Beruflich Dokumente
Kultur Dokumente
By
Muruganantham.G
MBA, M.Phil, UGC-NET, Ph.D
Text/Reference Books:
1. Dewat. K.K., Modem Economic Theory, S. Chand & Co, New Delhi, 2005.
2. Ahuja.H.L., Economic Environment of Business, S. Chand & Co, New
Delhi, 2005.
3. Franchis Chernilam., Business Environment, Himalaya Publishing, New
Delhi, 2005.
4. Franchis Chernilam., International Economics, Tata McGraw Hill, New
Delhi, 2008.
Economics
Greek word Oikos means a House
nemein means to manage
“House hold management”
Definitions:
1) Adam Smith (1723-1790) ..Father of Economics
Separated economics from politics
An Enquiry into the nature and causes of wealth of
nations – 1776.
………… “Science of Wealth”…..
It deals with acquisition, accumulation and expenditure of wealth
(-) Too materialistic, neglect welfare
………………
c. Exchange
Connects consumption and production
Divisions of Economics cont..
d. Distribution:
By distribution in economics mean pricing of factors land, labour,
capital and organisation
Analysing how wealth produced by combination of factors
Under distribution theories of rent, wages, interest and profit are
analysed.
e. Public finance:
Branch of economics deals with the revenue and expenditure of all
types of governmental authorities.
GN undertakes public expenditure to increase the welfare of the
people.
Focuses public revenue, expenditure, debt, taxation, budgets.
Managerial Decision Problems
MANAGERIAL ECONOMICS
Application of economic theory
and decision science tools to solve
managerial decision problems
OPTIMAL SOLUTIONS TO
MANAGERIAL DECISION PROBLEMS
Types of Economic system
Economic System
Sum of various individuals and economic institutions
What to produce?, How to produce?, For whom to produce?
"economic systems" refers to the organizational arrangements and
process through which a society makes its production and
consumption decisions.
• Marxism
version of socialism, with some important modifications, adopted by
the Soviet Union under Stalin.
It shaped the Soviet Union and influenced Communist Parties
worldwide.
Studies the behaviour of not one particular unit, but of all the units combined
together….study of aggregates……often called Aggregative Economics
Measuring national income is also important to chalk out the future course of the economy.
It also broadly indicates people’s standard of living.
Income can be measured by Gross National Product (GNP), Gross Domestic Product (GDP),
Net National Product (NNP) and Net National Income (NNI).
GDP Refers to the value of the goods and services produced within the nation’s
geographical territory, irrespective of the ownership of the resources.
In the production process a country may use machines and equipments.
When there is depreciation, we have to repair or replace machines and
equipments. The expenses incurred for this is called the depreciation
expenditure.
Net National Product is calculated by deducting depreciation expense from
gross national product.
Handloom and Khadar products were given rebate during festival seasons
like Onam, Christmas and Bakrid. Say 20% rebate is given for handloom
products. What do you mean by this? Goods worth Rs.100/- is given to the
consumer for Rs.80/- The balance of Rs.20/- is given by the Government
as subsidy. If you want to know the original price of handloom products
sold during the festival seasons, naturally you have to add the subsidy
given to the sale price of the product.
Calculating National Income
As per National Income Accounting there are 3 ways to compute GDP:
Or
There are various methods for calculating the national income such as
production method, income method and expenditure method.
Calculating the total incomes received by factors of production – labour & capital
Different factors of production are paid for their productive services rendered to an
organization.
GNI = Rent + Wage + Interest + Profit
Expenditure Method:
The various sectors – the household sector, the government sector, the business
sector.
Calculating the total expenditure of all the entities
• Amol Agrawal ………..But all these calculations have errors and in reality
we never have one figure.
• In India, for all these years we have been getting GDP Product-wise i.e.
Now, for the first time, CSO has released GDP based on expenditure.
(2007)
• The method of Calculating India GDP is the expenditure method, which is,
GDP = consumption + investment + (government spending) + (exports-imports)
and the formula is GDP = C + I + G + (X-M)
The India Gross Domestic Product is worth 1217 billion dollars or 1.96%
of the world economy, according to the World Bank.
Some economists have felt that GNP has a measure of national income has
limitation, since they exclude poverty, literacy, public health, gender equity
and other measures of human prosperity.
An exception is that illegal goods and services are often excluded even if they
are sold at economically significant prices.
Types of investment:
public investment by the government – social good and not for private gain
MEC must never fall below the current rate of interest, if investment is to be
worthwhile.
Higher the propensity to consume the higher will be the level of income and
employment in the country.
Multiplier
When investment is increased then level of income and employment rises.
How much or how many times income increases as investment is done.
Monetary policy
Fiscal policy
Monetary Policy
Operates thro availability of credit.
Modern economy - credit economy
4. Repo Rate
Rate at which RBI releases funds into the system.
Fiscal Policy
Government policy which is concerned with raising revenue thro taxation and
deciding on the level and pattern of expenditure.
Objectives:
Economic Growth
Promotion of employment
Stabilisation of economy
Economic equity
Revenue…….Investment
Banking Sector Reforms
one of the major objectives of banking sector reforms has been to
enhance efficiency and productivity through competition.
Since 1993, twelve new private sector banks have been set up.
A reduction in the Government shareholding in public sector banks to 51
per cent.
OBJECTIVES
350 %.............20%
G – Globalization
Competition
Indian economy/Market
• "let's stay home, let's copy or imitate, and let's compete on price".
• Single Market - Borderless World.
Chinese technology major Huawei has filed for over 200 patents from its
India R&D centre and continues to expand its operations with an accent on
localisation. The India R&D centre, its largest outside China, is part of the
$16-billion Huawei Technologies’ - 12 globally-dispersed research centres,
seven of them located in China.
The India’s Opportunity
Advantage
GDP - Growth
India can attract huge FDI
Wide Choice of quality goods
Employment opportunity.
Disadvantages
R&D Center
Globalisation and HRM