acquire through the process of foreign
direct investment. Firms that participate international business,
however large, they may be, solely by exporting or licensing
technology are not multinational enterprises."
Characteristics of MNCs-
(i) Multi-domestic Management: Under this approach a

company operating in several countries allows its local units to
act independently and does not coordinate Its international
operations on a global basis. In each country, the local
organization is self-contained and acts much like a separate
domestic business.
(ii) Giant Size: MNCs are large in size and exercise a great degree
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of economic dominance. The assets and sales of MNCs run into

billions of dollars and they are also earn supernormal profits.
(iii) Host Country: Under this approach, the organization

conducts its business activities outside the home countries and
head office or headquarter is located or based on the home
country. Host country is supposed to provide all legal and other
environmental frameworks for MNCs.
(iv) Direct Investment: MNCs acquire an ownership interest in

the overseas company or invest in production and marketing
facilities in another country called as the host country, Through
foreign direct investment MNCs can take active participation in
the management and formulate policies for execution in home
country as well as in the host countries. Through direct
investment, MNCs develop their business outfits in host
countries.
(v) Professional Management Team: MNCs employ a team of

professionals to operate and control world-wide operations. It
employs trained managers to handle advanced technology,
transactions of huge funds and international business operations.
(vi) Mode of Transfer: The MNC has considerable freedom in

selecting thefinancial channel through which funds or profits or
both are moved, e.g., patents and trademarks can be sold outright
or transferred in return through contractual binding on royalty
payments.
Similarly, the MNC can move profits and cash from one unit to
another by adjusting transfer prices on intercompany sales and
purchases of goods and services. MNCs can use these various
channels, singly or in combination, to transfer funds
internationally, depending on the specific circumstances
encountered.
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(vii) Value for Money: By shifting profits from high-tax to low-

tax nations, MNCs can reduce their global tax payments. In
addition, they can transfer funds among their various units,
which allow them to circumvent currency controls and other
regulations and to tap previously inaccessible investment and
financing opportunities.
(viii) Flexibility: MNCs can extend trade credit to their other

through open account terms, say from 90 to 180 days, This
subsidiaries to financial status. In addition, the timing for
payment of fees and royalties may be modified when all parties to
the agreement are agreed.
MULTINATIONAL CORPORATIONS IN INDIA
MNCs have been operating in India even prior to Independence,

like Singer, Parry, Philips, Uni-Lever, Proctor and Gamble. They
either operated in the form of subsidiaries or entered into a
collaboration with Indian companies involving sale as well as the
use of foreign brand names for the final products. The entry of
MNCS in India was controlled by existing industrial policy
statements, of technology MRTP Act and FERA. In the pre-reform
period the operations of MNCs in India were restricted.
Apart from playing an important role in globalization and

international relations, these multinational companies even have
a notable influence on a country's economy. As far as India is
concerned, a number of multinational companies have shown
interest in the Indian market. It is obvious that foreign companies
come and settle in India to earn a profit. As India has a wide
market for different and new goods and services due to its
increasing population and varying consumer taste, MNCS find it
as a resourceful nation. Besides that, India's foreign directive
policies, labour competitive market, market competition and
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macro-economic stability are some of the key factors that

magnetize MNCs towards India.
In turn, India also derives a lot of benefits from
MNCs -such as higher level of investment, reduction in the
technological gap, optimum utilization of natural resources,
reduction in foreign exchange gap and boost to basic economic
structure. But roses do not come without thorns. So, there are
certain disadvantages of having MNCs in a developing country
like India as competition increased pollution and environmental
hazards, improper diffusion of profits and Forex imbalance, slow
decision making and sometimes economic distress. But are
operating. So, here we have compiled a list of a top 10 MNCs in
India: these don't overcome the gains of having MNCs. In India, a
large number of MNCs
1. Microsoft Corporation
2. Nokia Corporation
3. Nestle
4.Coca-Cola
5. Procter and Gamble
6. International Business Machines (IBM)
7.PepsiCo
8. Sun Pharmaceutical
9. Sony Corporation
10.Citigroup
NEW INDUSTRIAL POLICY, 1991 AND MULTINATIONAL

CORPORATION
The New Industrial Policy, 1991 removed the restrictions of entry

to MNCsthrough various concessions. The amendment of FERA in
1993 provided further concession to MNCs in India. At present
MNCs in India can :
(1) Increase foreign equity up to 51 per cent by remittances in
foreign exchange in specified high priority areas. Subsequently,
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MNCs are free to own a majority share inequity in most products,

(ii) Borrow money or accept deposit without the permission of
Reserve Bank of India.
(iii) Transfer shares from one non-resident to another non-
resident.
(iv) Disinvest equity at market rates on stock exchanges .
(v) Go for 100 per cent foreign equity through the automatic
route in Specified sectors.
(vi) Deal in immovable properties in India.
(vii) Carry on in India any activity of trading, commercial or

industrial excepta very small negative list.
(vll) Thus, MNCs have been placed at par with Indian Companies
and would not be subjected to any special restrictions under
FERA.
CHALLENGES FACED BY MULTINATIONAL COMPANIES IN

INDIA
For succeeding in India, MNCs need to cater the locals with their
local flavor.keep prices competitive, value our diverse cultures,
not hurt sentiments, provide outstanding services, and a lot more
things. India witnessed a number of foreign companies entering
India since liberalization in 1991. Of these companies, many have
shut down in short terms, since they could not survive India. Be it
General Motors announcing its exit in mid-2017, or banks like
Barclays and Royal Bank of Scotland shutting down their banking
services, there were a number of reasons for their failure. Often
times, the challenges they faced werent accounted for in initial
planning. Followings are the some common challenges faced by
Multi-National Companies while setting up business in India.
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1. Infrastructure
Selecting a suitable place in India can be quite a challenge for
Multinational Companies. Western companies tend to lease office
spaces rather than owning it. Due to the lack of professional
infrastructure and high demands, companies need to book offices
in under construction buildings way before they are completed.
Not only this, but they also need to lease large office spaces in the
very beginning to keep a check on the growth of the company,
and availability of more space. This creates quite a hassle at the
beginning for the spaces are too large for the amount of people it
holds. Once the company grows, and there is the scope of
expansion, a company should be considered lucky if it gets
another office near the existing ones. For instance, HP has more
than 20 offices in Bangalore which are scattered all over the city.
Now, it is looking towards constructing its own office getting into
real estate business, which was never in its initial plan.
2. Recruitment
Recruitment is another challenge for the companies as there is an
enormous professionals is very less. The fact that India has
become a hub for IT/Software crowd applying for jobs in India...
whereas the number quality and talented and Service sector,
there is a race among top multinationals to hire the best available
talent in the country. Also, the supply of labour is enormous in
the Country. To filter out the cream is a challenge in itself. For
instance, there was once a time when there was a scarcity of
software engineers in India, and hence turned completely.
Companies like Infosys receive more than 1.4 mil applications in
a year, out of which not more than 60-70k are interviewed," final
selection is as low as 25,000 per company. Since the supply has
skyrockete the cost of labour has gone down. It is only a cream of
students from top institu who are employed by such companies.
3. Diverse Culture
While Unity in Diversity is one of the top strengths of India, it is
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also one weakness for the companies to set up their business.

Since most companies an western, and the top management is
foreign in the beginning, there is a hug problem in coping up with
the culture of the diversity of employees they hire. Tha can create
quite an unrest in the employees. In mono culture teams and
countries, a person can freely express his views, whereas, in a
diverse cultural natione India, you are more likely to offend
people with your thoughts and opinions.
4. Price Centric Customers

In India, another problem that companies face is the mentality of
the people In buying goods and availing services. India is more of
a price centric nation, whi does not witness as much brand
loyalty, as it does consider the price. Hence, t only do the
companies need to provide quality products, but they also need
charge a competitive price for that. People would compare
features without going into the premium depth, and hence choose
a cheaper version. The fall of the telecom sector is a perfect
example of the price centric mentality of the people.
5. The Global Economic Slowdown

Drying up investment funds India is hit by the global recession.
This is primarily visible in an increase in lay-offs in the export
sector where orders have shrunk. Another important change is
the difficulty of finding external financing, on which Indian
multinational firms have become increasingly dependent. Tatak
reported to be looking for ways of sustaining its recent
acquisitions and Reliance Industries is said to be looking for
takers for some of its overseas Investments. The Indian IT
industry is also hit hard, with almost half its export revenues
coming from the US market and in particular the financial
markets, which is the epicentre of the recession.
The economic slowdown may however not be such a tragedy for

India as for many other countries. First, the banking system of
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India seems to be in reasonably good shape, and due to a semi-

insulated rupee, a strong internal market and the fall in oil prices,
the Indian economy is predicted to grow at about six per cent
during 2009. While it is a downward revision from the earlier
projected nine per cent it is, of course, very good compared to
many European economies. Second, a global recession can also
Increase the pressure on cost across the world, which would
provide a business opportunity for Indian firms.
6. Increasing Competition
India has become a very important destination for most global
firms, and in particular in ICT. While this is good for the economy
and for overall economic efficiency. It means that the earlier fairly
safe home market of Indian firms now is contested. IBM.
Accenture and EDS together have 1,00,000 employees in India
This means that they are one-third as big as the big five Indian
firms. As the Indian market develops it will become more
competitive and less of a captive market for Indian firm.
7. Talent Crisis
One result of the expansion of the Indian economy is a serious
shortage of talent. This may sound paradoxical in one of the
largest countries in the world. but more and more sectors are
reporting difficulties in recruiting what they need. Indian IT firms
are currently recruiting abroad, in Russia, the Philippines and
other places. The rapid inflow of global firms in combination with
a poor supply through higher education and an unresponsive
government has led to this almost crisis situation. There is now a
national mission on up-grading of vocational schools that are
planned by the central government and that will work on a joint
venture basis. It is, however, a long time in the making.
Meanwhile, there are a number of private alternatives that are
developing from the private education systems of the large firms
(in-house universities) to public-private partnerships where
firms take over and run government-owned training centers and
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schools.
8. Global Firms require Global Management

There are currently few Indian managers with international
management experience. There is no quick fix for this situation,
but there is a functioning International market. Indian industry is
currently so hard up for good managers, out got is as expensive
or even more to recruit an Indian manager to bring in an all of
international expatriate to manage Indian operations. An
outcome of this shortage of management many Indian
multinational firms as they may have difficulties in finding
replacement managers.
ADVANTAGES OF MULTINATIONAL CORPORATIONS IN INDIA
(1) Marketing Opportunity:-

Multinational companies have a big market available in different
countries.They have the necessary skill and expertise to sell their
products at the international level. Any company can enter into a
joint venture with a foreign company to sell its products in the
international market.
2) Research and Development

Research enable the host country to establish an efficient
research and The resources and experience of multinational
companies in the field of development system. This helps host
country to produce quality products at least possible cost.
3). Export Production

Multinational company help developing countries in earning
foreign Exchanges. These companies can supply the necessary
raw materials, technology, technician and foreign exchange to
promote Export and reduce import.
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(4) Growth of Industry

Multinational Companies are specialized, fast growing and
dynamic, s offer growth opportunities for domestic industries.
These companies assist lo producers to enter the global markets
through their well established internation network of production
and marketing.
(5) Give Latest Technology

Technology plays an important role in bringing down the cost of
production and produce quality goods on a large scale.
Multinational company technologically rich. They can be of great
help to bridge the technological gap between developed and
developing countries.
(6) Optimum Utilization of Resources

These companies ensure optimum utilization of natural and other
resources of the home country. The home country refers to the
country in which th multinational company has its head office.
Thus, the growth of these companies.
(7) Help to Local Industries
of raw material or semi-finished products. In recent years many

multinationa companies have opened their production units in
India, and most of their requirement in respect of spare parts,
raw materials, etc. are being met by local suppliers is beneficial to
the home country. Multinational companies provide a readymade
market to domestic supplier.
8) Management Opportunities
These companies open management opportunities to the
management students of the host country. They can be appointed
as professional managers by a multinational company and can
earn handsome salary and build a reputation for the country.
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(9) National Development Multinational

Companies assist to developing countries to increase efficiency
and productivity through the transfer of technology and foreign
investment. It helps developing countries by providing the
required financial, technical and other resources in exchange for
economic gains.
(10) Control over Monopolies

When a multinational company enters into the domestic market
they compete with existing competitors and breaks the monopoly
of selected few domestic companies. In nutshell, we can say that,
in the long-run, the presence of multinational company along
with domestic companies is beneficial to the consumers.
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UNIT -4
Globalization
Globalization can be defined as a process of rapid economic,

cultural, and institutional integration among countries. This
unification is driven by the liberalization of trade, investment and
capital flow, technological advances, and pressures for
assimilation towards international standards.
• Gobalization is a term used to describe the changes in societies

and the world economy that are the result of dramatically
increased trade and cultural exchange. In specifically economic
contexts, it refers almost exclusively to the effects of trade,
particularly trade liberalization or "free trade".
It is a common belief that globalization plays a role just at

international levels of trade and commerce, but the fact is that it
has played an important role in making our lives much more
comfortable too. The phones, apparels, gadgets or accessories
that we use in our day-to-day life are be available to us through
globalization. Knowingly or unknowingly, we are all under the
impact of globalization, and more importantly it has helped in
bringing international peace and justice to mankind.
"Globalization" can mean:
The formation of a global village - closer contact between

different parts of the world, with increasing possibilities of
personal exchange, mutual understanding and friendship
between "world citizens",
Economic globalization - "free trade" and increasing relations

among members of an industry in different parts of the world
(globalization of an industry), with a corresponding erosion of
National Sovereignty in the economic sphere.
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Signs of globalization
• Increase in international trade at a faster rate than the growth

in the world economy.
• Increase in international flow of capital including foreign direct
investment.
• Greater transborder data flow, using such technologies such as
the Internet, communication satellites and telephones.
• Greater international cultural exchange, for example through
the export of Hollywood and Bollywood movies.
• Some argue that even terrorism has undergone globalization.
Terrorists now have attacked places all over the world.
• Spreading of multiculturalism and better individual access to
cultural diversity, with on the other hand, some reduction in
diversity through assimilation, hybridization, Westernization,
Americanization or Sinosization of cultures.
• Erosion of national sovereignty and national borders through
international agreements leading to organizations like the WTO
andOPEC.
• Greater international travel and tourism
• Greater immigration, including illegal immigration
• Development of global telecommunications infrastructure
• Development of a global financial systems
• Increase in the share of the world economy controlled by
multinational corporations
• Increased role of international organizations such as WTO,
WIPO, IMF that deal with international transactions
• Increase in the number of standards applied globally;
e.g. copyright laws
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TYPES OF GLOBALIZATION
1. Economic: Countries that trade with many others and

have few trade barriers are economically globalized.
2. Social: A measure of how easily information and ideas pass

between people in their own country and between different
countries (includes access to internet and social media
networks).
3. Political: The amount of political co-operation there is between

countries.
•Evolution Of Globalization
Evolution of Global Marketing
What is marketing?
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Marketing involves the planning and execution of the conception,

pricing, promotion, and distribution of ideas, products, and
services.
Marketing involves customer satisfaction and their current and
future needs. Marketing is much more than selling and involves
the entire company.
Within marketing strategies, companies are always under
competitive pressure to move forward both reactively and
proactively.
Five stages in the evolution of global marketing
1. Domestic Marketing (domestic focus; home country

customers; ethnocentric orientation).
2. Export Marketing (indirect vs. direct exporting; country

choice, exports; ethnocentric orientation; home country
customers).
3. International Marketing (markets in many countries;

polycentric orientation; use of multidomestic marketing when
customer needs are different across national markets).
4. Multinational Marketing (many markets; consolidation on

regional basis; regiocentric orientation; standardization within
regions).
5. Global Marketing (international, multinational & geocentric

orientation; company's willingness to adopt a global perspective;
global products with local variations)
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Global Marketing refers to marketing activities that

emphasize the following:
1. Standardization efforts.
2. Coordination across markets.
3. Global integration.
• Global marketing does not necessarily mean that products can

be developed anywhere on a global scale.
• The economic geography, climate, and culture affect how
companies develop certain products.
• The Internet adds a new dimension to global marketing. E-
commerce retailers gain substantial savings by selling online.
Business planning
Planning is needed to grow or start a business. The main source

of planning for a company is the business plan. A business plan
definition is a document that details the strategy of business
owners on how they intend to run their business. There are
several objectives that should be covered in a business plan from
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what the company's goals are to how many employees are going
to be hired. Business plans provide a road map for where the
owners want to take their businesses. It is also necessary to have
if owners want to secure financing.
The key elements of a good business plan:
Executive Summary: An executive summary gives a clear picture

of the strategies and goals of your business right at the outset.
Though its value is often understated, it can be extremely helpful
in creating the readers’ first impression of your business. As such,
it could define the opinions of customers and investors from the
get-go.
Business Description: A thorough business description removes

room for any ambiguity from your processes. An excellent
business description will explain the size and structure of the
firm as well as its position in the market. It also describes the
kind of products and services that the company offers. It even
states as to whether the company is old and established or new
and aspiring. Most importantly, it highlights the USP of the
products or services
Market Analysis: A systematic market analysis helps to

determine the current position of a business and analyzes its
scope for future expansions. This can help in evaluating
investments, promotions, marketing, and distribution of
products. In-depth market understanding also helps a business
combat competition and make plans for long-term success.
Operations and Management: Much like a statement of

purpose, this allows an enterprise to explain its uniqueness to its
readers and customers. It showcases the ways in which the firm
can deliver greater and superior products at cheaper rates and in
relatively less time.
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Financial Plan: This is the most important element of a business

plan and is primarily addressed to investors and sponsors. It
requires a firm to reveal its financial policies and market analysis.
At times, a 5-year financial report is also required to be included
to show past performances and profits. The financial plan draws
out the current business strategies, future projections, and the
total estimated worth of the firm.
Four types of business plans:
Operational Planning
This type of planning typically describes the company's day-to-
day operations. Single-use plans are developed for events and
activities that occur only once (such as a single marketing
campaign). Ongoing plans include problem-solving policies, rules
for specific regulations, and procedures for a step-by-step
process for achieving particular goals.
Strategic Planning
Strategic plans are all about why things must occur. A high-level
overview of the entire business is included in strategic planning.
It is the organization's foundation and will dictate long-term
decisions.
Tactical Planning
Tactical plans are about what will happen. Strategic planning is
aided by tactical planning. It outlines the tactics the organization
intends to employ to achieve the goals outlined in the strategic
plan.
Contingency Planning
When something unexpected occurs or something needs to be
changed, contingency plans are created. In situations where a
change is required, contingency planning can be beneficial
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These are the basic steps in business planning:
Summary and Objectives

Briefly describe your company, its objectives, and your plan to
keep it running.
Services and Products

Add specifics to your detailed description of the product or
service you intend to offer. Where, why, and how much you plan
to sell your product or service and any special offers.
Customers
Conduct research on your industry and the ideal customers to
whom you want to sell. Identify the issues you want to solve for
your customers.
Operations
Operations are the process of running your business, including
the people, skills, and experience required to make it successful.
Marketing
How are you going to reach your target audience? How you
intend to sell to them may include positioning, pricing,
promotion, and distribution.
Finances
Consider funding costs, operating expenses, and projected
income. Include your financial objectives and a breakdown of
what it takes to make your company profitable. With proper
business planning through the help of support, system, and
mentorship, it is easy to start a business.
Global Marketing strategies
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Meaning
Global marketing strategies are a part of an overall business plan.
It is the process of adjusting the marketing strategies of a
company to better fit the needs of potential customers in other
countries. Entering a new international market can give a
company access to a new customer base, which can increase
company revenue. This may also have several other benefits, such
as reduced labour costs, access to additional resources, and the
ability to diversify risks.
Creating a consistent brand that feels familiar to everyone is a

priority when expanding to international markets. When
executing your marketing strategies, some aspects of the
business can remain the same, while other aspects can be greatly
affected. For example, the name and logo can likely remain the
same, although some businesses choose to change these aspects
as well. Your marketing approach may also change considerably.
For example, the messaging, advertising, and PR approach can
change in every new market.
Effective global Marketing

If you implement strategies effectively, it can benefit the bottom
line of a company in various ways, including better public
perception and increased profit margins. Embracing new markets
can help you discover business potential and allow for new
opportunities and stronger international relationships.
It's important to know your target audience. Understanding who

needs your products, and how to deliver the messaging in a way
that grows the company, is the core of global marketing. If a
business chooses not to expand internationally, it can face
immediate competition from international companies that are
extending their presence.
Developing a Successful Global Marketing Strategies

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Know your audience. Familiarizing yourself with your

customers' regions of origin and why they are choosing to
support your products or services can help determine where a
business is in higher demand.
Set achievable goals. It's important to determine what kind of

customer retention you can realistically expect in every region
where you expand. By setting specific goals, you can use them as
benchmarks for your progress.
Recognize your competitors. As you expand internationally, it's

important to identify other businesses that sell similar services
and products. Understanding the culture of local competition in
every region and how they approach the market can help you
develop a better strategy.
Elements of global marketing are:

Products have universal demand
Uniform marketing practices
Standardised products or services
Marketing activities are concentrated in the headquarter
Promotion adopts a global customer perspective.
Types of Global Marketing Strategy:

1).Standardization
2). International
3). Multinational.
1). Standardization
Global marketing standardization means adopting the same
product and marketing practices for all markets. In other words,
to sell the same things everywhere.
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The benefit of standardization is that it is pretty simple to carry

out. The company only needs to design the marketing campaign
once and apply it to all markets. Global marketing
standardization also gives the company more control over the
market and reduces its reliance on local partners.
Standardization also quickens the production process as there's

no need to develop new features. Companies also have an easy
time when training their staff.
An example of standardization in global marketing is Red Bull.

Red Bull uses the same packaging everywhere, 12-ounce cans
with a global appeal. It also adopts a sponsorship marketing
tactic in all markets it operates in. The consistency in packaging
and marketing message has gained Red Bull tremendous success.
Almost everyone can recognize the brand as an energy drink
provider and a reputable sports events sponsor.
2).International strategy
International strategy in global marketing involves importing and
exporting goods. This is a low-risk strategy with the least level of
engagement in the target market. The company does not have to
set up an office abroad and can keep all operations within the
home market. While international strategy is less risky, it is not
the most rewarding.
3).Global Marketing: Multinational strategy in global marketing

is a bit like international marketing. The products are tailored to
each market, but the same procedure applies. The customization
is based on the market demand and conditions. For example,
more staff can be sent to populous and high-demand regions.
International Marketing Strategy: Dunkin Donuts

Dunkin Donuts is a brand that successfully combines global and
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international marketing strategies.
The first franchise was opened in 1955. Nowadays, the company

serves doughnuts and coffee in over 67 countries.3
As a global company, Dunkin Donuts focuses on innovating the

variety and quality of its products. The company has a whole
innovation team to design new menu items to refresh consumers'
tastes. It also experiments with many innovations such as digital
technology and fast-to-market product concepts. For example, to
target digital-savvy and busy customers, Dunkin Donuts uses
mobile marketing to reward customers and offer on-the-go
services.
Being locally relevant is another key to Dunkin' Donuts' success.

Dunkin Donuts is a 100% franchise. This means all Dunkin
operations are locally operated, giving the store a competitive
advantage over foreign brands. Since the local owners are more
aware of the regional culture, they can adapt the recipe to match
local tastes
UNIT -5
International financial markets
A financial market is the mechanism that facilitates the transfer

of funds from lenders (surplus units) to borrowers (deficit units).
▸ The institutions & instruments are integral part of financial
market.
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▸ When funds flow across national boundaries and the transfer is

between parties residing in different countries, there comes into
existence the international financial markets
Meaning
The international financial market is the worldwide marketplace

in which buyers and sellers trade financial assets, such as stocks,
bonds, currencies, commodities and derivatives, across national
borders. It is a wide set of les and institutions where assets are
traded between gents in surplus and agents in deficit and where
stitutions lay down the rules. This market includes the arket for
foreign exchange, the Euro currency and lated money markets,
the international capital those countries. arkets, the commodity
market and the markets for stock exchanges rward contracts,
options, swaps and other derivatives.
Motives for the internationalization of financial transactions
1.Differences in interest rates

2.Inernational diversification
3. Economic growth prospects
4.Exchange rate fluctuations
Sources of international funds
The flow of funds from providers to seekers of international

funds takes place through different institutions or agencies and
through different financial instruments. The institutions or
agencies that serve as the sources of international funds are;
1. Multilateral development banks or agencies

2.Government/governmental agencies
3. International banks
4. Securities market
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Segments of international financial markets
International financial market facilitates the transfer of funds

globally. The funds so transferred may be ownership funds or
debt funds. The funds may be transferred for different maturity
periods such as short term, medium term or long term. Segments
of International Financial Markets;
1)Foreign Exchange Market

2)International Bond Market
3)International Equity Market
4)International Money Market
5)International Credit Market
Euro Currency
The euro is the form of money for the 19 member

countries of the eurozone. It is the second most
widely used currency in forex trading after the US
Dollar. It is also the second most widely held forex
reserve used by Central Banks.
The euro was initially proposed to unify the entire

European Union. All 28 member nations pledged to
adopt the euro, when they joined the EU. But they
must meet budget and other criteria before they can
switch to the euro.
As a result, nine EU members have not adopted the

euro, The euro symbol is £. Euros are divided into
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euro cents, each euro cent is one hundredth

(1/100th) of a euro. There are six denominations
£5, £10, £ 20, £ 50, £ 100 and £ 500
Each bill and coin has a different size. The bills also
have raised print, while the coins have distinct edges.
These features allow the visually impaired to
distinguish one denomination from another.
Advantages of Euro Currency
• Smaller countries have the advantage of being

backed by Europe's powerhouse economies like
Germany and France.
•Developed countries could produce more at a lower
cost as euro allows to enjoy lower interest rates.
•Larger companies enjoys the benefit of high demand
and production without paying the higher price.
Disadvantages of Euro Currency
•Adopting the euro means countries lose the ability

to print their currency.
•Euro currency is shared by 19 countries that
complicated its management.
• Each country sets its own fiscal policy that affects
the euro's value
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EUROCURRENCY MARKETS
.The eurocurrency market is the money market for

currency outside of the country where it is legal
tender. The eurocurrency market is utilized by banks,
multinational corporations, mutual funds, and hedge
funds.
The term eurocurrency is a generalization of
eurodollar and should not be confused with the EU
currency, the euro. The eurocurrency market
functions in many financial centers around the world,
not just Europe.
Eurocurrency markets can offer better rates for both
borrowers and lenders, but they also have higher
risks.
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UNDERSTANDING THE EUROCURRENCY MARKET
The eurocurrency market originated in the aftermath

of World War II when the Marshall Plan to rebuild
Europe sent a flood of dollars overseas. The market
developed first in London, as banks needed a market
for dollar deposits outside the United States. Dollars
held outside the United States are called eurodollars,
even if they are held in markets outside Europe, such
as Singapore or the Cayman Islands.
There is not necessarily any connection between
eurocurrency markets and Europe today, although
these markets did begin in
Europe.
The eurocurrency market has expanded to include
other currencies, such as the Japanese yen and the
British pound, whenever they trade outside of their
home markets. However, the eurodollar market
remains the largest.
Interest rates paid on deposits in the eurocurrency
market are typically higher than in the domestic
market.
CHARACTERISTICS OF EUROCURRENCY
MARKETS:
(1) Unregulated Market: It is a market across

border. Hence the government does not have full
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control over the transactions. Hence transacting

entities escape from most of the stringent provisions
and regulations. Under euro currency government
interference is minimal. Thus it is an unregulated
market.
(2) Long Term Loans and Short Term Deposits:

Eurocurrency loans are for longer period of time.
Deposits however in Eurocurrency markets are
primarily for short term. This leads to asset-liability
duration mismatch problem for the banks.
(3) Massive wholesale market: Transactions in

Euro currency markets are huge. They are mostly
within Governments and Banks, Public Sector
Organizations and large MNCs. This makes the
market a wholesale rather than a retail market.
(4) Time Deposits: The Euro currency market exists

for savings and fixed deposits and recurring deposits
in banks. There is hardly any space in Euro market
for demand deposits.
(5) Eurodollar and LIBOR based market:

Eurocurrency interest rates are based on a variable
rate base such as the (LIBOR).i.e. London Interbank
Offer Rate. Under this interest rate risk is reduced.
This market is largely dominated by US Dollars over
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other currencies.
COMPONENTS OF EUROCURRENCY MARKETS:
Composition is broken apart in 3 areas, viz.,

(I) Market Participants,
(II) Euro financial- instruments and
(III) transactional structure.
(1) MARKET PARTICIPANTS:
(1) Commercial Banks: The institutional core of the

market is formed by the Commercial banks. Banks
enter the euro currency market both as lenders and
as depositors. Around 20 of the world's largest banks
play a vital role in the Euro market.
(2) Corporate: Euro currencies are mainly borrowed

by Corporations whose name, size and good standing
enable banks to make loans to them with little more
than a superficial analysis of credit worthiness.
(3) Governments and central banks: Central banks

and Governments are also lenders in the
Eurocurrency markets. In addition, international
institutions such as the World Bank and other
regional development banks, and institutions
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associated with the EU, have been borrowers on

regular basis. In the last decade the market has also
seen an enlargement in government and government-
related borrowers.
(4) Private Individuals: Minor participants in the

Euro dollar markets are known as private individual.
High net worth individuals are no doubtedly been
significant participants as investors in the Euro bond
market, where the fact that payment of interest is
without deduction of tax and securities are bearer
securities gives the market anonymity and an most
probable attractiveness from a tax point of view.
(II) EURO FINANCIAL-INSTRUMENTS:
(1) Euro deposits: Most deposits in the Euro

currency market are Fixed deposits at fixed interest
rates, whose maturity is of a short period. Around
three-quarters of deposits in London Euro banks
have maturities of less than three months. Many of
these deposits are on call .i.e. thus they can be
withdrawn without notice. These types of time
deposits are mostly made by other bank, but many
are made by governments and their central banks as
well as Multi-national Corporation.
(2) Euro loans: Many Euro dollar loans are direct on

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the basis of formal lines of credit. However, the

technique of loan syndication has been developed for
larger currencies by the market.
(3) Eurobonds: Euro bonds are international bonds

denominated in a currency which is different from
that of the country in which they were issued.
Eurobonds are securities which are easily
transferable, and the Eurobond market is a vital
factor in international finance as the size of the Euro
bond market in the international market exceeds that
of the U.S. bond market.
(4) Other Instruments: Other Euro financial

instruments consist of Euro certificates of deposits,
Euro commercial papers, etc.
(III) TRANSACTIONAL STRUCTURE OF EURO

MARKETS:
•The Euro currency market is completely a wholesale
market.
•Transactions made are very rarely to be for less than
$1 million while at times they are for $100 million
and more.
•Like the foreign exchange markets, the vast bulk is

operated to interbank operations.
•The market is liked by telephone or
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telecommunication and is focused upon London,

which has a share of around 1/3 of the Euro currency
market.
• All Euro currency transaction are unsecured credits
in nature, hence the lenders pay a lot of attention to
borrowers status and name.
FUNCTIONS OF EUROCURRENCY MARKETS
(1) Cheap Source of working capital: Lesser

interest rate is attracted by Euro currency loans than
the loans of the domestic economy. This is due to low
overhead costs.
(2) Liquidity: Financial institutions find it highly

profitable to hold their idle resources in Euro
markets. Moreover due to fewer restrictions in the
markets, investors can make investments in bearer
securities. With the absence of tax withholding on
interest there is an advantage in this form. On an
average 80 per cent of these deposits have maturity
of 6 months
(3) Facilitates International Trade: Euro currency

markets make easy availability of loans which helps
in smoother working of international trade. It's
mainly for two reasons:
(a) Lower interest rate and (b) easy procedural
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formalities.
EUROBANKING/OFFSHORE BANKING
A eurobank is a financial institution that accepts

deposits and makes loans in foreign currencies. It is
not necessary for a eurobank to be located in Europe;
it can in fact be located anywhere in the world. For
example, an American bank located in New York
which holds deposits and issues loans in Japanese
yen (JPY) would be considered a eurobank.
Euro banking offers many vital advantages to the
various stakeholders. Depositors try to evade from
the tax-net of their own country of domicile.
Borrowers get liquid money for capital investments
as well for working capital at a highly competitive
interest rate.
ADVANTAGES OF OFFSHORE BANKING:
(1) Access to politically and economically stable

jurisdictions: Offshore banks provide easy access to
politically and economically stable jurisdictions. This
may turn advantageous for those residing in a
political turmoil areas where there is a risk and fear
of getting their assets frozen, seized or disappear.
(2) Higher interest on deposits: Some offshore

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banks may operate with a lower cost and greater

interest rates than the official rate in the home
country due to lower overheads and a lack of
intervention by the government.
(3) Evasion of Tax: Usually Interest is by offshore

banks without deducting tax. This is an advantage to
individuals who evade the payment tax on worldwide
income.
(4) Non-conventional Facilities: Some offshore

banks offer banking services which are non-available
from domestic banks such as anonymous bank
accounts.
(5) Other advantages to the banks: In most offshore

banking centers; banks get exemption from reserve
requirements, entry is easy to establish a branch,
license fees are low, etc.
DISADVANTAGES OF OFFSHORE BANKING

(1) Crime and illegal activities: Offshore banking
has been associated with the crime economy and
organized crime, through money laundering.
(2) Tax loss to Governments: Tax evasion is been

promoted by Offshore banking, by giving tax evaders
with an attractive place to deposit their hidden
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income.
(3) Capital outflow and volatility: Developing

countries may suffer due to the speed at which
money can be transferred in and out of their
economy.
(4) Widens rich-poor gap: Offshore banking is

usually more accessible to those on high incomes,
because of the costs of establishing and maintaining
offshore accounts. Middle-income groups suffer the
most on account of the tax burden in developed
countries.
Balance of Payment (BOP)
The Balance of Payment (BoP) is a comprehensive

record of economic transactions of the residents of a
country with the rest of the world during a given
period of time usually one year.
According to Kindleberger, "Balance of payment as
a systematic record of all economic transactions
between the residents of the reporting country and
residents of foreign countries during a given period
of time."
A consistently positive BoP reflects more foreign
investment and money coming into the country and
not much of its currency being exported. On the other
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hand, adverse or negative BoP indicates more

outflows of money compared to inflows. Theoretical
records of balance of payment is kept in standard
double entry book keeping under which each
transaction undertaken by residents of a country
results in a debit and a credit of equal size. In the BoP
sheet, currency inflows are recorded as credits (+),
whereas outflows are recorded as debits(-).
Characteristics of Balance of Payment

•It is a way of listing receipts and payments in
international transactions of a country.
• It adopts a double entry book keeping system. It has
two sides, debit and credit. Payments are recorded on
the debit side and receipts on the credit side.
• In the accounting sense, debit and credit will always
balance each other.
• It contains two sets of account long term (a)
Current account (b) Capital account.
•Real and short-term transactions are recorded
under current account. Capital account records all
financial and long-term transactions.
Importance of Balance of Payment

•It analyses the business transactions of any
economy into exports or imports of goods and
services for a particular financial year.
•The government can adopt some protective
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measures such as higher tariff and duties on imports,

s So as to discourage imports of non-essential items
and encourage the domestic industries to be self-
sufficient."
•If the economy needs support in the form of imports
the government can formulate appropriate policies to
divert the critical sectors of the economy that can
drive future growth.
•If the country has a flourishing export trade, the
government can adopt measures such as devaluation
of its currency to make its goods and services
available in the international market at cheaper rates
and bolster exports.
•The government can also use the indications from
balance of payments to discuss the state of the
economy and formulate its policies of inflation
control, monetary and fiscal policies based on that.
Components of Balance of Payment

Current Account
Current account or income account of BoP includes
the flow of all goods and services between one
country and the rest of the world.
It includes
•Commodity imports and exports
• Service imports and exports
The current account is usually subdivided into visible
and invisible.Visible items refer to goods i.e those we
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can see or and touch when they cross international

borders invisible items refer to all those services
which we cannot see or touch like insurance and
banking services.
Current account consists of

Merchandise Exports and Imports Merchandise
exports include the sale of goods to foreign countries.
Most of these transactions are on credit basis. All
these transactions give the Bo rise to monetary
claims on foreign importing companies. These claims
are credits. While, merchandise imports Privat
include purchase of goods from foreign countries.
Travel The credit item under travel covers

expenditure incurred by non-residents travellers
during their stay in the country. It excludes
international passenger services, which are included
in transportation.
Transportations This item covers all receipts and

payments attributable to international transportation
services on freight and shipping account except for
the freight on imports invoiced CIF, which is included
under imports. These data are derived from
transportation transactions reported in exchange
control records.
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Insurance The entries against this item cover all

receipts and payments on life and general insurance
and reinsurance excepting payments for marine
insurance in respect of imports invoiced CIF, which
are booked under import payments.
Investment Income Credits represent income

received by Indian residents from the ownership of
foreign financial assets while debit represent income
paid to non-residents acquiring from their ownership
of financial assets in India. Government not Included
Elsewhere Official transactions in goods and services,
which are not classified in the current account
transactions elsewhere, are included here.
Transfer Payments The entries represent all
receipts and payments without a quid pro quo..
The basic significance of the current account in Bop is
that on the credit side, it represents the current
international income from goods and services and on
the debit side, it represents the current international
expenditure on goods and services. In current
account, most important item is visible trade. Balance
of trade is the difference between merchandise
exports and imports.
Capital Account
Capital account covers debts and the claims payable
in money or those constituting money. It contains all
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changes in claims on or of a country owed by or owed

to the rest of the world. Thus, if a resident invests or
loans money abroad. then the rest of the world owes
a claim to that resident, who in turn, has an
equivalent asset. In other words, capital account is
concerned with changes in claim of residents on
overseas residents and changes in the liabilities of
residents to overseas residents. All capital inflows are
classified as credits and all capital outflows as debits.
Capital account may be divided into official and

private account on the basis that private capital flows
normally takes place in order to make profit or avoid
loss. Official capital account are flows that are taking
elsewhere in the BoP . Capital account consists of
Private Capital This item includes capital

transactions of resident individuals, firms, privately
owned non-financial corporate enterprises and non-
bank financial enterprises, with non-residents
including international institutions. Private capital is
sub-divided into long-term and short-term.
Banking Capital This item covers changes in the

foreign financial assets and liabilities of deposit
money banks, comprising commercial banks, whether
privately owned or state owned and such cooperative
banks, which are authorised to deal in foreign
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exchange.
Official Capital It comprises transactions affecting

foreign financial assets and liabilities of the
Government of India and the Reserve Bank of India.
The capital transactions, thus covered under this item
are classified into:-
•Loans
•Amortisation
• Miscellaneous
•Reserve
Meaning of Deficit and Surplus in Bop Autonomous

transactions are those transactions, which are
undertaken for their own sake, for the profits they
give. Induced transactions are movement of reserves.
International reserves serve the purpose of filling up
gaps in BoP and we can measure the size of surplus
or deficit by the volume of reserve payments.
A deficit appears in country's BoP when autonomous
transactions requiring payments exceed" "au
autonomous transaction involving receipts. A surplus
is said to arise when receipt from exports of goods
and services exceed autonomous payments for
similar items.
Any imbalance in the current account must be offset

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by appropriate action under the capital account A

deficit in the current account must be covered by
surplus in the capital account, by borrowing from
foreign countries, sale of gold and drawing down
foreign exchange from the official reserves.
Similarly, a surplus in the current account must be
eliminated by a deficit in the capital account by
lending to foreigners, purchasing gold and adding to
official reserves. The current account and capital
account together will remain in balance.
Bop Equilibrium)
It is that state of BoP over the relevant time period
which makes it possible to sustain an open economy
without severe unemployment on a continuing basis.
There are two kinds of equilibrium
Static Equilibrium It is the state in which exports

equal imports including exports and imports of
services as well as goods and other items on the BoP.
Besides, the BoP equilibrium, there should also be an
equilibrium in national money incomes. The foreign
exchange rate must also be in equilibrium.
Dynamic Equilibrium The condition of dynamic

equilibrium for short periods of time is that exports
and imports differ by the amount of short-term
capital movements and gold (net) and there are no
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large destabilising short-term capital movements.
The condition for dynamic equilibrium in the long-

run is that exports and import differ by the amount of
long-term autonomous capital movements made in a
normal direction, i.e. from the low interest rate
country to those with high rates.
BOP Disequilibrium
Cyclical Disequilibrium This is caused by countries

having cyclical patterns of income or the same
income pattern with different income elasticities or
identical income patterns and income elasticities
with different price elasticities.
Structural Disequilibrium
It occurs on account of structural changes in some
sectors of economy at home or abroad, which may
alter the demand or supply relations of exports or
imports or both. Structural disequilibrium at the
factor level results from factor prices, which fail to
reflect accurately factor endowments, i.e. when factor
prices distort the structure of production.
Autonomous Capital Flows These are capital flow,

which has no connection with the country's balance
of payment situation. Autonomous capital flow takes
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place regardless of other items in the balance of

payment. These are planned capital movements and
depend on the rate of return available in the country,
where capital is being invested. It is influenced by
rate of interest in the economy, taxation policy and
political climate of the country.
Accommodating Capital Flows These are capital

flows that take place specially to equalise, the balance
of payment in the book keeping. They are unplanned
and unforeseen capital flows. These are ex-post in
nature. Only at the end the period can one discover
whether accommodating capital inflow or outflow is
needed.
Economic Policy In order to balance the BoP, country

can not concentrate on current account or capital
account. T reduce deficit on current account,
government may devalue its currency, which will
increase price of imports and decrease price of
exports. Government can increase capita flow by
increasing the rate of interest,
Measures for Correcting, Disequilibrium in

Bop
Expenditure Reducing Policies Such measures aim

at reducing the domestic demand and income levels
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in order to curtail the demand for imports,

depressing prices and encouraging exports in order
to correct a disequilibrium in the form of deficit. In
the case of a surplus in the BoP, there will be a rise in
the level of domestic aggregate demand.
Expenditure Switching Policies These policies aim

at shifting expenditure to goods produced at home
and away from foreign goods.
Following are the expenditure switching policies
• Devaluation It is reduction in the value of the
domestic currency in relation to foreign currencies
will make domestic goods cheaper to foreigner and
raise the price of foreign goods. So, exports will be
encouraged an imports discouraged.
• Protection Imposition of tariffs, restriction of

impor quotas and liberalisation, of export subsidies
etc m reduce imports and boost exports.
Balance of Trade
Balance of payment is different from balance of trade.
Balance of trade means the balance of visible trade
that trade in goods on merchandise account over a
given perio Thus, if exports exceed imports, the trade
balance is said be favourable, whereas an excess of
imports over expor yields an unfavourable trade
balance.
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Thus, the Bop of a country is an economic barometer,

which measures the country's economic life. It
reveals to the government a true picture of the
international economic position of the country.
Although, BoP accounts is an economic indicator of
the nation's international health, yet it is not
appropriate to draw any conclusion concerning the
property or poverty of a country merely on the basis
of BoP.
Thus, surplus in BoP is no proof of country's
prosperity and similarly a deficit is no indication of
its economic degradation. The main purpose of
keeping BoP records is to inform the government of
the international economic position of the country
and to help it in reaching decisions on monetary and
fiscal policy on one hand and trade and payment on
another.
What is technology transfer?
"Research transforms money into knowledge …

technology transfer transforms knowledge into
money.”
Geoffrey Nicholson, father of the Post-It
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Technology transfer (TT) refers to the process of

conveying results stemming from scientific and
technological research to the market place and to
wider society, along with associated skills and
procedures, and is as such an intrinsic part of the
technological innovation process.
Technology transfer is a complex process that

involves many non-scientific and non-technological
factors, and many different stakeholders. Good or
high quality research results are not enough for
successful technology transfer; general awareness
and willingness both at the level of organisations and
individuals, as well as skills and capacity related to
specific aspects, such as access to risk finance and
intellectual property (IP) management, are also
necessary components.
The fundamental steps of the technology transfer

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process are depicted in the figure below.
Technology transfer covers the complex value chain

linking research to its eventual societal deployment.
This begins with the discovery of novel technologies
at research institutions, followed by the disclosure,
evaluation and protection of these technologies. The
next steps include marketing, potential licencing
agreements and the development of products based
on the technical inventions. The financial returns of
these products can then, for instance, be used for
further research
Technology Transfer Activities

Technology transfer activities differ according to the
exact nature of the project, and can include an array
of different activities, including:
• Securing patent and intellectual property rights

• Assessing the commercial potential of innovations
and inventions
• Marketing technologies to potential licensees and
partners
• Joining up research with commercialisation
principles and strategies
• Assisting with start-up creation and development
• Securing funding for research and start-up
• Negotiating license agreements and partnerships
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• Creating a business plan

• Building innovation ecosystems and structures to
support and promote innovation and economic
development
•Encouraging innovation and engaging in
entrepreneurship to bring a commercial product to
market
There are many other potential activities within

technology transfer, depending on the exact nature of
the innovation, product, services and end goals.
Three Phases of Technology Transfer

Technology transfer activities can be broadly split
into three phases; preparation, installation and
utilisation. These three phases are, in turn, affected
by technological, organisational and environmental
factors.
However, some people point to six steps in the

technology transfer process, these are:
(1) Invention disclosure

(2) Evaluation
(3) Patent application
(4) Assessment and marketing
(5) Patent licensing
(6) Commercialisation
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These steps take an innovation forward to a

commercial product via market evaluation,
intellectual property protection and licensing, as well
as promotion and commercialisation for the
marketplace.
Advantages:-
With the advent of new technologies, people are now
able to do things in an efficient way.
•The use of computers and other devices has helped

the education sector in many ways.
•The use of equipment and machines has made

manual labor easy in the agricultural sector.
• The advancement in medical equipment and other
devices has made the hospital industry advance in
many areas.
• coming with technology transfer is the cost-saving
factors. When new equipment and machinery are
used in place of old ones and new technology is being
applied for making process running in the industries
becomes less costly.
•Money can be saved in many ways which is
beneficial for the business owners. The overall
economy of the industry also gets boosted with
technology transfer.
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Disadvantage:-
•The dependency of people on machinery will be

increased in long term.
•When there is any breakage or stoppage of machines
people will reach a helpless situation until the
problem is solved.
•The amount of self-reliance for people will become
less and people will try to find an alternative in
technology for every problem they face.
•Another disadvantage of technology transfer is the
number of workers who become jobless.
• Automation of many jobs will make human labor
cheaper and more people will find it difficult to get a
job.
For example ‘e-learning’, it is a powerful delivery

method. e-learning comes under online education.
You can study anything through online. Main feature
of e-learning is virtual learning system
Types of Technology Transfer

Technology transfer can be categorized into three
basic types:
Technology push. This takes place when a company

or university patents its invention and licenses it to
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other companies. This process is common with

university-related inventions because universities
are not in charge of manufacturing the inventions
themselves, but they want to get their inventions out
into the market.
Market pull. This is when new technologies are

developed in response to demand for a product or
service. This is the most common way of technology
transfer as it pulls up innovation in order to meet the
demands of the market.
Technological spillover. This takes place when new

advances in one area stimulate progress in another.
It’s called a “spillover” because it’s like ideas spilling
from one subject to another, or technology being
transferred between countries.
Examples
Examples of technology transfer can be found
across virtually every scientific and industrial area,
from pharmaceuticals and medical devices to
alternative energy solutions, computing, transport,
artificial intelligence, robotics, agriculture, aerospace,
environmental improvements and many more.
Many of the products and technological advances we

take for granted in our everyday lives came from
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university or institute research before being

transferred to the marketplace through technology
transfer procedures.
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Global Business Environment And Communication
Unit-1
Introduction
'Business Communication' is essential for the success of all sorts

of business organizations in home and abroad.
Without effective communication no business organizations can
run for long time properly and to achieve their objective
successfully.So,especial attention should be going to this area.In
this section,as given below,you will study about the meaning of
communication and business communication, various types of
communication,what factors you need to consider while selecting
a method of communication and the keystages of
communication,principles,channels of communication , and
different barriers of communication that you should keep in mind
which hinder effective communication Let's first start with the
study of the meaning of communication
Meaning of Business Communication
By in a very simple way we can say Communication is the process

ofconveying message. Any behavior that results in an exchange of
ideas,news,and views are regarded as Communication. According
to Gray Desslur ‘Communicationis the exchange of information
and transmission of meaning.’
So we can say Communication is an exchange of information,
ideas, news,and views among the related parties.
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Business Communication is an exchange of ideas,news,and views

in commerce and industry are regarded as in an exchange of
ideas,news,and views are regarded as Communication.
According to Mr .Brennan' Business Communication is the
expression,channeling and interchanging of ideas in commerce
and industry.’
On the other hand, according to Prof. W H Meanning ‘The
exchange of ideas,news,and views in connection with business
among the related parties is called business communication.’
So we can say Business Communication is an exchange of

information,ideas,news,and views in connection with
business,among the related parties.
Types of Business Communication
Now you will try to understand types of communication. We

know that there are two major types of communication.i.e.;
1).Internalcommunication
2).Externalcommunication
1).Internalcommunication:The internal communication could

be either oral or written.
(a) Oral methods of internal communication: Oral methods of

internal communication include telephone, messages
meetings,conferences,presentations,face-to-face communication
and etc.
(b) The written methods of internal communication:

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The written methods of internal communication include

memos,reports,graphs,notices,forms,questionnaires,minutes,
newsletters,and etc.
2).External communication:The external communication could

also be either oral or written.
(a) Oral methods of external communication:Oral methods of

external communication include meetings , conferences
conversations,telephonemessages,presentations,and etc.
(b) The written forms of external communication: The

written forms ofexternal communication include leaflets,
brochures,press releases advertisements,notices, reports,e-
mails,faxes,letters and etc.
Factors for selecting a method of communication:-
If we are the sender of any communication,the factors that we

should consider while selecting a method of communication are:
1).The cost of using the method;
2).The confidentiality, safety and security you wish to ensure

regarding the message;
3).How important,complex,or urgent the message is;
4).When and over what distance the message will travel;
5).What resources you and the reader of the message have;
6).Whether you want the message to carry more authority and

create an impression and influence upon the reader; and also
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7).The situation of the reader and the relationship you have with
him/her
Barriers of communication
Now let us look to the barriers to communication. By barriers of

communication we mean the obstacles or problems in the way to
effective communication. Among the barriers of communication
are:
1).Non-verbal signals or body language by the sender or recipient

of the message.
2).Language,which may be ambiguous or too specialized.
3).Distorted listening by the recipient of the message.
4).Pre-judgment sheld by the sender or recipient of the message.
5).Nature of relationship between the sender and recipient of the

message.
6).Messages that involve emotion either on the part of the sender

orrecipient
7).Lack of suitable systems together the message across
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Business Letter
Any letter written for business use is a business letter. It is mean

toexchange information in a written form. It is the most formal
method of
communicationinabusinessrelationship.Acustomerwritingalettert
oa
supplier,ajobseekerwritingajobapplication,coverlettersaresomeof
the common business letters.
Letter of inquiry, order letter, business contract, complaint letter,

sale letter,letter of recommendation,and letter of resignation
comes under this category.
EssentialQualitiesofBusinessLetter
A person should always maintain the quality of the business

letter. The qualities of a business letter make it presentable . It
becomes easy for a person or an organization to imprint an
impression onto the others.
The qualities of a business letter can be classified as:-
1).InnerQuality
2).OuterQuality
Let us discuss each of them in detail.
1).Inner Quality
It refers to the quality of language used and the presentation of a
business letter.They are
1).Clear
The language used in the business letter must be clear. It helps
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the receiver to understand the message immediately easily , and

clearly. Any ambiguity will lead to the misinterpretation of the
message stated.
2).Simple
The language used in the business letter must be simple and
easy.One must not write a business letter in difficult and
fancywords.
3).Concise
The message written in the letter must be concise and to the
point.
4).Concrete
The message is written must be concrete and specific. By using
concrete language , a reader will have a clear picture of the
message.
5).Accuracy
One must always check for the accuracy of the business letter.
Accuracy generally means no error in grammar, spelling,
punctuations etc.Correct personnel should be targeted for
communication.
6).Coherent
The language used in the business letter must be coherent. The
messagemust be in a logical way for the clear understanding of
the message. The flow of the message must be consistent.
7).Complete
One must write a complete message.It helps the reader to know
about the issue and the solution to be taken. It should provide all
the necessary information. One must also keep in mind that the
message should be concise and short along with the complete
details.
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8).Relevance
The letter should only contain important information. Irrelevant
information should not be included and avoided in any business
communication.
9).Courteous
The language used in the business letter must be courteous. A
writer must always use open,friendly,and honest wording in his
letter.It does not mean that one must use slang and abusive
words.One must always add the words like please,thankyouetc.
10).Neatness
A business letter must be neatly typed or handwritten. Proper
spacing,indention,and use of paragraph should be used.
OuterQuality
The outer quality of a business letter means the quality of its
outerappearance. The outer look of the letter must be catchy and
impressive. Some of the outer qualities are:-
1).Size of the Paper

The standard size of paper should be used. An A4 paper is the
most used paper for writing a business letter.
2).Quality of the Paper

The quality of the paper used must be good. It is not always
possible for a firm to use the costlypaper. One must use good
quality paper for original copy and ordinary copy for the
duplicate copy.
3).The Color of the Paper

Sometimes it is very useful to use the different color of paper for
different types of letter. The receiver can clearly understand the
intention and the purpose of the letter by its color.
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4).Folding of Letter
One must fold the letter properly and uniformly.The folding must
be done to fit the letter in the envelope. It is notice able that one
must not overfold the letter. It will have a bad impression on the
reader’s mind.
5).Envelope
The envelope used must be of good quality. Special attention
must be given to the size of the envelope for fitting the letter.
Solved Example on Business Letter
Problem: Write the category of qualities for the following

statements.
1).One must use the words like thankyou,welcome,please etc.
2).Details regarding orders like shape,colors,designs,date of

delivery etc.
3). One must not use aggressive tones or hidden insults
4).One should avoid over writing and cuttings
Solution:1.Courteous
2.Completeness
3.Courteous
4.Neatness
Export Correspondence:
The economy of a country enhances when it concentrates on

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exporting its products,projects and consultancy in different

spheres. With the increased in flow of foreign exchange, a
country’s image and status rise high in the eyes of foreign
countries.Its dual benefi to faiding import of quality goods and
services otherwise not available in that country is equally
valuable. In this scenario, export business correspondence plays a
major role.
There are letters written by both exporter and importer on

varied occasions and necessarily the contents differ suiting to the
particular situation.It will be interesting to see the difference in
letters.
Compared to the domestic business correspondence,handling of

the export business correspondence calls for better skill. This is
in view of the fact that letters are written to those having
different culture.If a damage is done by wrong communication, it
is difficult to erase. If it calls for a personal visit to explain and
change the opinion, the consequent foreign trip becomes
expensive. In contrast, a domestic travel even to a faraway town
may not cost much.
Import export business is another aspect of general trade. The

only difference is that the trading is between an indigenous
concern and a foreign company. Normally, the letters have to be
written with an understanding of the working of the working
company and the culturalmilieu(environment) of the people who
are responsible for that foreign company. Infact, export business
also involves communication at different levels,with licensing
authorities,transporters,customers,authorities and others.All
correspondence has to be coordinated with speed as the watch
word.
No country in the world produces all goods in its ownland. It has

to depend on other countries for many types of good, products
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and commodities. It exports many goods and commodities,which

are in excess of home consumption, to other countries.Even if a
country can produce all goods of its requirements,the cost prices
of different commodities differ because of various factors. A
particular commodity can be produced in country A at a much
lower cost than in countryB. It is profitable, therefore, for the
country B not to go in the production of that commodity at home
but to importit from country A.In these various ways import and
export trade is built up and a constant flow of goods from one
country to another country takes place. All this traffic is
facilitated through correspondence. A good knowledge of it will
always stand a businessman in good stead. A brief account of the
various types of traders engaged in this work and their methods
of conducting their business and the correspondence relating to it
are discussed here as follows.
The agencies engaged in the import trade are the

merchants,firms andjoint stock companies importing goods
direct. Branches or agents in India of foreign manufacturers are
importing their own manufactures to supply them to the traders
in the country and firms of intermediaries known as Intend Firms
or Intend Houses importing for the local traders. In this country a
large number of those who want to import goods have a
comparatively small capital and little knowledge of foreign
markets.They find it easier to get their requirements through
firms who have expert knowledge of the foreign markets and are
in better position to buy for their customers the right type of
goods at competitive prices.
A trader importing goods through a foreign commission agent
would rarely ask the letter to make quotations as here lies on his
goodwill.If,however, the trader wants to buy goods directly from
a foreign manufacturer,he will first write a letter of enquiry and
obtain a quotation.The letter of enquiry must provide full details
of the goods required and state how they should be packed and
by what time they should be dispatched. In the case of first
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enquiry, it is usual for the importer to send to the exporter the

names of banker sort traders to whom exporter may refer for
information regarding the financial position of the importer.
Enquiries and quotations are frequently made by cable in codes
which may be private or public.Whether the exporter should
quote the price of the goods in his own currency or in that of the
importer is decided by reference to the terms of the enquiry,the
circumstances of each particular case and the trade usages of the
two countries.
On receipt of the indent the exporter proceed to execute the

order. The goods are procured and arranged for their packing
and shipment according to the instructions of the importer. When
the goods are shipped the shipping documents are forwarded to
the importer: either directly or through the bank. After getting
shipping documents that entitle an importer to take delivery of
the goods shipped to him, he waits for the arrival of the ship
carrying them. As soon as the goods arrive, the importer makes
arrangements for taking delivery of the goods from the customs
house in the custody of which they lie after they are unloaded
from the ship.In case the importer does not need the goods so
imported immediately or has the intention of re-exporting them,
he can without payment of the import duty have them stored in
warehouses owned by the Government called Bonded
Warehouse. When goods lie in such a warehouse they maybe
inspected, handled, sampled etc, by the owner.
Unit 2
Incoterms
The Incoterms® rules are the world’s essential terms of trade for
the sale of goods. Whether you are filing a purchase order,
packaging and labelling a shipment for freight transport, or
preparing a certificate of origin at a port,the Incoterms® rules
are there to guide you. The Incoterms® rules provide specific
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guidance to individuals participating in the import and export of

global trade on a daily basis.
Who publishes the Incoterms rules?
Since its founding in 1919, ICC has been committed to the

facilitation of international trade.
Different practices and legal interpretations between traders

around the world necessitated a common set of rules and
guidelines. As a response,ICC published the first Incoterms®
rules in 1936. We have been maintaining and developing them
ever since.
As ICC celebrates its Centenary in 2019, the world business

organization is pleased to announce the publication of Incoterms
2020 The newest edition of the Incoterms® rules will help
prepare business for the next century of global trade.
Incoterms 2020 is available on ICC’s new e-commerce platform

ICC Knowledge 2 Go in both print and digital formats.
The 2020 edition is available in no fewer than 29 languages —

from Estonian and German to Pashto and Spanish. Check with the
ICC local representative in your country for further information.
More than 250 launch events and training seminars are also
being organized worldwide by ICC national committees. What’s
more, there is even an online course and certificate programme
available from our educational arm, the ICC Academy.
Although other clauses for global trade exist around the world,
such as the Harmonized Tariff Schedule of the United States,
Incoterms® rules are global in their reach. Similarly, Incoterms®
rules do not include trade terms codified for national purposes,
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such as the “less than truckload shipping”

(LTL) rule of the United States. Unlike national trade policies,
Incoterms® rules are universal, providing clarity and
predictability to business.
What does “Incoterms” stand for?
Incoterms®” is an acronym standing for international

commercial terms.
“Incoterms®” is a trademark of International Chamber of

Commerce,registered in several countries.
The Incoterms® rules feature abbreviations for terms, like FOB
(“Free on Board”), DAP (“Delivered at Place”) EXW (“Ex Works”),
CIP (“Carriage and Insurance Paid To”), which all have very
precise meanings for the sale of goods around the world.
These terms hold universal meaning for buyers and sellers

around the world. If you are a financial analyst in the City of
London, then you might associate the acronym “FCA” with the
United Kingdom’s Financial Conduct Authority. However, for
importers and exporters around the world, FCA are the initial
used for “Free Carrier,” or the seller’s obligation to deliver the
goods to the carrier nominated by the buyer at the seller’s
premises or another named place.
When were ICC’s Incoterms rules last updated?
ICC last updated the Incoterms rules in 2019. While Incoterms

2020 is the most current version of the trade terms, Incoterms
2010 is still in effect today and can be accessed under our
resources for business.
Buying and selling goods in the international trade system can
often be complicated with responsibilities, cost and risk to all
parties needing to be determined.
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To help you in the import and export of trade, the International

Chamber of Commerce(ICC)introduced the International
Commercial Terms (Incoterms®), which act as the world’s
essential terms of trade for the sale of goods. Whether you are
completing a purchase order, packaging and labelling a shipment,
or preparing a certificate of origin, these regulations
have become part of our daily language of trade and are there to
guide you.
Since the first publication of the rules in 1936, the ICC has been
maintaining and developing them ever since. To help prepare
businesses for the next century of global trade, the newest
edition, Incoterms®2020, came into effect on 1 January 2020 and
should be referenced going forward.
The Incoterms® rules feature a series of three-letter trade terms

which all have very precise meanings for the sale of goods around
the world.
Rules for any mode or modes of transport:
EXW – Ex Works (named place of delivery)

Often used when making an initial quotation for the sale of goods
without any costs included, EXW means that the seller makes the
goods available at their premises or at another named place
(works, factory, warehouse etc). The seller does not need to load
the goods on any collecting vehicle,nor does it need to clear the
goods for export.
FCA – Free Carrier (named place of delivery)
FCA can have two different meanings, each with varying levels of
risk and cost for the buyer and seller. FCA (a) is used when the
seller delivers the goods, cleared for export, at a named place
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which is their own premises. FCA (b) is used when the seller
delivers the goods, cleared for export, at a named place which is
not their premises. In both instances, the
goods can be delivered to a carrier nominated by the buyer, or to
another party nominated by the buyer.
CPT – Carriage Paid To (named place of destination)
Under CPT the seller pays for the carriage of goods up to the
named place of destination.
CIP – Carriage and Insurance Paid to (named place of

destination)
Similar to CPT with the exception that the seller is required to
obtain minimum insurance for the goods while in transit.
DAP – Delivered at Place (named place of destination)
The seller is deemed to have delivered when the goods are placed
at the disposal of the buyer on the arriving means of transport
and ready for unloading at the named place of destination. Under
DAP terms, the seller needs to manage all risks involved in
bringing the goods in.
DPU – Delivered at Place Unloaded (named place of

destination)
This Incoterm requires that the seller delivers the goods,

unloaded, at the named place. The seller covers all the costs of
transport (export fees,carriage, unloading from main carrier at
destination port and destination port charges) and assumes all
risk until arrival at the destination place.
DDP – Delivered Duty Paid (named place of destination)
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The seller is responsible for delivering the goods to the named

place in the country of the buyer, and pays all costs in bringing
the goods to the destination including import duties and taxes.
The seller is not responsible for unloading.
Rules for sea and inland waterway transport:
FAS – free alongside Ship (named port of shipment)
The seller delivers when the goods are placed alongside the
vessel (e.g., on a quay or a barge) nominated by the buyer at the
named port of shipment.
The risk of loss of or damage to the goods passes when the goods
are alongside the ship, and the buyer takes on responsibility for
all costs from that moment onwards.
FOB – Free on Board
The seller delivers the goods on board the vessel nominated by

the buyer at the named port of shipment or procures the goods
already so delivered.
The risk of loss of or damage to the goods passes when the goods
are on board the vessel, and the buyer takes on responsibility for
all costs from that moment onwards.
CFR – Cost and Freight
The seller delivers the goods on board the vessel. The risk of loss
of or damage to the goods passes when the goods are on board
the vessel. The seller must contract for and pay the costs and
freight necessary to bring the goods to the named port of
destination.
CIF – Cost, Insurance and Freight
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The same as CFR with the addition that the seller must also
obtain minimum insurance cover against the buyer’s risk of loss
of or damage to the goods during the carriage.
Differences between Incoterms® 2010 and 2020:
The Incoterms® FCA (Free Carrier) now provides the

additional option to make an on-board notation on the Bill of
Lading prior loading of the goods on a vessel.
The costs now appear centralized in A9/B9 of each Incoterms®

rule.
CIP now requires at least an insurance with the minimum cover

of the Institute Cargo Clause (A) (All risk, subject to itemized
exclusions).
CIF requires at least an insurance with the minimum cover of

the Institute Cargo Clause (C) (Number of listed risks, subject to
itemized exclusions).
The Incoterms® rules Free Carrier (FCA), Delivered at Place

(DAP),Delivered at Place Unloaded (DPU) and Delivered Duty
Paid (DDP) now take into account that the goods may be carried
without any third-party carrier being engaged, namely by using
its own means of transportation.
The rule Delivered at Terminal (DAT) has been changed to

Delivered at Place Unloaded (DPU) to clarify that the place of
destination could be any place and not only a “terminal”.
The Incoterms® 2020 now explicitly shifts the responsibility of

security-related requirements and ancillary costs to the seller.
Useful information
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The Incoterms® do not constitute a complete contract of sale, but

rather become a part of it. For its application, the following
structure should be used:
“[The chosen Incoterm® rule] [Named port, place or point]
Incoterms® 2020”
Example: “CIF Shanghai Incoterms® 2020” or “DAP 10 Downing

Street,London, Great Britain Incoterms® 2020“
If there is no year stated in the Incoterms® then the following
applies:
until December 31st 2019 the Incoterms® 2010 apply.
From January 1st 2020 the Incoterms® 2020 apply.
If a different year is stated, e. g. Incoterms® 1980, then
respective terms apply.
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UNIT -3
What is Market Report? or, what is marketing report? A market
report is a kind of report which contains the information
regarding the overall market situation of a product of a group of
products or service. It reflects the market condition of a product
or service in terms of its price, demand,supply, volume of
transactions, market structure trend and so on. This type
of report is prepared mainly on agricultural items to help the
concern parties. Definition of market report, Meaning of market
report, Business market report discuses below hereWhat is
Market Report?
ACCORDING TO LORENZO, “A MARKET REPORT IS AN INDEX TO

BUSINESS CONDITION PREVAILING IN A PARTICULAR MARKET
AT A SPECIFIED PERIOD OR ON A FIXED DAY.”
IN THE OPINION OF USUNIER JC, “MARKET REPORT CONTAINS

THE BUSINESS OR MARKET SCENARIO OF A COMMODITY SOLD
AT A PLACE DURING A CERTAIN TIME LIMIT.”
ANOTHER SCHOLAR QUOTED AS “A MARKET REPORT
IS THE PUBLICATION OF RECORDS OF BUSINESS
TRANSACTIONS OVER A SPECIFIED PERIOD.”
From the above discussion we can say that a report containing
the information on demand, supply, price, and quantity, quality of
a product or service in a particular area or place during a
particular time period is called a market report. In fact it is a
statement about any market item which reveals its overall
market situation.
Importance of Market Report in Business Communication
Market report plays an important role in the development of

product market of a country. This type of report is prepared
mainly on agricultural items to help the concern parties. It
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provides information on demand, supply, and price, and quantity,

quality of a product or service in a particular area or
place during a particular time period. The importance of market
report can be discussed through the following points-
Market Development: It also helps the development of market

by supplying necessary information on the products, customers
and market factors.
Stock Exchange: From market report the investors can know

the prices of different shares, changes in prices of shares and
their market trend. Thus it helps to develop and expand the stock
market of a country.
Setting Price: The demand and supply of a product determine

its price structure and this information are provided by market
report.Thus market report helps management set appropriate
price of a product or service.
Taking Future Decision: Market report acts as the mirror of

the market situation of a product and after analyzing the report
one can take proper future decision.
Market Expansion: Market report not only helps to develop

the market of a product but also helps to expand its market. From
it,the marketers can take proper decision on creating market
base,product base and demand supply mechanism.
Speculation of Business: Market report provides information

on the future trends of market of products. This trend helps
speculation of future business of any product or service.
Taking Proper Investment Decision: From the market report

of any product an investor can get different information related
to the product or product group and thus take pragmatic
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investment decision.
Demand Supply situation of a Product or Service: Market

report clearly shows the demand supply situation of a product. It
help the management to take proper decision in formulating
marketingand other policies.
Developing International Trade: Market reports also help the

development of international trade as they contain information
on export-import items. From it people around the globe can
learn the situation of different products in different countries and
can take export-import decisions which increase the volume of
international trade.
Marketing of Agricultural Products: Market report has

immense contribution in the development and expansion of
market of agricultural products, especially in Asian country. From
it, the farmer’s businessmen and the customers can easily get the
information on production, supply, demand, price and prospect of
agro products. Thus it helps in marketing of agricultural
products.
Publicity of Goods: Market report not only provides

information on a product but also helps in publicizing it among
the public. It acts as an indirect media of advertising that helps to
promote a product or service.
Forecasting International Market: Market reports containing

information of international commodities are of special interest
to the exporters and importers from it they can know the market
trend of export and import items and can easily forecast their
trend.
Bringing Equilibrium in Demand and Supply: From market

report the producers can know the actual market scenario of
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their products. Thus they can bring equilibrium in the demand

and supply by taking proper steps.
From the above discussion we see that market report has great
importance in the business and economic development of a
country. Ithelps the development and expansion of market of
different commodities.Its necessity is inevitable in the
development of market of agro-products of a country like Asian
Country. So, we should be careful in preparing it.
A marketing report is a set of data created to analyze the

performance of a specific marketing campaign or effort. It is
utilized to effectively communicate a company’s marketing
strategy, including research,promotional tactics, goals and
expected outcomes.
How to Write a Marketing Report?
We’ve all heard of that famous end of the month when it’s time to
deliver reports, be it in an agency or in-house. While your
keyboard is burning and your fingers try to keep up with your
brain and comprehend all the data you’re writing about, using an
interactive online data visualization tool to set specific time
parameters or goals you’ve been tracking can bring a lot of saved
time and, consequently, a lot of saved money.
1. First things first - organizing and prioritizing your marketing

data
And just like you schedule daily, weekly and monthly marketing
activities,so will you build daily, weekly and monthly marketing
reports. If you get your practice right and utilize some effective
data driven marketing strategy tips and tricks, a report can be
generated with just a few clicks.
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Below, in the article, we’ve gathered some of the marketing

reportstemplates that can easily be used to perfect the efficiency
of generating data and reduce the time needed to create it.
2. Use professional software
There are countless reports digging into your marketing data; the
question usually is, where do I start? Are there any basic reports
that could help me get more comfortable with these mountains of
aggregated data? To get started, you might want to equip yourself
with a marketing BI software to analyze all your data and easily
build professional reports.
3. Structure your metrics
As with any report you might need to create, structuring and

implementing metrics that will tell an interesting and educational
data-story is crucial in our digital age. We will go into detail with
each report below in the article, but it is important to keep in
mind that low-level metrics such as CPC or CTR will not take part
in the strategic report that focuses on customers'
costs. You need to decide which story you want to tell and to
whom: your colleagues, supervisor or VP? That way you can
choose the best possible metrics for your case.
4. Regularly monitor your data
Secondly, launching a campaign with achievable goals is only

worth it if you check on them on a regular basis and see if you’re
on track – waiting for the end of the campaign to see how it
performed is, unfortunately, a common mistake people do, and
the worst practice. As a Forbes article states, “there’s no such
thing as ‘set it and forget it’ [in digital marketing]”.
Noticing that something does not work as planned on the 7th day
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instead ofthe 47th is a lot of time saved, and less money wasted.
Types of Marketing Reports
There are numerous marketing report types, depending on which

data you need to monitor and analyze. Usually, reports are done
on an annual,monthly, weekly or daily basis, but sometimes you
need to create an adhoc, KPI report for a particular purpose.
That said, we will go into details of a marketing campaign report,

provide a digital marketing report template, and look into
marketing reporting and analysis with the help of carefully
created dashboards.
But let’s get over some real data, starting with the annual
marketing report.
Annual Marketing Report Examples
As with each part of a business, the end and beginning of a year is

usually the time to reflect what was accomplished, conduct a few
meetings, consolidate data and prepare for the year ahead.
Marketing strategy reports such as annual ones focus on the
biggest possible picture a department can have, usually with
high-level metrics that will look at marketing activities on a
broader spectrum, focusing on strategic
developments and goals, discussed by the most senior marketing
authorities a company might have such as the chief marketing
officer(CMO).
Delivering milestones and reflecting on strengths and

weaknesses will ensure your next year will be fresh, full of new
opportunities and identified possibilities that will ensure you stay
on the right path and deliver the best possible promotional
results. Let's see this through a marketing report
sample focused on high-level metrics.
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1) Marketing CMO report
This is one of the marketing reporting template VPs, C-level

executives and This is one of the marketing reporting template
VPs, C-level executives and seniors can use to their strategic
advantage and interact with each metric displayed on the screen.
It shows how targets are performing in a monthly
view, but the user can easily set this marketing dashboard to a
yearly timeframe. Often CMOs don't have time to look into each
detail of an advertising campaign but focus their resources into
strategic goals of a Company and this report shows us exactly
what kind of metrics and insights are needed to be successful.
The layout of this marketing reporting template is clearly set to

guide theviewer if the most important metrics have reached their
goals or additional adjustments are needed. The funnel shows the
total amount of users, leads,MQL, SQL, and customers, compared
to the previous period and in relation
to the set goal. We can see that our number of leads has increased
by 4%in comparison to the previous period, but we still miss 6%
to target. Other metrics are structured similarly, which gives the
CMO a clear overview of which parts of the strategy need more
attention.
On the right side of this marketing report format, you can dig
deeper into relevant costs: per lead, per MQL, SQL and customer
as well as total costs and net income of each metric. This is useful
since seniors need to know and control customer costs and the
quality of leads. That way, they can compare their findings with
overall sales goals and see if there is a
mismatch that leads to more adjustments on operational levels.
2) Marketing KPI Report
This report example gives a good overview of the most important

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marketing KPIs in a single glance: costs and revenue stats. In the

end, this is what matters: did I get enough bang for my buck?
The design of this report for marketers is clear and lets you focus
on the core metrics. Keep in mind that a metric like your CTR
(click-through-rate)or the number of sessions should be
understood in their globalist, and not an absolute truth:
increasing them will not systematically generate more profit or
rise the ROI (return on investment) displayed on this dashboard.
That’s why you should dig deeper: analyze the profit per
acquisition you made, in comparison to the cost per acquisition
over time. See which campaigns are acquiring the most
customers, with the minimum of dollars invested in them. The
goal is to have the highest possible return on investment at the
lowest costs, but you should not forget about the whole funnel
and compare it with other reports you will create.
In this particular example above, we can see how some of the

metrics have performed by each week of a year, such as the
revenue per acquisition,which will help you in building your
future strategies and consolidate with operational objectives
(more on that later). This is one of our digital marketing reports
that can be seen on a monthly basis as well, it's just a matter of
filtering based on the desired time frame.
The point here is, looking at your different campaigns and
channels is key to have the big picture and understand what is
going on.
Monthly Marketing Report Examples and Templates
In our second part, we would like to stress the fact that you
should also keep looking at the big picture. We have already
stated that every Report must correlate with the big picture in
marketing and provide a steady connection with sales, but
looking at a monthly level can deliver more insights than
anything else. The weekly marketing report template we
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Provided below in the article can be implemented into a broader

perspective and utilized for monthly decisions. The channel
bringing in the most traffic is not always the one bringing the best
quality leads in the end– but that you cannot know before some
weeks have passed. That is why a monthly marketing report is so
useful, providing a cross-disciplinary
overview of several parameters at stake in a campaign, that you
can analyze conjointly for more accuracy.
This first monthly marketing report below provides you with a

broader feeling of how your marketing campaigns are performing
based on web analytics – even though, as we said, it can take too
long to spot problems and adjust. This is why each of these
different reports should be used conjointly, to get the best
possible insights into the state of the whole department.
1) Web Analytics Report
Simply, the web analytics dashboard will track all of your website
traffic details that you get thanks to Google Analytics (GA). GA is a
great tool and provides a lot of affordable data on your visitors.
Well-designed, custom Google Analytics dashboards will give you
a deeper understanding and greater clarity on your audience.
On this second monthly marketing report template, shown above,

you can track basic info like the number of visitors over time,
their behavior (new,returning, time on page, pages per session,),
the bounce rate, etc. In addition to the more general
demographics, knowing your audience’s behavior is an asset.
Secondly, monitoring the traffic sources is as important, as
already stated earlier in this article. That way, you can tailor
time and budget accordingly. Finally, the bottom line is the
conversion. You want all of these people coming to your site to
take action, and convert whichever that conversion is, provided
that you stated itbeforehand:signing up for a newsletter, starting
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a free trial, watching a video, and buying your product. Your

monthly report should track these conversion rates and see how
they perform compared to the initial goals.
This web marketing report basically consolidates all your GA

data, often the only roadmap you have to see how your website
performs and how visitors behave. Monitoring the traffic source,
whether it's paid, social, referral or organic, will tell you where
your potential buyers are coming from and learn how you can
improve your website to offer the best possible user
experience that will, ultimately, increase your conversions.
2) Marketing Performance Report
Our final monthly report is providing a good overview of the

performance of all your paid advertisement campaigns. How
much do you spend? Is it complying with what was initially
planned? These are the questions you want to answer through
that report. This monthly marketing report template also wants
to answer, “How much are we spending to get a new customer”?
The cost per acquisition (CPA) addresses that question according
to the campaign, and you can see which is the most profitable.
Thanks to these insights you know how to acquire a new

customer with the minimum of investments, and can then
replicate the best practices from that campaign.
In essence, this marketing campaign report template is focused

on the costs of your paid promotional activities that you can
easily compare, drill down into bits and pieces of each campaign
and decide what strategy works best. Monitoring the total spent
budget, amount of clicks, and the total number of acquisitions,
just to name a few, will certainly give you an
insight into which campaign performed best, which ones didn't
live to your expectations, and why.
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Thanks to the data gathered on that marketing campaign

performance report, you have all in hand to strategically decide
where to allocate your money.
Weekly Marketing Report Examples and KPIs
The weekly monitoring of your traffic will ensure that there is no

“breakdown” in the performance that could affect a whole
month’s progress. A weekly report will gather data that can be of
the utmost importance to the overall marketing strategy. If you
see on a daily basis that your channels aren’t performing the way
you expected them to, then the weekly summary can provide you
with more insights and create a basis for future decisions.
Especially in digital marketing reporting, where data
can change on a daily basis, but keeping in mind the big picture is
crucial for a successful campaign.
Now let’s approach some new aspects of this kind of report, on a

weekly basis.
1) Blog Traffic and Blog Leads Report
Some research showed that within a week of posting, a blog

article’s traffic can drop by 90%. This is mainly due to the fact
that you share the article on social media, which explains the
short-term traffic, and the fact that after getting a couple of
hundreds of visitors, depending on your reach, it maydrop
significantly. If it has been optimized for SEO though, you
shouldn’t stop measuring it after the first week, as it needs a
couple of months to reach its “cruising traffic”, and you can get
several thousands of monthly visits. Tracking the weekly
development of the blog traffic will show you how it actually
takes off. You don’t need to panic if you don’t see the results right
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away, but do keep in mind the weekly progress to know when to

take specific actions. If a blog post doesn’t deliver immediate
results, it should not affect the whole marketing strategy,
patience, in this case, is key.
We can see in our example below which pages have the highest
number of visitors, but you can also adjust and easily filter by the
number of leads.
This is useful to track on a weekly basis to see if any changes in
traffic or leads will signal a lengthier trend.
We know by now how important blogs are for companies, and
not only for ranking on Google. Correlation is not limited to the
number of times a company blogs and the traffic they drive, but
also to the number of leads they generate. Producing a blog leads
report gives a quick overview of how many leads you bring every
week with your articles. Sharpening theanalysis, a bit more, you
can see which category of articles is bringing the most traffic, and
focus then on improving the quality of content in thatcategory, to
attract even more.
Keep in mind also regular search engine updates, such as the ones
from Google, that affect your traffic each time they take place.
Sometimes you can be the greatest winner, but sometimes you
need to adjust the content to get back on the top of your blog
performance.
2) Website Traffic and Leads Per Channel
What we described above can also be applied to your website

traffic in general. Breaking it down into channels and analyze
which ones are bringing in the most leads may shed light on
under-performing (or on the contrary, super-performing)
channels that may need more attention and investments. The
number of sessions by source or by channel groupings,can track
your traffic in many different ways thanks to Google Analytics
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KPIs available in your GA account. Having an interactive report

tool to establish your performance on a weekly basis can reduce
the amount of time needed to consider additional actions or to
simply decide what the next step will be.
Identify which channel from paid, organic, social, referral or any

other is your gem and increment your strategies' performance in
order to boost the traffic coming from it. Although keep in mind
your long-term performance is one of the most important
parameters to decide in which way you have to adjust your
campaigns and efforts, weekly summaries can decrease the
number of interdepartmental meetings between marketing
professionals,and provide a faster way to analyze big data.
3) Online Advertising Performance
You choose to invest money to advertise online, you also need to

track how it performs. The most common pricing model, Cost-
Per-Click (CPC), as presented in the picture above, is used by the
main search engines like Google Ads, Yahoo Search Marketing, or
Yandex Direct. In our example above, we focused on the CPC and
keyword performance as well as qualityscores to get a more
holistic overview of our paid campaigns. You pay a fixed price for
each click on your ad, and the goal is to decrease that price over
time, which will decrease as a result of your customer acquisition
costs (as long as your conversion rate is not decreasing). When
you choose the most suitable online advertising model for your
business, you can set your payment also on CPM or CPA, it all
depends on which platform You want to advertise, how big you’re
marketing budget and which goals you expect is. For example,
there are programmatic advertising technologies that have their
own sets of platforms on which your advertisement is shown.
Also, if you set a branding campaign, then it differentiates from
the standard paid search campaign. It all depends on your overall
marketing strategy and how it aligns with your general sales
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report, which you have to keep in mind since sales are directly
interconnected with marketing activities.
In the example below, we can see the total amount of the spent
budget in connection with weeks and channels. Using this data
can provide insights on whether your investments are stable or
need more optimization to deliver specified targets. These data
sets can be broken down on the specific week of interest,
meaning you can interactively follow-up on what happened in
week 11 in regards to week 10. Although these data can also
be utilized in monthly or yearly reports, this weekly marketing
report template can be a source of input on how to track and
analyze your efforts.
Now that we have gone over some weekly marketing report

templates, let’s move to a shorter vision. Daily reports are not as
common as monthly ones,especially for SEO marketing, where
you should not think too short-termed.
But let's see this through examples and marketing report

analysis.
Daily Marketing Report Examples and KPIs
The general purpose of our marketing reporting templates is to

give you tools to make better-informed decisions. A daily report
will help you do that at a faster pace. You can use it to create an
action plan every morning: what did you accomplish the day
before, and what can be done better today.It can allow you to
interact with your data almost in real-time, so you can be
positive that information, objectives, and strategies are fresh and
on track. Although the overall result of the marketing strategy
will not be affected on a daily basis, using these kinds of reports
can provide more details into the daily activities of the campaign
setting.
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A daily marketing report will also allow you for faster

experimentation:running small operations to answer small
questions. This keeps everyone proactive to see a problem early
enough and adapt, to avoid wasting money.Besides, your team
and you will know your numbers perfectly, enticing
more confidence for everyone when a decision has to be made.
On a daily basis, though, a lot of things are out of your control–

especially in marketing. One single day will definitely not
determine the outcome of a campaign, but several days in a row
can indicate a trend. While you shouldn’t tie yourself up in too
much daily reporting, checking in on a couple of activities every
day is the best practice. Here are some examplesof KPIs you can
track on a daily basis.
1) Website Traffic
For inbound marketing, website traffic is the blood and pulse:

you need to attract a certain audience (new or returning), before
turning them into prospects and actual customers. After setting a
traffic goal for the month,you can divide it by the number of days
in the month to set your daily target and see if you come close to
it or not. For greater precision, you can adjust according to your
business, and if weekdays/weekends impact or not.
Monitoring your website traffic can help identify sudden rise or

drop, lets you act straight away, and should encourage you to
communicate with the sales team, whose number of leads and
qualified leads will also probably be affected.
You can also filter the channel-specific traffic, meaning you can
instantly look for sources like organic traffic, referrals, social
media, email, or paid search, and see which channels are
performing well, and keep an eye on how they behave in relation
to your goals, so that you can optimize them on time and prevent
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unnecessary budget expenditure. The important thing to

emphasize is to not change all your defined structures or goals
merely because your daily activity hasn’t performed as expected.
Let’s take a look at an example.
The example above shows the exact percentage of the traffic

sources gained through a specific time interval, in this case, daily.
While organic search definitely shows the biggest value of this
specific performance, the display shouldn’t be disregarded simply
because on that specific day didn’t
perform that well. But if this tendency of almost 50% of the
overall traffic gained develops in the same direction, then it can
be concluded that parts of the budget can be optimized for
channels that are performing better.
2) Engagement on Social Media
We never say it enough, but engagement is key. For your brand to

be known and your name to be memorized, daily activity on
various social newsfeeds of your audience will not only increase
your chances to reach a higher number of people with time, but it
will also increase your chances to engage with them. No one
discusses with a brand whose last post on social media was three
months ago. Inactivity in today’s prolific discussion and sharing
channels(Facebook,Twitter,Instagram,
but also LinkedIn, Snapchat and Pinterest) is digging your own
grave.
Find the channel that fits you better, but most importantly, where
you can reach your audience better (50-year-old businesspeople
do not use the same channels as teenagers, who somehow tend to
create and make trends, so stay tuned). Communicate daily or
every couple of days through it. Don’t throw uninteresting news
just to have attention, or you will easily lose it; build a strategy
and provide valuable content. Respond to questions, add yourself
in relevant groups, interact with possible customers or clients
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and listen to what the market and audience say. If needed, create
a client dashboard and inform all your relevant stakeholders
about changes in your social channels.
While it depends on the industry you are part of, social media is a
great tool to interact directly, on a personal level and build a
community around your products or services. That being said,
building a community management strategy can also provide an
additional source of a marketing activity that can be tracked and
evaluated on a daily basis. By listening to your clients
and customers, you can also improve your product or service and
generate more ideas that can be utilized and implemented in
other marketing channels and activities.
Researches have shown that content shared on Facebook and

Twitter live from 15 minutes to 6 hours – which makes it a good
daily KPI to track.
Over a day, you can determine how engaging your post was and
how much it brought to your website traffic. Although metrics
and algorithms of digital media change regularly, social media is
still quite an important part of a marketing strategy. By adjusting
your social efforts to the right audience, it can still bring value
and traffic.
You can also check our social media reporting article and get a
comprehensive overview of how different SM behaves and how
you can utilize them in the most effective way.
Digital Marketing Reports and Templates
These examples can also help a business to create a digital

marketing report. In this data-driven world, it is essential to keep
your digital efforts in a concise, factual and presentable way.
Digital marketing has become a must-have part of the overall
strategy, and to make sure you have all your data in one place, a
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KPI dashboard software can track a campaign’s

performance in real-time, while setting an alarm so you can be
automatically notified when specific digital marketing KPIs
changes its course or performs below expectations. Let’s see this
through some examples.
1) Content Quality Control
We all know the old content marketing saying: content is king,

context is queen. To be certain your content production and
article engagement is on its track, this digital marketing report
example showcases a peek into an interactive dashboard
representing the most important data for creating a content
piece. With this marketing report template, you can get a clear
overview of all the content stages before and after publishing. By
seeinghow much time a story needs to be written, you can
conclude if the writer is struggling, or there is not enough time
for the reviewing process? This whole story turnaround can
provide deeper data-insights and, therefore,drive to measurable
actions by decision-makers.
2) Google Ads Digital Marketing Analysis Report
Google is one of the most popular platforms for digital marketers

who look for search engine optimized content to rank, paid by the
cost per click (CPC) or cost per mile (CPM). We have already
expanded on paid options earlier in the article, but this section is
dedicated to one of the biggest search engines in the world:
Google.Most marketers have advertised on Google at some point
in their careers.
While Google gives many options to track and present your
results, it does have some limitations that can easily be solved
with a comprehensive live dashboard.
This dashboard showcases the most prominent Google AdWords

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metrics focused on the analysis of keyword information and data.

As you can see, the number of clicks is compared to the previous
period, following by a performance overview throughout selected
weeks. The top keywordssection will immediately let you know
what kind of keywords generated thehighest amount of clicks and
where most of your budget has been spent.
The details of the average CTR per position makes sense to track
since it will help you to create a benchmark for used keywords
where you will see if you need additional adjustments or your
campaign is performing well. Theposition of your ad will
influence the CTR and you should keep in mind that is almost
impossible to obtain an upper position with a below-average
CTR.
3) LinkedIn Report
While we have mentioned the importance of including social

media into your promotional efforts, we have selected one
network to showcase a holistic approach in reporting practices:
LinkedIn. As we know, LinkedIn is a powerful business network
that can generate numerous B2B promotional results such as
increased engagement, number of followers, and,
ultimately,Leads. That's why it is important to track social
networks as part of your promotional activities as possibilities
are endless.
This extensive report puts a spotlight into invaluable company

performance on this social network. One of the marketing
reporting best practices includes gathering the most important
LinkedIn metrics and holistically Looking at how they
complement each other and what can be done to ensure the best
possible results.
In this case, we take a closer look at where your company stands

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in terms of gained followers. By understanding your audience,

you will have better chances to create compelling content and
target based on their professional backgrounds such as industry
(you will definitely create a different content if you target
software enthusiasts or law professionals).
This is one of our dashboard ideas that will help you to

consolidate all your LinkedIn company page data under one roof,
giving you details about the CTR, engagement rate, and short
overview of the last 5 updates.
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UNIT - 4
The term “business letters” refers to any written communication
that begins with a salutation, ends with a signature and whose
contents are professional in nature. Historically, business letters
were sent via postal mail or courier, although the internet is
rapidly changing the way
businesses communicate. There are many standard types of
business letters, and each of them has a specific focus.
Sales Letters
Typical sales letters start off with a very strong statement to

capture the interest of the reader. Since the purpose is to get the
reader to do something, these letters include strong calls to
action, detail the benefit to the reader of taking the action and
include information to help the readerto act, such as including a
telephone number or website link.
Order Letters
Order letters are sent by consumers or businesses to a

manufacturer,retailer or wholesaler to order goods or services.
These letters must contain specific information such as model
number, name of the product,the quantity desired and expected
price. Payment is sometimes included with the letter.
Complaint Letters
The words and tone you choose to use in a letter complaining to

abusiness may be the deciding factor on whether your complaint
is satisfied. Be direct but tactful and always use a professional
tone if you want the company to listen to you.
Adjustment Letters An adjustment letter is normally sent in

response to a claim or complaint.If the adjustment is in the
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customer’s favor, begin the letter with that news.

If not, keep your tone factual and let the customer know that you
understand the complaint.
Inquiry Letters
Inquiry letters ask a question or elicit information from the

recipient. When composing this type of letter, keep it clear and
succinct and list exactly what information you need. Be sure to
include your contact information so That it is easy for the reader
to respond.
Follow-Up Letters
Follow-up letters are usually sent after some type of initial

communication.This could be a sales department thanking a
customer for an order, a businessman reviewing the outcome of a
meeting or a job seeker inquiring about the status of his
application. In many cases, these letters are a combination thank-
you note and sales letter.
Letters of Recommendation
Prospective employersoften ask job applicants for

letters of recommendation before they hire them. This type of
letter is usually from a previous employer or professor, and it
describes the sender’s relationship with and opinion of the job
seeker.
Acknowledgment Letters
Acknowledgment letters act as simple receipts. Businesses send

them to let others know that they have received a prior
communication, but action may or may not have taken place.
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Cover Letters
Cover letters usually accompany a package, report or other
merchandise.
They are used to describe what is enclosed, why it is being sent
and whatthe recipient should do with it, if there is any action that
needs to be taken.These types of letters are generally very short
and succinct.
Letters of Resignation
When an employee plans to leave his job, a letter of resignation is

usually sent to his immediate manager giving him notice and
letting him know when the last day of employment will be. In
many cases, the employee also will detail his reason for leaving
the company.
The Seven Principles of Business Correspondence (The 7Cs

of Business Communication)
1. Consideration / Conversational (Your attitude)
Try to visualize your reader’s circumstances, problems, emotions,

their desires etc. and indicate that you understand these by using
your words with care. If you are writing a sales letter, show the
recipient how the product would be beneficial for them. When
you write with consideration,you generate goodwill.
2. Courtesy (Be courteous)
Be courteous and polite. Avoid making negative statements and

an accusatory tone accusing the recipient. e.g. Instead of writing,
“You did not send the cheque”, use “The cheque wasn’t enclosed.”
Even if you are writing a complaint letter, your tone must be
polite and courteous at all times.
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3. Clarity (Be clear)
One has to be clear and specific in their letter. The words used
should be unambiguous and not vague. Avoid giving abstract
information.e.g. Instead of ‘visualize’, use ‘see’. Instead of ‘at the
present time’, write ‘now’. Instead of using ‘the website is now
fully operational with the ecommerce functionality setup’, write
‘the company has launched its website’.
4. Concreteness (Be convincing)
A good business letter always provides concrete information

(specificinformation).E.g. Instead of saying, “I expect the
consignment/order to reach me at the earliest”, use “I expect the
order to be delivered to me by the 21st of March 2013.
5. Correctness
While writing a business letter, the principle of correctness

should be followed. The writer must ensure correctness in his
tone, format and information that he provides in the letter. The
facts mentioned must be true and correct. Grammatical
structures and spellings should be correct.
6. Conciseness
Use only necessary details and short sentences. Be direct and

avoid long redundant expressions.
Use the “Keep it short and simple” formula.
7. Completeness
Provide complete information in the letter and try to keep it as

brief as possible.
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Business Letters
This handout will help you write business letters required in

many different situations, from applying for a job to requesting or
delivering information.
While the examples that are discussed specifically are the
application letter and cover letter, this handout also highlights
strategies for effective business writing in general.
Principles to keep in mind
Business writing is different
Writing for a business audience is usually quite different than

writing in the humanities, social sciences, or other academic
disciplines. Business writing strives to be crisp and succinct
rather than evocative or creative; it stresses specificity and
accuracy. This distinction does not make business writing
superior or inferior to other styles. Rather, it reflects the unique
purpose and considerations involved when writing in a business
context.When you write a business document, you must assume
that your audience has limited time in which to read it and is
likely to skim. Your readers have an interest in what you say
insofar as it affects their working world. They want to know the
“bottom line”: the point you are making about a situation or
problem and how they should respond.
Business writing varies from the conversational style often found

in email messages to the more formal, legalistic style found in
contracts. A style between these two extremes is appropriate for
the majority of memos, emails, and letters. Writing that is too
formal can alienate readers, and an attempt to be overly casual
may come across as insincere or unprofessional. In business
writing, as in all writing, you must know your audience.
In most cases, the business letter will be the first impression that
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you make on someone. Though business writing has become less

formal over time, you should still take great care that your letter’s
content is clear and that you have proofread it carefully.
Pronouns and active versus passive voice

Personal pronouns (like I, we, and you) are important in letters
and memos.
In such documents, it is perfectly appropriate to refer to yourself

as I and to the reader as you. Be careful, however, when you use
the pronoun we in a business letter that is written on company
stationery, since it commits your company to what you have
written. When stating your opinion, use I; when presenting
company policy, use we.
The best writers strive to achieve a style that is so clear that their
messages cannot be misunderstood. One way to achieve a clear
style is to minimize your use of the passive voice. Although the
passive voice is sometimes necessary, often it not only makes
your writing dull but also can be ambiguous or overly
impersonal. Here’s an example of the same point
stated in passive voice and in the active voice:
Passive voice: “The net benefits of subsidiary divestiture were

grossly overestimated.”
[Who did the overestimating?]
Active voice: The Global Finance Team grossly overestimated the

net benefits of subsidiary divestiture.
The second version is clearer and thus preferable.
Of course, there are exceptions to every rule. What if you are the
head of the Global Finance Team? You may want to get your
message across without calling excessive attention to the fact that
the error was your team’s fault. The passive voice allows you to
gloss over an unflattering point—but you should use it sparingly.
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Focus and specificity
Business writing should be clear and concise. Take care, however,

that your document does not turn out as an endless series of
short, choppy sentences. Keep in mind also that “concise” does
not have to mean “blunt”—you still need to think about your tone
and the audience for whom you are writing. Consider the
following examples:
After carefully reviewing this proposal, we have decided to
prioritize other projects this quarter. Nobody liked your project
idea, so we are not going to give you any funding.
The first version is a weaker statement, emphasizing facts not
directly relevant to its point. The second version provides the
information in a simple and direct manner. But you don’t need to
be an expert on style to know that the first phrasing is diplomatic
and respectful (even though it’s less concise) as compared with
the second version, which is unnecessarily harsh and likely to
provoke a negative reaction.
Business letters: where to begin Reread the description of your

task (for example, the advertisement of a job opening,
instructions for a proposal submission, or assignment prompt for
a course). Think about your purpose and what requirements are
mentioned or implied in the description of the task. List these
requirements. This list can serve as an outline to govern your
writing and help you stay focused, so try to make it thorough.
Next, identify qualifications, attributes, objectives, or answers
that match the requirements you have just listed. Strive to be
exact and specific, avoiding vagueness, ambiguity, and platitudes.
If there are industry- or field-specific concepts or terminology
that are relevant to the task at hand, use them in a manner that
will convey your competence and experience. Avoid any language
that your audience may not understand. Your finished piece of
writing should indicate how you meet
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the requirements you’ve listed and answer any questions raised

in the description or prompt.
Application letters and cover letters
Many people believe that application letters and cover letters are
essentially the same. For purposes of this handout, though, these
kinds of letters are different. The letter of application is a sales
letter in which you market your skills, abilities, and knowledge. A
cover letter, on the other hand, is primarily a document of
transmittal. It identifies an item being sent, the person to whom it
is being sent, and the reason for its being sent, and provides a
permanent record of the transmittal for both the writer and the
reader.
Application letters
When writing an application letter, remember that you probably

have competition. Your audience is a professional who screens
and hires job applicants—someone who may look through
dozens or even hundreds of other applications on the day she
receives yours. The immediate objective of your application letter
and accompanying resume is to attract this person’s attention.
Your ultimate goal is to obtain an interview.
As you write your application letter, be sure you complete three

tasks: catch the reader’s attention favorably, convince the reader
that you are a qualified candidate for the job, and request an
interview.
Application letter checklist:
•Identify the job by title and let the recipient know how you
heard about it.
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•Summarize your qualifications for the job, specifically your work

experience, activities that show your leadership skills, and your
educational background.
•Refer the reader to your enclosed resume.
•Ask for an interview, stating where you can be reached and

when youwill be available. If your prospective employer is
located in another city and you plan to visit the area, mention the
dates for your trip.
•If you are applying for a specific job, include any information
pertinent to the position that is not included in your resume. To
save your reader time and to call attention to your strengths as a
candidate, state your objective directly at the beginning of the
letter.
Example:
I am seeking a position as a manager in your Data Center. In such

a management position, I can use my master’s degree in
information systems and my experience as programmer/analyst
to address business challenges in data processing.
If you have been referred to a company by one of its employees, a

career counselor, a professor, or someone else, mention that
before stating your job objective.
Example:
During the recent ARRGH convention in Washington, D.C., one of

your sales representatives, Dusty Brown, informed me of a
possible opening for a manager in your Data Center. My extensive
background in programming and my master’s degree in
informationsystems make me highly qualified for the position.
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In subsequent paragraphs, expand on the qualifications you

mentioned in your opening. Add any appropriate details,
highlighting experience listed on your resume that is especially
pertinent to the job you are seeking. Close With a request for an
interview. Proofread your letter carefully.
Two sample letters of application are presented below. The first

letter
(Sample #1) is by a recent college graduate responding to a local
newspaper article about the company’s plan to build a new
computer Center. The writer is not applying for a specific job
opening but describes the position he seeks. The second letter
(Sample #2) is from a college senior who does not specify where
she learned of the opening because she is uncertain whether a
position is available.
Sample #1
6123 Farrington Road
Apt. B11
Chapel Hill, NC 27514
January 11, 2005
Taylor, Inc.
694 Rockstar Lane
Durham, NC 27708
Dear Human Resources Director:
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I just read an article in the News and Observer about Taylor’s

new computer center just north of Durham. I would like to apply
for a position as an entry-level programmer at the center.
I understand that Taylor produces both in-house and customer

documentation. My technical writing skills, as described in the
enclosed resume, are well suited to your company. I am a recent
graduate of DeVry Institute of Technology in Atlanta with an
Associate’s Degree in Computer Science. In addition to having
taken a broad range of courses, I served as a computer consultant
at thecollege’s computer center where I helped train users to
work with new systems.
I will be happy to meet with you at your convenience and discuss

how my education and experience match your needs. You can
reach me at my home address, at (919) 233-1552, or at
krock@devry.alumni.edu.
Sincerely,
Raymond Krock
Sample #2
6123 Farrington Road

Apt. G11
Chapel Hill, NC 27514
January 11, 2005
Taylor, Inc.
694 Rockstar Lane
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Durham, NC 27708
Dear Ms. Jones:
I am seeking a position in your engineering department where I

may use my training in computer sciences to solve Taylor’s
engineering problems. I would like to be a part of the department
that developed the Internet Selection System but am unsure
whether you have a current opening.
I expect to receive a Bachelor of Science degree in Engineering

from North Carolina State University in June and by that time will
have completed the Computer Systems Engineering Program.
Since September 2000, I have been participating, through the
University, in the Professional Training Program at Computer
Systems International in Raleigh. In the program I was assigned
to several staff sections as an apprentice. Most recently, I have
been a programmer trainee in the Engineering Department and
have gained a great deal of experience in computer applications.
Details of the academic courses I have taken are included in the
enclosed resume.
If there is a position open at Taylor Inc., please let me know

whom I should contact for further information. I look forward to
hearing from you soon. I may be reached at my office (919-866-
4000 ext.232) or via email (Brock@aol.com).
Sincerely,
Rebecca Brock
Cover letters
As mentioned previously, application letters and cover letters are

not the same. A cover letter identifies an item being sent, the
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person to whom it is being sent, and the reason for its being sent.
A cover letter provides a permanent record of the transmittal for
both the writer and the reader.
In a cover letter, keep your remarks brief. Your opening should

explain what you are sending and why. In an optional second
paragraph, you might include a summary of the information you
are sending. A letter accompanying a proposal, for example,
might point out sections in the proposal that might be of
particular interest to the reader. The letter could then go on to
present a key point or two explaining why the writer’s firm is
the best one for the job. The closing paragraph should contain
acknowledgements, offer additional assistance, or express the
hope that the material will fulfill its purpose.
The following are examples of cover letters. The first letter

(Sample #1) is brief and to the point. The second letter (Sample
#2) is slightly more detailed because it touches on the manner in
which the information wasgathered.
Sample #1
Your Company Logo and Contact Information
January 11, 2005

Brian Eno, Chief Engineer
Carolina Chemical Products
3434 Pond View Lane
Durham, NC 27708
Dear Mr. Eno:
Enclosed is the final report on our installment of pollution control

equipment at Eastern Chemical Company, which we send with
Eastern’s Permission. Please call me collect (ext. 1206) or email
me at the address below if I can answer any questions.
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Sincerely,
Nora Cassidy
Technical Services Manager
ncassidy@company.com
Enclosure: Report
Sample #2
Your Company Logo and Contact Information
January 11, 2005

Brian Eno, Chief Engineer
Ecology Systems, Inc.
8458 Obstructed View Lane

Durham, NC 27708
Dear Mr. Eno
Enclosed is the report estimating our power consumption for the

year as requested by John Brenan, Vice President, on September
4.
The report is the result of several meetings with Jamie Anson,

Manager of Plant Operations, and her staff and an extensive
survey of all our employees. The survey was delayed by the
transfer of key staff in Building A. We believe, however, that the
report will provide the information you need to furnish us with a
cost estimate for the installation of your Mark II Energy Saving
System.
We would like to thank Billy Budd of ESI for his assistance in

preparing the survey. If you need more information, please let me
know.
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Sincerely,
Nora Cassidy
New Projects Office
ncassidy@company.com
Enclosure: Report
The following sample letter format illustrates the information

you need to include when writing a letter, along with advice on
the appropriate font, salutation, spacing, closing, and signature
for business correspondence.
More Sample Letter Format
Contact Information (Include your contact information unless

you are writing on letterhead that already includes it.)
Your Name
Your Address
Your City, State Zip Code
Your Phone Number
Your Email Address

Date
Contact Information (The person or company you are writing
to)
Name
Title
Company
Address
City, State Zip Code
Greeting (Salutation Examples)

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Dear Mr./Ms. Last Name:

Use a formal salutation, not a first name, unless you know the
person well. If you do not know the person's gender, you can
write out their full name. For instance, "Dear Pat Crody" instead
of "Dear Mr. Crody" or "Dear Ms. Crody." If you do not know the
recipient’s name, it’s still common and acceptable to use the old-
fashioned “To Whom It May Concern.”
Body of Letter
•The first paragraph of your letter should provide an

introduction as to why you are writing so that your reason for
contacting the person is obvious from the beginning.
•Then, in the following paragraphs, provide specific details about

your request or the information you are providing.
• The last paragraph of your letter should reiterate the reason

you are writing and thank the reader for reviewing your request.
If appropriate, it should also politely ask for a written response or
for the opportunity to arrange a meeting to further discuss your
request.
Closing
Best regards, (Closing Examples)
Signature
Handwritten Signature (For a hard copy letter, use black or blue
ink to sign the letter.)
Typed Signature
ExampleJennifer Lastname
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{Street Address}
{City}, {State} {Zip Code}
555-555-5555
email@email.com
June 17, 2020
Michelle Lastname
Manager
The Company Name

{Street Address}
{City}, {State} {Zip Code}
Dear Ms. Lastname:
Thank you so much for taking the time to meet with me to discuss
selling my handmade sweaters in your wonderful shop.
As I mentioned in our conversation, I’ve been a customer of your

store since I used my third-grade allowance to buy my very first
pair of knitting needles. I’m honored that you’d consider selling
one of my original creations at The Yarn Company alongside your
own work.
We discussed a trial consignment arrangement in which a portion

of the sales would go to the store. This is more than agreeable to
me.
Let me know how you want to proceed. I’m available most

afternoons at 555-555-5555, or you can email me at
email@email.com, and I’ll respond to your message ASAP
Thanks, and best,
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Jennifer Last name
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UNIT -5
Public Relations
Public relations professionals shape an organization's image.
They build the brand, spread the organization's message and
minimize the effect of negative publicity. At a small company, the
PR person may have to handle all the roles – cheerleader, media
contact person, the deflector of criticism themselves. At larger
companies or big PR firms, staffers can have more specialized
roles to handle different organizational needs.
One way to divide up roles is between communication

technicians and communication managers. Communication
technicians are PR writers.They turn out press releases,
newsletters, website content, speeches, blogs and social media
posts. Managers handle the bigger picture, assessing the PR goals
to accomplish or the problems to solve and determining the PR
strategy required.
Different PR roles call for different skill sets. PR communication

technicians have to be good writers. Their talent lies in writing
messages with strong imagery and evocative language that steers
listeners to the point the organization wants them to reach. These
technicians execute the strategy drawn out by the managers.
Communications managers are more into the big picture. They

don't have to be gifted writers themselves, but they set the goals
for the people who are. Communications managers have a seat at
the management table,discussing strategy, resource management
and how to improve the company's image or build relationships
given the resources at hand.
Sometimes they watch for potential threats to the organization's
success, and then craft a PR strategy to head the problem off.
The roles aren't bound by anything but ability and opportunity. A

skilled technician may shift from image management to
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relationship management in different situations. If technicians

have the right skills, they may eventually step up and become
communications managers.
Public relations is a strategic communication process companies,

individuals, and organizations use to build mutually beneficial
relationships with the public.
A public relations specialist drafts a specialized communication

plan and uses media and other direct and indirect mediums to
create and maintain a positive brand image and a strong
relationship with the target audience.
Objective of Public Relations
The main objective of public relations is to maintain a positive

reputation of the brand and maintain a strategic relationship with
the public, prospective,customers, partners, investors, employees
and other stakeholders which leads to a positive image of the
brand and makes it seem honest,successful, important, and
relevant.
Functions Of Public Relations
Public relations is different from advertising. Public relations

agencies don’t buy ads, they don’t write stories for reporters, and
they don’t focus on attractive paid promotions. The main role of
public relations is to promote the brand by using editorial
content appearing on magazines, newspapers,news channels,
websites, blogs, and TV programs.
Using earned or free media for promotion has its own benefits as
information on these mediums aren’t bought. It has a third party
validation and hence isn’t viewed with skepticism by the public.
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The functions of public relations manager and public relations

agencies include:
1. Anticipating, analysing and interpreting the public opinion and

attitudes of the public towards the brand and drafting strategies
which use free or earned media to influence them.
2. Drafting strategies to support brand’s every campaign and new
move through editorial content.
3. Writing and distributing press releases.
4. Speechwriting.
5. Planning and executing special public outreach and media
relations events.
6. Writing content for the web (internal and external websites).
7. Developing a crisis public relations strategy
8. Handling the social media presence of the brand and
responding to public reviews on social media websites.
9. Counselling the employees of the organization with regard to
policies, course of action, organization’s responsibility and their
responsibility.
10. Dealing with government and legislative agencies on behalf of
the organization.
11. Dealing with public groups and other organizations with
regard to social and other policies of the organization and
legislation of the government.
12. Handling investor relations.
Types of Public Relations
According to the functions of the public relations

department/agencies, public relations can be divided into 7
types. These are:
•Media Relations: Establishing a good relationship with the

media organizations and acting as their content source.
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• Investor Relations: Handling investor’s events, releasing

financial reports and regulatory filings, and handling investors,
analysts and media queries and complaints.
• Government Relations: Representing the brand to the

government with regard to the fulfilment of policies like
corporate social responsibility,fair competition, consumer
protection, employee protection, etc.
• Community Relations: Handling the social aspect of the brand

and establishing a positive reputation in the social niche like
environment protection, education, etc.
• Internal Relations: Counselling the employees of the

organization with regard to policies, course of action,
organization’s responsibility and their responsibility.
Cooperating with them during special product launches and
events.
• Customer Relations: Handling relationships with the target

market and lead consumers. Conducting market research to know
more about interests, attitudes, and priorities of the customers
and crafting strategies to influence the same using earned media.
• Marketing Communications: Supporting marketing efforts

relating to product launch, special campaigns, brand awareness,
image, and positioning.
Public Relations Examples
PR stunts or strategies range from donating to an affected

community to running a brand activation stunt in a mall. Some of
the examples of successful public relations campaigns are:
Google’s Fight Ebola Campaign

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The outbreak of Ebola virus in 2014 was critical as it was spread

among many countries and took many lives. Google, to help the
people in need and to build up a positive brand image, started a
donation campaign where it pledged to give $2 for every $1
donated to the cause through its website.
The public relations strategy attracted the media attention and

resulted to be a huge success as Google raised $7.5 million.
Public relations tools and Methods
By using proven public relations (PR) tools and activities, you can
promote positive attitudes and behaviors towards your business
that will help convert interested consumers into customers.
PR tools are very cost-effective, and often give you a greater
degree of control than more broadly targeted advertising
campaigns. Consider using these PR tools to build your business's
reputation.
Media relations
Media strategies focus on circulating messages through media

channels to manage how your business is portrayed by the media.
Your media tools might include releasing media statements and
fact sheets, offering on-site media tours to encourage journalists
to report positive messages aboutyour business, and using social
media to get the attention of journalists and track journalists who
report in your market.
By developing good media contact lists and building relationships

with key journalists to pitch media releases and story ideas to,
you can use local,regional or state media to:
• promote your business
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• Manage risks, issues or crises affecting your business.
Advertorials
Advertorials are advertisements in the form of news stories or

reviews in newspapers. Advertorials allow you to associate your
advertising with the credibility of the newspaper.
Many businesses employ advertising or marketing professionals

to help them develop TV advertorials — which are commonly
used as a form of advertising and product placement.
Social media
Social media lets you bypass the media and go straight to your
customers. Using social networking sites such as Facebook and
Twitter allows you to follow and be followed by journalists, drive
web traffic, manage issues by responding quickly to criticisms or
negative perceptions, and increase exposure for your business
brand.
Learn more about social media and your business.

Newsletters
Print or emailed newsletters are a good way to promote your

business, communicate with customers and keep them informed
of new products and services.
Regular newsletters can strengthen your personal connections

with customers and reflect your business brand andpersonality.
A well written newsletter offers information of value to your
customers.
Brochures and catalogues
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'Take home' or mail-out brochures or catalogues can help keep

your customers thinking about your business and its products
and services. Properly designed brochures and catalogues give
customers confidence in you and your brand, and help drive
customers to your website or store.Information contained in
business brochures and catalogues can be effectively reworked
for your website, helping you do business online.
Business events
Events are opportunities for business people to gain exposure for

their businesses, promote new products or services and make
sure accurate information reaches targeted customers.
From a sales point of view, events are a chance to counter

customer doubts and build customer confidence. They can also
help you research your market and competitors, and build your
mailing list. Make sure you go to the event prepared with
marketing materials to disseminate and a way to collect
information and customer details.
Trade shows are an opportunity for businesses to compete in

their industry and share information with people in similar lines
of work. Learn more about promoting your business at trade
shows and exhibitions.
Speaking engagements
Speaking at events where customers are likely to attend helps

position you as a leader or innovator in your field. As a business
owner or leader, building your reputation as an expert also builds
the reputation of your business - and draws new customers.
Events are valuable promotional opportunities even if you don't

have top billing as a speaker. You will build reputation simply by
Page 63 of 65
having your business name or logo on the event listing, or

delivering a presentation about a new product or innovation.
Additionally, they provide valuable networking opportunities.
Sponsorships or partnerships
Partnerships and sponsorships are good for business. Supporting

a not-forprofit cause can help build feelings of goodwill and
loyalty towards your business. Community partnerships may
involve an exchange of funds or inkind benefits to grow a local
community organization in return for benefits that promote your
business reputation.
Partnerships can help consumers identify your brand with good

business practice and good ethics.
Employee relations
Your staff are ambassadors for your business and brand. Many
larger businesses conduct employee relations - building their
business culture and team relationships by sharing information,
promoting involvement and instilling a sense of pride in business
achievement. This can improve teamwork, staff retention and
productivity, and ensure that staff are representing your business
consistently and with the right messages.
Community relations
Building good relationships with members of the community

where you do business helps build customer loyalty. Find out
where the customers in your community live by collecting
postcodes at point of sale.
Engaging local stakeholders and decision makers helps build your

profile and level of influence, helping you to attract more
Page 64 of 65
customers through wordof-mouth and ensuring your business

interests are factored into community decision making.
Page 65 of 65

Unit 3,4 Bbas

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Unit 3,4 Bbas

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Subject Name/ Year or Semister:- - BFT Ist Year

Global Business Environment And Communication

1. Macro and Micro Environment, Environmental Change,

2. Global Environment - Political and Economic Environment,

3. Challenges of Multinational Corporation Problems and

4. Globalisation-Emergence of Global Marketing, Business

5. International Financial Markets, Trends in World Trade und

1. Objective of Export Correspondence: Essentials of Successful

2. Terminology: Meaning of Special Terms Used in Export and

4. Correspondence: Practice in Writing of Busines Letters

5. Public Relations:Significance Art and Methods

Meaning of Global business environment:-

Global Business Environment is defined as a diversified and

•Economic instability or recession

•Achieving sustainability as an ingredient of future economic

growth and prosperity

Globalization: The world is becoming increasingly

Diverse cultures: Different countries and regions have unique

Economic conditions: The global economic environment is

Technological advancements: Rapid technological

Legal and regulatory environment: Different countries have

Environmental concerns: Businesses must also contend with

Understanding these features of the global business environment

Importance of global business environment

The global environment plays a critical role in the sustainability

• The political environment helps execute an inter-border trade

•The economic environment enables business management to

•The technological environment helps international business

•Understanding cultural environment informs the business on

• For businesses and nations to experience sustainable growth,

they need to be in line with the global business environment

Global business environment is of two types:-

a) Micro environment or the internal environment

b) Macro environment or the external environment

Micro environment / Internal Environment of Business

Micro environment comprises of the factors in the immediate

micro business environment.

The forces and institutions outside of the organization that can

The term ‘business environment’ connotes external forces,

have a direct or indirect bearing on the functioning of business. It

1). Micro Environment:

Micro external forces have an important effect on business

They do not have the same attitude towards relatively small

An important factor in the external environment of a firm is the

backward integration and set up captive production plants for

A firm has different categories of customers. For example, a car

oligopolies exist in the real world.

Finally, publics are an important force in external micro

Arundhi Roy have been campaigning against industries which

Many citizen groups are actively campaigning against cigarette

External Macro Environment

Apart from micro-environment, business firms face large external

External macro-environmental factors are classified into:

exists in the economy, the nature and structure of the economy,

competition from the imported products. Incentives have been

Social and Cultural Environment:

Members of a society wield important influence over business

policies in accordance with the conceived notion of social

Political and Legal Environment:

Businesses are closely related to the government. The political

The nature of technology used for production of goods and

absence of competition. The users had no choice and Ambassador