BB0022: Capital and Money Market Assignment set 2

1. Discuss the role played by SEBI in capital markets and list out the SEBI regulations. SEBI is regulator to control Indian capital market. Since its

establishment in 1992, it is doing hard work for protecting the interests of Indian investors. SEBI gets education from past cheating with naive investors of India. Now, SEBI is more strict with those who commit frauds in capital market. The role of security exchange board of India (SEBI) in regulating Indian capital market is very important because government of India can only open or take decision to open new stock exchange in India after getting advice from SEBI. If SEBI thinks that it will be against its rules and regulations, SEBI can ban on any stock exchange to trade in shares and stocks. Now, we explain role of SEBI in regulating Indian Capital Market more deeply with following points: 1. Power to make rules for controlling stock exchange : SEBI has power to make new rules for controlling stock exchange in India. For example, SEBI fixed the time of trading 9 AM and 5 PM in stock market. 2. To provide license to dealers and brokers : SEBI has power to provide license to dealers and brokers of capital market. If SEBI sees that any financial product is of capital nature, then

SEBI can also control to that product and its dealers. One of main example is ULIPs case. SEBI said, " It is just like mutual funds and all banks and financial and insurance companies who want to issue it, must take permission from SEBI." 3. To Stop fraud in Capital Market : SEBI has many powers for stopping fraud in capital market.

It can ban on the trading of those brokers who are involved in fraudulent and unfair trade practices relating to stock market. It can impose the penalties on capital market intermediaries if they involve in insider trading. 4. To Control the Merge, Acquisition and Takeover the companies : Many big companies in India want to create monopoly in capital market. So, these companies buy all other companies or deal of merging. SEBI sees whether this merge or acquisition is for development of business or to harm capital market. 5. To audit the performance of stock market : SEBI uses his powers to audit the performance of different Indian stock exchange exchanges. 6. To make new rules on carry - forward transactions : Share trading transactions carry forward can not exceed 25% of broker's 90 day limit for carry forward. 7. To create relationship with ICAI : total transactions. for bringing transparency in the working of stock

ICAI is the authority for making new auditors of companies. SEBI creates good relationship with ICAI for bringing more transparency in the auditing work of company accounts because audited financial statements are mirror to see the real face of company and after this investors can decide to invest or not to invest. Moreover, investors of India can easily trust on audited financial reports. After Satyam Scam, SEBI is investigating with ICAI, whether CAs are doing their duty by ethical way or not. 8. Introduction of derivative contracts on Volatility Index : For reducing the risk of investors, SEBI has now been decided to permit Stock Exchanges to introduce derivative contracts on Volatility Index, subject to the condition that; a. The underlying Volatility Index has a track record of at least one year. b. The Exchange has in place the appropriate risk management framework for such derivative contracts. 2. Before introduction of such contracts, the Stock Exchanges shall submit the following: i. Contract specifications ii. Position and Exercise Limits iii. Margins iv. The economic purpose it is intended to serve v. Likely contribution to market development

vi. The safeguards and the risk protection mechanism adopted by the exchange to ensure market integrity, protection of investors and smooth and orderly trading. vii. The infrastructure of the exchange and the surveillance system to effectively monitor trading in such contracts, and viii. Details of settlement procedures & systems ix. Details of back testing of the margin calculation for a period of one year considering a call and a put option on the underlying with a delta of 0.25 & -0.25 respectively and actual value of the underlying. Link 9. To Require report of Portfolio Management Activities : SEBI has also power to require report of portfolio management to check the capital market performance. Recently, SEBI sent the letter to all Registered Portfolio Managers of India for demanding report. 10. To educate the investors : Time to time, SEBI arranges scheduled workshops to educate the investors.

2. What do you mean by a Demat account?. Explain the importance and process of dematerialization of shares.
Dematerialization (Demat in short form) is the method by which a person can get his physical share certificates converted into electronic form, for the same number of holding which is credited to his demat account with a depository participant (DP).

It is a process by which the physical share certificates of an investor are taken back by the Company and an equivalent number of securities are credited in electronic form at the request of the investor. For this an investor will have to first open an account with a depository participant and then request for the dematerialization of his share certificates through the depository participant. The dematerialized holdings are credited into the account he has with the DP. This is quite similar to opening a bank account. Dematerialization of shares is optional and an investor can still hold shares in physical form. However, to sell the shares through the stock exchanges one has to dematerialize it before he sells it and similarly, if an investor purchases shares, the delivery of the shares will be in the demat form. Process of dematerialization of shares The process begins with the opening of an account with a depository participant. This is similar to the opening of a bank account. An account has to be opened with a depository participant (DP) by filling up an Account Opening Form and signing a Participant-Client Agreement. The applicant is then given a unique client ID number, which must be quoted in all correspondence with the DP. The client (registered owner) has to submit a request to the DP in the Dematerialization Request Form for dematerialization, along with the certificates of securities to be dematerialized. Before submission, the client has to deface the certificates by writing "SURRENDERED FOR DEMATERIALIZATION". The DP verifies that the form is duly filled in and the number of certificates, number of securities and the security type (equity, debenture etc.) are as given in the DRF. Once the form and security

count is in order, the DP will issue an acknowledgement slip duly signed and stamped, to the client. The DP will scrutinize the form and the certificates. This scrutiny involves: Verification of client's signature on the dematerialization request with the specimen signature (the signature on the account opening form). If the signature differs, the DP should ensure the identity of the client. Compare the names on DRF and certificates with the client account. Paid up status. ISIN. Pari Passu status. Lock-in status. Distinctive numbers. In case the securities are not in order they are returned to the client and acknowledgment is obtained. The DP will reject the request and return the DRF and certificates in case: A single DRF is used to dematerialize securities of more than one company. The certificates are mutilated, or they are defaced in such a way that the material information is not readable. It may advise the client to send the certificates to the Issuer/R&T agent and get new securities issued in lieu thereof. Part of the certificates pertaining to a single DRF is partly paid-up; the DP will reject the request and return the DRF along with the

certificates. The DP may advise the client to send separate requests for the fully paid-up and partly paid-up securities. Part of the certificates pertaining to a single DRF is locked-in; the DP will reject the request and return the DRF along with the certificates to the client. The DP may advise the client to send a separate request for the locked-in certificates. Also, certificates locked-in for different reasons should not be submitted together with a single DRF. The DP will verify the nature of the security, its pari passu status with reference to the list of ISIN codes available with it. The allotment of ISIN must be verified at a second level. Wrong allocation may result in avoidable losses to the clients. The ISIN is entered in the space provided for it in the dematerialization request form. In case the securities are in order, the details of the request as mentioned in the form are entered in the DPM (software provided by NSDL to the DP) and a dematerialization request number (DRN) will be generated by the system. The DRN so generated is entered in the space provided for the purpose in the dematerialization request form. A person other than the person who entered the data is expected to verify details recorded for the DRN. The request is then released and forwarded electronically by the DP to DM (Depository Module, NSDL's software system) by DPM. The DM forwards the request to the Issuer/R&T agent electronically. The DP will fill the relevant portion viz., the authorization portion of the demat request form. The DP will punch the certificates on the company name so that it does not destroy any material information on the

certificate. The DP will then dispatch the certificates along with the request form and a covering letter to the Issuer/R&T agent. The Issuer/R&T agent confirms acceptance of the request for dematerialization in his system DPM (SHR) and the same will be forwarded to the DM. The DM will electronically authorize the creation of appropriate credit balances in the client's account. The DPM will credit the client's account automatically. The DP must inform the client of the changes in the client's account following the confirmation of the request. The issuer/R&T may reject dematerialization request in some cases. The issuer or its R&T Agent will send an objection memo to the DP, with or without DRF and security certificates depending upon the reason for rejection. The DP has to remove reasons for objection within 15 days of receiving the objection memo. If the DP fails to remove the objections within 15 days, the issuer or its R&T Agent may reject the request and return DRF and accompanying certificates to the DP. The DP, if the client so requires, may generate a new dematerialization request and send the securities again to the issuer or its R&T Agent. No fresh request can be generated until the issuer or its R&T Agent has rejected the earlier request and informed NSDL and the DP about it. 3. What do you mean by Mutual Fund? Give an example and advantages of mutual funds. List out the RBI guidelines for mutual funds. An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual

funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Diversification Using mutual funds can help an investor diversify their portfolio with a minimum investment. When investing in a single fund, an investor is actually investing in numerous securities. Spreading your investment across a range of securities can help to reduce risk. A stock mutual fund, for example, invests in many stocks - hundreds or even thousands. This minimizes the risk attributed to a concentrated position. If a few securities in the mutual fund lose value or become worthless, the loss maybe offset by other securities that appreciate in value. Further diversification can be achieved by investing in multiple funds which invest in different sectors or categories. This helps to reduce the risk associated with a specific industry or category. Diversification may help to reduce risk but will never completely eliminate it. It is possible to lose all or part of your investment. Professional Management: Mutual funds are managed and supervised by investment

professionals. As per the stated objectives set forth in the prospectus, along with prevailing market conditions and other factors, the mutual fund manager will decide when to buy or sell securities. This eliminates the investor of the difficult task of trying to time the market. Furthermore, mutual funds can eliminate the cost an investor would incur when proper due diligence is given to researching securities. This cost of managing numerous securities is dispersed among all the investors according to the amount of shares they own

with a fraction of each dollar invested used to cover the expenses of the fund. What does this mean? Fund managers have more money to research more securities more in depth than the average investor.

Convenience: With most mutual funds, buying and selling shares, changing distribution options, and obtaining information can be accomplished conveniently by telephone, by mail, or online. Although a fund's shareholder is relieved of the day-to-day tasks involved in researching, buying, and selling securities, an investor will still need to evaluate a mutual fund based on investment goals and risk tolerance before making a purchase decision. Investors should always read the prospectus carefully before investing in any mutual fund. Liquidity: Mutual fund shares are liquid and orders to buy or sell are placed during market hours. However, orders are not executed until the close of business when the NAV (Net Average Value) of the fund can be determined. Fees or commissions may or may not be applicable. Fees and commissions are determined by the specific fund and the institution that executes the order. Minimum Initial Investment: Most funds have a minimum initial purchase of $2,500 but some are as low as $1,000. If you purchase a mutual fund in an IRA, the minimum initial purchase requirement tends to be lower. You can buy some

funds for as little as $50 per month if you agree to dollar-cost average, or invest a certain dollar amount each month or quarter. RBI Guidelines i. PDs should take specific approval from their Board to enable them to trade in the Stock Exchanges. ii. PDs may undertake transactions only on the basis of giving and taking delivery of securities. iii. Brokers/trading members shall not be involved in the settlement process. All trades have to be settled either directly with clearing clearing corporation/clearing house (in case they are members) or else through clearing member custodians. iv. The trades done through any single broker will also be subject to the current regulations on transactions done through brokers. v. A standardized settlement on T+1 basis of all outright secondary market transactions in G-Sec has been adopted to provide the participants more processing time for transactions and to help in better funds as well as risk management. vi. In the case of repo transactions in G-Sec, however, market participants will have the choice of settling the first leg on either T+0 basis or T+1 basis, as per their requirements. vii. Any settlement failure on account of non-delivery of securities/ non-availability of clear funds will be treated as SGL bouncing and the current penalties in respect of SGL transactions will be applicable. Stock Exchanges will report such failures to the respective PDOs.

viii.

PDs who are trading members of the Stock Exchanges may have to put up margins on behalf of their non-institutional client trades. Such margins are required to be collected from the respective clients. PDs are not permitted to pay up margins on behalf of their client trades and incur overnight credit exposure to their clients. In so far as the intra day exposures on clients for margins are concerned, the PDs should be conscious of the underlying risks in such exposures.

ix.

PDs who intend to offer clearing /custodial services should take specific approval from SEBI in this regard. Similarly, PDs who intend to take trading membership of the Stock Exchanges should satisfy the criteria laid down by SEBI and the Stock Exchanges.

4.

Write short notes on the following with an example of each

a. Derivatives Derivatives are financial instruments whose value is derived from the value of something else. They generally take the form of contracts under which the parties agree to payments between them based upon the value of an underlying asset or other data at a particular point in time. The main types of derivatives are futures, forwards, options and swaps. The main use of derivatives is to minimize risk for one party while offering the potential for a high return (at increased risk) to another. The diverse range of potential underlying assets and payoff alternatives leads to a huge range of derivatives contracts available to be traded in the market. Derivatives can be based on different types of

assets such as commodities, equities (stocks), bonds, interest rates, exchange rates, or indices (such as a stock market index, consumer price index (CPI) see inflation derivatives or even an index of weather conditions, or other derivatives). Their performance can determine both the amount and the timing of the payoffs. b. Forward contract In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today. This is in contrast to aspot contract, which is an agreement to buy or sell an asset today. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position. The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into. The price of the underlying instrument, in whatever form, is paid before control of the instrument changes. This is one of the many forms of buy/sell orders where the time and date of trade is not the same as the value date where the securities themselves are exchanged. The forward price of such a contract is commonly contrasted with the spot price, which is the price at which the asset changes hands on the spot date. The difference between the spot and the forward price is the forward premium or forward discount, generally considered in the form of a profit, or loss, by the purchasing party. Forwards, like other derivative securities, can be used to hedge risk (typically currency or exchange rate risk), as a means of speculation, or to allow a party to take advantage of a quality of the underlying instrument which is time-sensitive. A closely related contract is a futures contract; they differ in certain respects. Forward contracts are very similar to futures contracts, except they are not exchange-traded, or defined on standardized

assets. Forwards also typically have no interim partial settlements or "true-ups" in margin requirements like futures such that the parties do not exchange additional property securing the party at gain and the entire unrealized gain or loss builds up while the contract is open. However, being traded over the counter (OTC), forward contracts specification can be customized and may include mark-to-market and daily margining. Hence, a forward contract arrangement might call for the loss party to pledge collateral or additional collateral to better secure the party at gain.

5.

Describe the various sectors of money markets

The Indian money market consists of two main sectors: 1. 2. 1) ORGANISED SECTOR UNORGANISED SECTOR ORGANISED SECTOR:

The instruments of the Organised money Market are:i) ~ CALL MONEY AND NOTICE MONEY MARKET: The call money market is the most important segment of the Indian money market. It is also called as inter-bank call money market. ~ Under call money market, funds are transacted on an over-night. Generally, banks rely on call money market where they raise funds for a single day. ~ The notice money market funds are transacted for a period of 2 to 14 days. The loans are to be repaid at the option of either the lender or the borrower. ~ The rate at which funds are borrowed / lent in this market is called the call money rate. ~ The call money rate (that depends on depends on demand for and supply of funds) is highly variable from day to day and from centre to centre. ~ The main participants in the call money market are commercial banks (excluding RRBs), co-operative banks and primary dealers.

ii) ~

Treasury Bills Market: Treasury bills are short-term securities issued by the RBI on behalf of the Government of India.

Treasury bills are of three types: 91 day treasury bills, 182 days treasury bills and 364 day treasury bills.

Since these bills are issued through auctions, interest rates on all types of treasury bills are determined by market forces.

~ ~ ~ iii) ~

Treasury bills are highly liquid and are readily available. They give assured yields at a low transaction cost. However Treasury Bills Market in India is very narrow and undeveloped. COMMERCIAL BILLS: A commercial bill is a short- term, negotiable, self liquidating instrument drawn by the seller on the buyer for the value of goods delivered by him.

Such bills are called trade bills / bills of exchange and when they are accepted by banks, they are called commercial bills.

Generally the bill is payable at a future date (mostly, the maturity period is up to 90 days).

During this period, the seller may discount the bill with the banks. The commercial banks may rediscount these bills with FIs like EXIM bank, SIDBI, IDBI, etc.

Thus, commercial bills are very important for providing short-term credit to trade and commerce.

iv) ~

CERTIFICATES OF DEPOSITS: (CDs) Certificates of Deposits are unsecured, negotiable promissory notes issued by commercial banks and development financial institutions.

CDs are marketable receipts of funds deposited in a bank for a fixed period at a specified rate of interest.

~ ~

They are highly liquid and riskless money market instruments. CDs were originally introduced in India to enable commercial banks to raise funds from the market.

The RBI has modified its original scheme for CDs. The following are the recent guidelines for the issue of CDs:-

v) ~

COMMERCIAL PAPERS: Commercial paper is an unsecured, highly liquid money market instrument in the form of a promissory note / a dematerialised form through any of the depositories registered with SEBI.

It has fixed maturity whereby the purchaser is promised a fixed amount at a future date.

Commercial paper are issued by leading nationally reputed manufacturing and finance companies (public / private sector).

They are issued on a discount to face value.

Commercial papers are issued (by corporates / primary dealers / all India financial institutions).

vi) ~

REPOS AND REVERSE REPOS: The RBI achieves the function of maintaining liquidity in the money market through REPOS / REVERSE REPOS.

The repo / reverse repo is a very important money market instrument to facilitate short-term liquidity adjustment among banks, financial institutions and other money market players.

A repo / reverse repo is a transaction in which two parties agree to sell and repurchase the same security at a mutually decided future date and price.

From the seller's point of view, the transaction is called a repo, whereby the seller gets immediate funds by selling the securities with an agreement to repurchase the same at a future date.

Similarly, from the buyer's point of view, the transaction is called a reverse repo, whereby the purchaser buys the securities with an agreement to resell the same at a future date.

The RBI, commercial banks and primary Dealers deal in the repos and reverse repo transactions.

The financial institutions can deal only in the reverse repo transactions i.e. they are allowed only to lend money through reverse repos to the RBI, other banks and Primary dealers.

The maturity date varies from 1 day to 14 days.

vii) ~

DISCOUNT AND FINANCE HOUSE OF INDIA (DFHI) The Discount and Finance House of India is jointly owned by the RBI, the public sector banks and all India financial institutions.

The DFHI helps in developing and stabilizing the money market by stimulating activity in the money market instruments and developing secondary market in those instruments.

The DFHI deals in treasury bills, commercial bills certificates of deposits, commercial papers, short term deposits, call money market and govt securities. It also participates in repo operations.

viii) ~

MONEY MARKET MUTUAL FUNDS: (MMMFs): The RBI introduced Money Market Mutual Funds to enable small investors to participate in the money market. Thus, MMMFs mobilises saving of mutual funds and invest them in such money market instruments that mature in less than one year.

2)

UNORGANISED SECTOR:

The main components of unorganised money market are: i) ~ INDIGENOUS BANKERS: These financial intermediaries operate as banks by receiving deposits, giving loans and dealing in hundies' (The hundi is a short term indigenous bill of exchange) ~ The rate of interest varies from market to market / bank to bank.

ii) ~

MONEY LENDERS: Money lenders predominate in villages and they deal in the business of lending money.

~ iii)

Their interest rates are very high: UNREGULATED NON BANK FINANCIAL INTERMEDIARIES:

# Chit funds: are saving institutions wherein members make regular contribution to the fund. The fund is given to some member by bids / draws. # Nidhis: are mutual benefit funds as loans are given to members (from the deposits made by members themselves) at a reasonable rate of interest. ^ The loans are generally given for purposes like house construction / repairs. # Loan companies: (also called as finance companies) have capital in the form of borrowings, deposits or owned funds. iv) FINANCE BROKERS:

~ They are found in all major urban markets, especially in cloth market, commodity market and grain market. ~ They are intermediaries between lenders and borrowers. 6. Explain the credit instruments used in money markets.

Money market instruments provide for borrowers' short-term needs and gives needed liquidity to lenders. The types of money market instruments are treasury bills, repurchase agreements, commercial papers, certificate of deposit, and banker's acceptance.

Treasury Bills (T-Bills) Treasury bills began being issued by the Indian government in 1917. They are short-term instruments issued by the Reserve Bank of India. They are one of the safest money market instruments because they are risk free, but the returns from this instrument are not very large. The primary as well as the secondary markets circulate this instrument. They have 3-month, 6-month and 1-year maturity periods. T-bills are issued with a separate price from their face value. The face value is achieved upon maturity, as is the interest earned on the buy value. The buy value is set by a bidding process in auctions. Repurchase Agreements Repurchase agreements are also known as repos. They are short-term loans that buyers and sellers agree to sell and repurchase. As of 1992, repo transactions are allowed only between RBI-approved securities such as state and central government securities, T-bills, PSU bonds, FI bonds and corporate bonds. Repurchase agreements are sold by sellers with a promise of purchasing them back at a given price and on a given date in the future. The buyer will also purchase the securities and other instruments in the repurchase agreement with a promise of selling them back to the seller. Commercial Papers Commercial papers are promissory notes that are unsecured and issued by companies and financial institutions. They are issued at a discounted rate of their face value. They have a fixed maturity of 1 to 270 days. They are issued for financing of inventories, accounts receivables, and settling short-term liabilities or loans. Commercial papers yield higher returns than T-bills. They are usually issued by companies with strong credit ratings, as these instruments are not backed by collateral. They are usually issued by corporations to raise working capital and are actively traded in the secondary market. Commercial papers were first issued in the Indian money market in 1990.

Certificate of Deposit A certificate or deposit is a short-term borrowing note, like a promissory note, in the form of a certificate. It enables the bearer to receive interest. It has a maturity date, a fixed rate of interest and a fixed value. It usually has a term between 3 months and 5 years. The funds cannot be withdrawn on demand, but it can be liquidated on payment of a penalty. The returns are higher than T-bills as the risk is higher. Returns are based on an annual percentage yield (APY) or annual percentage rate (APR). In APY, interest is gained by compounded interest calculation, whereas in APR simple interest calculation is done to calculate the return. The certificate of deposit was first introduced to the money market of India in 1989. Banker's Acceptance A banker's acceptance is a short-term investment plan created by a company or firm with a guarantee from a bank. It is a guarantee from the bank that a buyer will pay the seller at a future date. A good credit rating is required by the company or firm drawing the bill. The terms for these instruments are usually 90 days, but this period can vary between 30 and 180 days. Companies use the acceptance as a time draft for financing imports, exports and other trade

BB0022: Capital and Money Market Assignment set 1

1. Explain the securities market and discuss the methods of underwriting the securities. The Indian securities market, considered one of the most promising emerging markets, is among the top eight markets of the world. The Stock Exchange, Mumbai, which was established in 1875 as The Native Share and Stockbrokers Association (a voluntary non-profit making association), has evolved over the years into its present status as the premier Stock Exchange in the country. At present 24 stock exchanges operate all over India. These stock exchanges provide facilities for trading securities, Securities markets provide a common platform for transfer of funds from the person who has excess funds to those who need them. Securities market is regulated by the Securities& Exchange Board of India (SEBI). Methods of Underwriting An underwriting agreement may take any of the following forms. i) Standing Behind the Issue: Under this method, the underwriter guarantee the sale of a specified number of shares within a specified period. If the public does not take up the whole of the specified amount of the issue, the underwriters standing behind the issue come forward to purchase the balance. ii) Outright Purchase:

Underwriters purchase the issue outright and resell the securities to the investors. The purchase price is negotiated between the issuers and the underwriters or may be determined by competitive bidding. iii) The Consortium Method: Underwriting is jointly done by a group of underwriters who form a syndicate for the purpose. This method is adapted for large issues. This method enables the spread of risk among the members of the syndicate. No single underwriter bears the entire risk. 2. List out the primary stock exchanges operating in India and the causes of price fluctuations of shares. Primary Stock exchange in India SEBI The Securities and Exchange Board of India (frequently

abbreviated SEBI) is the regulator for the securities market in India. It was established on 12 April 1992 through the SEBI Act, 1992. Functions and responsibilities SEBI has to be responsive to the needs of three groups, which constitute the market:

the issuers of securities the investors the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasijudicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its

executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeal process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court. Powers For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are: 1. to approve bylaws of stock exchanges. 2. to require the stock exchange to amend their bylaws. 3. inspect the books of accounts and call for periodical returns from recognized stock exchanges. 4. inspect the books of accounts of a financial intermediaries. 5. compel certain companies to list their shares in one or more stock exchanges. 6. levy fees and other charges on the intermediaries for performing its functions. 7. grant license to any person for the purpose of dealing in certain areas. 8. delegate powers exercisable by it. 9. prosecute and judge directly the violation of certain provisions of the companies Act. 10. power to impose monetry penalties.

OTC Exchange Of India (OTCEI) OTC Exchange Of India (OTCEI) also known as Over-the-Counter Exchange of India based in Mumbai, Maharashtra.It is the first exchange for small companies. It is the first screen based nationwide stock exchange in India. It was set up to access high-

technology enterprising promoters in raising finance for new product development in a cost effective manner and to provide transparent and efficient trading system to the investors.[ OTCEI is promoted by the Unit Trust of India, the Industrial Credit and Investment Corporation of India, the Industrial Development Bank of India, the Industrial Finance Corporation of India and others and is a recognised stock exchange under the SCR Act. Inter-connected Stock Exchange of India Limited (ISE) Inter-connected Stock Exchange of India Limited (ISE) is a nationallevel stock exchange, providing trading, clearing, settlement, risk management and surveillance support to its Trading Members.ISE incorporated as a company limited by guarantee in January - 1998. It has 791 Trading Members, who are located in 84 cities spread across 18 states. These intermediaries are administratively supported through the regional offices at Delhi, Kolkata, Patna, Ahmedabad, Coimbatore and Nagpur, besides Mumbai. ISE aims to address the needs of small companies and retail investors by harnessing the potential of regional markets, so as to transform them into a liquid and vibrant market using state-of-the art technology and networking. ISE has floated ISE Securities & Services Limited (ISS) as a whollyowned subsidiary under the policy formulated by the Securities and Exchange Board of India (SEBI) for Revival of Small Stock Exchanges. The policy enunciated by SEBI permits a stock exchange to float a subsidiary, which can take up membership of larger stock exchanges, such as the National Stock Exchange of India Limited (NSE), and Bombay Stock Exchange Limited (BSE). ISS has been registered by SEBI as a Trading-cum-Clearing Member in the Capital Market segment

and Futures & Options segment of NSE and Capital Market segment of BSE. Trading Members of ISE can access NSE and BSE by registering themselves as Sub-brokers of ISS. Thus, the trading intermediaries of ISS can access other markets in addition to the ISE market. ISS, thus provides the investors in smaller cities, a one-stop solution for costeffective and efficient trading and settlement services in securities. Causes of fluctuation in security prices The prices of securities are determined by the forces of demand for and supply of shares in the stock market. The factors which affect the demand for and apply of securities resulting in their price fluctuation are to follows: 1. POLITICAL CONDITION:

The price of shares is directly affected by the political developments taking place both at home and abroad. The political instability in the country, the fear of war with neighbors country, the danger of spreading war on international level, bring a set back prices of securities. If there is political stability at home and abroad the price of shares moves up. 2. Business condition:

Political stability brings economic stability in country. If a government carries on economic policies in the planned manner, it then establishes strong Industrial base in country, the price of shares tend to move up. In case there are a rapid change in economic policies and budget are announced and revised time and again the price of securities go down. 3. Fear of nationalization:

If a government adopts a policy of nationalization of industries, the investment on the part of the private sector will be at the lower ebb. The prices of the securities are bound to go down. In case the private sector is encouraged for investment by going them due to concessions, the prices of the securities shoot up. 4. Trade activities:

The prices of the securities are directly influenced by the conditions of boom and slump. In the days business prosperity, the prices of the securities move up. If the depression is hovering over the country, it leads to a fall in the security prices. 5. Monopoly:

If the firm has monopoly in the production of a commodity, the share prices of that firm will go up. In case stiff competition by the competing firms for the production of a particular commodity, there will be a decline or a nominal rise in the stock pieces of the competing firms depending on the situation. 6. Bank rate:

Bank rate exercises a powerful influence on security price. If the interest rate on the short term loans fall, the speculators borrow money and purchase the securities which leads to the rise in the price of shares. When the money is dear, there is a fall in the prices of securities. 7. Distribution of dividend:

If the company enjoys a reputation of distributing dividend regularly to the shareholder, the share prices of that company rise up. In case the

dividend in not distributed and the financial position of the company is weak, the prices of the shares go down. 8. Inflation and deflation:

When the prices are rising in the country, the industrialist makes profit. The prices of the shares go up. When the country is in the grip of deflation, the prices of the shares go down. 9. Market psychology:

The price of securities sometime also fluctuates without any valid reason. The people who deal in securities. Q3. Explain the meaning, requirements, criteria, advantages

and limitations of listing. Listing requirements are the criteria set by a stock exchange to list the stock of a public company on that exchange. In the US, the New York Stock exchange has the most demanding criteria for listing. The listing requirements of the American Stock Exchangeare the easiest for a smaller company to meet. Example listing requirements include minimums for revenue, earnings, market capitalization, and share price. Listing requirements are periodically updated. The exchange can delist a company that no longer meets the exchange's listing requirements. Delisting is not necessarily immediate, with a possibility for appeal or a limited amount of time to return to meeting the listing requirements. An exchange may have more than one scenario of listing requirements to accommodate a few different types of companies. Advantages It is able to raise funds and capital through the sale of its securities.

This is the reason why public corporations are so important: prior to their existence, it was very difficult to obtain large amounts of capital for private enterprises. In addition to being able to easily raise capital, public companies may issue their securities as compensation for those that provide services to the company, such as their directors, officers, and employees. A private company also has several advantages. It has no requirement to publicly disclose much, if any financial information; such information could be useful to competitors. For example, Form 10-K is an annual report required by the SEC each year that is a comprehensive summary of a company's performance. Private companies do not file form 10-Ks. It is less pressured to "make the numbers"-to meet quarterly projections for sales and profits, and thus in theory able to make decisions that are best in the long-run. It spends less for certified public public accountants and companies by other bureaucratic government paperwork required For of regulations. example,

the Sarbanes-Oxley Act in the United States does not apply to private companies. The wealth and income of the owners remains relatively unknown by the public. Shareholders enjoy limited liability additional capital can be raised by issuing more shares or debentures it enjoys greater borrowing power board of directors with expertise/experience can be appointed to take decisions and delegates responsibilities shareholders can sell/transfer their shares freely

Disadvantages While private companies may also issue their securities as

compensation for services, the recipients of those securities often have difficulty selling them on the open market. Securities from a public company typically have an established fair market value at any given time as determined by the price the security is sold for on the stock exchange where the security is traded. The financial media and city analysts will be able to access additional information about the business. Disadvantages continued: loss of overall ownership and control of the business (the personal touch may be lost) decisions, due to bureaucracy, take longer and there may be disagreements significant expenses are incurred when setting up a company (legal, accountants, taxes, consultants, etc.) more statutory regulations to conform to more people to share profits with (less income) financial affairs must be disclosed publicly (this information could be used to competitors advantage) published accounts must to be prepared (time consuming and costly) Q.4 Discuss the shortcomings of Indian Money Market.

A well-developed money market is a necessary pre-condition for the effective implementation of monetary policy. The central bank controls and regulates the money supply in the country through the money market. However, unfortunately, the Indian money market is inadequately developed, loosely organised and suffers from many weaknesses. Major defects are discussed below: 1. Dichotomy between Organised and Unorganised Sectors: The most important defect of the Indian money market is its division into two sectors: (a) the organised sector and (b) the unorganised sector. There is little contact, coordination and cooperation between the two sectors. In such conditions it is difficult for the Reserve Bank to ensure uniform and effective implementations of monetary policy in both the sectors. 2. Predominance of Unorganised Sector: Another important defect of the Indian money market is its

predominance of unorganised sector. The indigenous bankers occupy a significant position in the money-lending business in the rural areas. In this unorganised sector, no clear-cut distinction is made between short-term and long-term and between the purposes of loans. These indigenous bankers, which constitute a large portion of the money market, remain outside the organised sector. Therefore, they seriously restrict the Reserve Bank's control over the money market, 3. Wasteful Competition: Wasteful competition exists not only between the organised and unorganised sectors, but also among the members of the two sectors. The relation between various segments of the money market are not cordial; they are loosely connected with each other and generally

follow separatist tendencies. For example, even today, the State Bank of Indian and other commercial banks look down upon each other as rivals. Similarly, competition exists between the Indian commercial banks and foreign banks. 4. Absence of All-India Money Market: Indian money market has not been organised into a single integrated all-Indian market. It is divided into small segments mostly catering to the local financial needs. For example, there is little contact between the money markets in the bigger cities, like, Bombay, Madras, and Calcutta and those in smaller towns. 5. Inadequate Banking Facilities: Indian money market is inadequate to meet the financial need of the economy. Although there has been rapid expansion of bank branches in recent years particularly after the nationalisation of banks, yet vast rural areas still exist without banking facilities. As compared to the size and population of the country, the banking institutions are not enough. 6. Shortage of Capital: Indian money market generally suffers from the shortage of capital funds. The availability of capital in the money market is insufficient to meet the needs of industry and trade in the country. The main reasons for the shortage of capital are: (a) low saving capacity of the people; (b)inadequate banking facilities, particularly in the rural areas; and (c) undeveloped banking habits among the people. 7. Seasonal Shortage of Funds:

A Major drawback of the Indian money market is the seasonal stringency of credit and higher interest rates during a part of the year. Such a shortage invariably appears during the busy months from November to June when there is excess demand for credit for carrying on the harvesting and marketing operations in agriculture. As a result, the interest rates rise in this period. On the contrary, during the slack season, from July to October, the demand for credit and the rate of interest decline sharply. 8. Diversity of Interest Rates: Another defect of Indian money market is the multiplicity and disparity of interest rates. In 1931, the Central Banking Enquiry Committee wrote: "The fact that a call rate of 3/4 per cent, a hundi rate of 3 per cent, a bank rate of 4 per cent, a bazar rate of small traders of 6.25 per cent and a Calcutta bazar rate for bills of small trader of 10 per cent can exist simultaneously indicates an extraordinary sluggishness of the movement of credit between various markets." The interest rates also differ in various centres like Bombay, Calcutta, etc. Variations in the interest rate structure is largely due to the credit immobility because of inadequate, costly and time-consuming means of transferring money. Disparities in the interest rates adversely affect the smooth and effective functioning of the money market. 9. Absence of Bill Market: The existence of a well-organised bill market is essential for the proper and efficient working of money market. Unfortunately, in spite of the serious efforts made by the Reserve Bank of India, the bill market in India has not yet been fully developed. The short-term bills form a much smaller proportion of the bank finance in India as compared to that in the advanced countries.

Many factors are responsible for the underdeveloped bill market in India: (i) (ii) Most of the commercial transactions are made in terms of cash. Cash credit is the main form of borrowing from the banks. Cash credit is given by the banks against the security of commodities. No bills are involved in this type of credit. (iii) The practice of advancing loans by the sellers also limits the use of bills. (iv) There is lack of uniformity in drawing bills (bundles) in different parts of the country. (v) (vi) Heavy stamp duty discourages the use of exchange bills. Absence of acceptance houses is another factor responsible for the underdevelopment of bill market in India. (vii) In their desire to ensure greater liquidity and public confidence, the Indian banks prefer to invest their funds in first class government securities than in exchange bills. (viii) The Reserve Bank of India also prefers to extend rediscounting facility to the commercial banks against approved securities. Q.5 What do you mean by "Bullish and Bearish". Explain the attitudes of buyers and sellers of call and put options. Bullish means you think prices will rise. Bearish means you think they will fall. The terms presumably came from the way the two animals attack. Bulls lower their horns and raise them high. So if you think

prices are moving from low to high, you are bullish, You would want to buy the shares of stock in order to profit. Bears attack with their paws by swiping down from high to low. If you think prices are falling from high to low, you are bearish. You would short the shares in order to profit. In stock market, we have the right to buy and sell an unlimited number of shares as long as there are people are willing to sell and we are willing to buy at the price that the seller has fixed. There are two types of options that are call and put option. Call option gives its owner the right to buy 100 units of share of a company at a specified price that has been agreed between the call option owner and the seller within certain period of time. So, within this period of time, if the stock price goes up, the call option price will also go up and vice versa. The second type of option is put option. This option gives its owner the right to sell 100 units of share of a company at a specified price that has been agreed between the put option owner and the seller within certain period of time. Put option seems like the opposite of call option. If the stock price goes up within this period of time, the put option price will go down. Either call or put option can be bought or sold. As long as there are people willing to sell, there will be people willing to buy. There are four permutations that are possible exist during the transaction of an option. The first one is buying a call option meaning that buy the right for yourself to buy 100 units of share. Second is selling call option meaning that sell the right to buy 100 units share from you to someone else. The third one is buying a put option meaning that buy the right for yourself to sell 100 units of shares. The last one is selling a put option meaning that sell the right to sell 100 units of share to you to someone else.

The other way to make these differences clearer is always remember that the call option buyer hopes the stock price will go up and the put option buyer looking for the price per share to fall. For the opposite side, a call option seller is hoping the stock price will maintain or fall. Whereas, put option seller is hoping that the stock price will go up. If the option buyer no matter dealing with the calls or puts option is correctly predicting the price movement of the stock, then they will gain profit from their action. For option, there is another obstacle we have to face besides estimating the direction of the stock price movement. This obstacle is that the change of the stock price has to be taken place before the deadline of the option. As a stockholder, we may be able to predict a stock's long-term prospects by waiting for a long-term change of the stock. However, for option holder, we may not have that kind of opportunity. This is because options are finite; they will lose all their value within a short period of time, usually within a few months. However, it has long-term options that can last up to one to three years. Due to this limitation, time will be an important factor to determine whether an option buyer can earn a profit or not. Q.6 Explain the importance of credit rating agencies. List of the credit rating agencies operating in India and describe the rating system. Introduction Investments involve both risk and uncertainty. All investments are risky, the degree varies on the basis of features of the assets. investment, instrument, mode of investment or the issuer of the security etc.

Some risks can be controlled by the investors and some by the issuers of securities by planning. Other risks cannot be controlled and to be borne compulsorily by the investor. Causes of Risks: Risks are caused by the following factors Wrong decision of what to invest in Wrong timing of investments Nature of investments Credit worthiness of issuer Maturity or length of investment Amount of investment Method of Investment (Security) Terms of lending (periodicity of servicing, redemption etc). Nature of industry or business in which issuer is operating.

Credit Rating Credit rating is essentially giving an expert opinion by a rating agency on the relative willingness and ability of the issuer of a debt instrument to meet the debt servicing obligation in time and full. Generally equities are not rated as their risk is not measurable and they being the owners of the companies have to take the residual risk. But when companies issue bonds or debentures or any debt instruments, they are to be rated because investors had no way to

know the credit quality of the companies whether they were strong financially, weak in some aspects, whether there were frauds. Rating and Rating System All investments are risky and debt-instruments carry a risk less than that of equity. The risk on debt instruments can be known to the investors before investing in these instruments, The agency rating has no fixed formula and it has to encounter a number of subjective elements like management quality, asset quality, auditors quality, accounting accuracy etc. Despite the highly competent and experienced staff, the credit rating agency can give only an indication and can not claim any foolproof and 100% reliability of its assessment. The rating grades are: AAA AA A BBB BB BC & D Highest safety High safety Adequate safety Moderate safety Inadequate safety High risk and default prone

Credit Rating Agencies in India CRISIL: CRISIL was set up in the year 1987 in order to rate the firms and then entered into the field of assessment service for the banks. Highly

skilled members manage the agency. Ms. Roopa Kudva who acts as the Managing Director and Chief Executive Officer of the company heads it. The company has set up large number of committees to look after dispersal of various services offered by the company for example, investor grievance committee, investment committee, rating committee, allotment committee, compensation committee and so on. The head office of the company is located at Mumbai and it has established offices outside India also. ICRA: ICRA was established in the year 1991 by the collaboration of financial institutions, investment companies, and banks. The company has formed the ICRA group together with its subsidiaries. The company is headed by Mr. Piyush G. Mankad and offers products like short-term debt schemes, Issue-specific long-term rating and offers fund based as well as non-fund based facilities to its clients. CARE (Credit Analysis and Research Ltd.) Care was set up in April, 1993 in the private sector. DPCR (Duff Phelps Credit Rating India Pvt. Ltd.). This is a private sector credit rating agency with foreign collaboration setup in 1996. it has made rating exercises to many companies and provided a competitive environment for rating agencies.

BB 0024: Introduction to International Marketing Set 1 Q.1 Name and explain with suitable examples, three reasons why international marketing is more challenging than domestic marketing. Domestic marketing is the marketing practices within a marketer's home country. Foreign marketing is the domestic operations within a foreign country (i.e., marketing methods used outside the home market). Comparative marketing analytically compares two or more countries' marketing systems to identify similarities and differences. International marketing studies the "how" and "why" a product succeeds or fails abroad and how marketing efforts affect the outcome. It provides a micro view of the market at the company level. Multinational, global, and world marketing are all the same thing. Multinational marketing treats all countries as the world market without designating a particular country as domestic or foreign. As such, a company engaging in multinational marketing is a corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference between international marketing and multinational marketing is probably insignificant in terms of strategic implications. Domestic marketing is the marketing practices within a marketer's home country. Foreign marketing is the domestic operations within a foreign country (i.e., marketing methods used outside the home market). Comparative marketing analytically compares two or more countries' marketing systems to identify similarities and differences.

International marketing studies the "how" and "why" a product succeeds or fails abroad and how marketing efforts affect the outcome. It provides a micro view of the market at the company level. Multinational, global, and world marketing are all the same thing. Multinational marketing treats all countries as the world market without designating a particular country as domestic or foreign. As such, a company engaging in multinational marketing is a corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference between international marketing and multinational marketing is probably insignificant in terms of strategic implications. Three challenges for international marketing Language Barriers The biggest, most common managerial challenge when it comes to working internationally is a language barrier. While most executives are fluent in a number of languages, there is no guarantee an entire office will speak your language. Even if you have some foreign language skills, it is different to try to conduct business in a foreign language than to merely have casual conversation. Additionally, the nuances of other languages make it harder to understand and be understood. Cultural Differences Every culture across the globe has its own unique set of cultural norms. In the U.S., managers typically do much of their own administrative work, including answering phones, sending mail, etc., but in many other countries, specifically in Asia, managers have several administrative employees at their disposal to do everything

from book travel to making a cup of tea. The best way to get used to the differences is to be gracious. Time Zone Challenges A challenge to working with international employees is sometimes the time zone differences. If you are based in the U.S. and work with offices in Europe or Asia, get ready for some off-hour conference calls. Also, when emailing, remember you probably will not hear back from the person you sent your message to until the next day. This can sometimes pose a challenge when a decision needs to be made, but careful planning can help avoid any issues that arise. Q.2 What are the relative advantages and disadvantages of and adaptation? Explain with suitable

standardization examples.

Specifics of Standardization A major point about a standardization marketing strategy is that organizations can choose to standardize all aspects of the product experience, or they can standardize component of the product or marketing. Standardizing the whole product experience includes product uniformity, customer service, product support, marketing, pricing and distribution. This is a standardized marketing mix. Benefits The overriding benefits of a standardized marketing strategy are consistency throughout the world and cost savings. Increased globalization of world businesses contributes to more similarities among international marketplaces. This has led some companies to realize the benefits of providing a consistent, and uniform product and marketing system around the world. Because these organizations are

producing same products and reusing established marketing and distribution systems, they also get economies of scales benefits in production and buying. Weaknesses An inherent disadvantage of a standardized marketing strategy emerges from its goal of offering uniformity. Selling the same products with the same message globally means little to no differentiation for local markets and their unique needs. Ideally, a standardized approach is based on research that unique needs are not relevant. However, companies open the door for competitors to enter the market and offer some type of standardized product, service, or unique marketing messages. Additional Insights Even companies that desire to standardize may find it difficult to do so in lieu of global restrictions. Trade barriers and tariffs are common tools global governments use to force companies to adapt to local market needs and requirements. Many countries have varying expectations on delivery from external sources. Not all businesses benefit from a standardized approach to international marketing and business. Each organization must carefully weigh its offering, its options and its ability to standardize or adapt for business results. Globalization in marketing refers to the marketing of a standardized product to multiple countries. An example of this would be Coca-Cola. Though they offer many different products in different countries, the original Coca-Cola is the pretty much the same worldwide. This is a global marketing strategy.

Transnational marketing refers to mass production of products to be marketed to many countries, but with subtle differences in each respective market. For instance, a bicycle manufacturer can benefit from economies-of-scale through mass production of bicycles, which can be further accelerated by selling bicycles globally. However, the Chinese, who use bicycles more for utility than entertainment, will require a different bicycle than the mountain bikers of Colorado. Because this strategy is more adaptive to the needs of specific markets, it is generally preferred to the global marketing strategy. Q.3 Suggest five different ways in which India could improve

its image as an exporter in international marketers and their implications for international marketing strategy. India has emerged victorious in the recent recession, which started in the US and engulfed the whole world in a short span of time. India could be able to secure a respectable rate of growth of 6.7 per cent during 2008-09, which is the second highest in world after China. This was mainly because of the domestic-led demand of the Indian economy and stimulus measures initiated by the government at the fiscal and monetary policy levels. However, the exports of India suffered a great deal as a result of the sagging demand in the world economy in general and its main trading partners economies in particular. Except for the months of November and December, the previous months of the current fiscal year 2009-10 witnessed negative export growth rates. This in spite of the array of trade policy initiatives (EXIM) announced Policy by the government were under the Export-Import 2009-10. These incentive

measures to promote exports. They mainly comprised extension of the Duty Entitlement Passbook (DEPB) scheme up to 2010, making the Export Promotion Capital Goods (EPCG) scheme more attractive, enhancing incentives for Export-Oriented Units (EOUs)/Special

Economic Zones (SEZs), etc. Some product-specific and marketspecific incentives, which were already in place, were also made more attractive. However, much more is desirable to promote exports not only in this crisis time but also for the long term. Though the World Trade Organisation (WTO) provisions have squeezed the policy space for the promotion of exports, still there are many WTO-compliant areas where the government can pay due attention. The whole gamut of measures to promoting exports can be divided into two broad categoriesprice measures and non-price measures. The price measures are supposed to enhance the competitiveness at the price front, whereas the non-price factors give competitive edge in areas other than the price front. The former category includes devaluation of currency, all kinds of indirect and direct tax benefits to exporters etc., whereas the latter one comprises the upgradation of quality of product, fast delivery of consignment, post-sale services etc. The price factors are of short term in effect because they can be emulated easily by the competitor country in a short span of time. For example, if the government initiates the devaluation of the currency, which is the most popular measure at the price front, it would make exports competitive intensive. This would be at the price increasing front sales in in the international market, unless the exports are not much importimmediately the international market (supposing there is the price elastic demand and enough supply of the product). However, having experienced the decrease in demand of their products, the competitor countries might also initiate the same measure neutralising its effect. So the effect of price factors can be easily neutralised in the short term by the competitor countries.

Trade facilitation (soft infrastructure) has been found a statistically significant factor affecting trade flow. In one World Bank study, it has been found that 10 per cent improvement in export custom procedures would enhance the export performance by 15.8 per cent and 17.1 per cent for the merchandise exports and manufactured exports respectively. (Broadman 2007) In the same way, an increase in internet services by 10 per cent in the exporter country would enhance the exports of all products and manufactured products by 1.9 per cent and 2.2 per cent respectively. The sensitivity (elasticity) of Indian exports to trade facilitation is more than to the tariff rate as per the estimation of the gravity model carried out by the author. The soft infrastructure can be improved in the short run with some conscious efforts for better coordination of various agencies involved in trade and capacity-building programmes of the staff. Etrading/filing is still operating on papers, which canbe made operational with less efforts in a short time. Likewise, of late the capacity to meeting sanitary and phyto-sanitary standards for agricultural products and technical standards for other manufactured products is significant for exporting especially to the developed countries. Conforming to these standards is difficult mainly for the small scale industries (SSIs). Educating the businesses, especially the SSIs, about these standards and establishing testing laboratories and certificate-giving agencies would be helpful in this regard. Financial and technical assistance to the SSIs to upgrade their technology would also go a long way in this direction. The government is already doing work in this area. However, there is a need to intensify efforts in this crisis time. Another area that can be exploited in this crisis time with relatively less effort is diversifying Indian exports geographically. Though

country-specific incentive schemes are already there, a lot more is desirable. India has traditionally relied more on the countries of the North for its exports. It is advisable to identify new markets from the South. For example, there is much scope to increase exports to the African countries. The African countries, in spite of being prominent allies of India politically, to always figure less favourably ties in Indias these economic priority list, albeit of late some efforts have been initiated by the Indian Government Focus Africa strengthen TEAM-9 economic with countries. Major policy initiatives by India after year 2000 included the Programme, Initiative, Pan-African ENetwork, India-Africa Partnership Conclaves and India-Africa Summit. A major thrust to Indo-African economic relations came after the conclusion of the Indo-African Summit, held in 2008 in New Delhi, with the aim of promoting trade and investments between India and the African countries. The not government can initiate have any operating the process of strengthening bloc (RTB) the with

institutional mechanism with these countries. For example, India does regional trading the African countries, though a few are in the process of negotiations. One regional trading bloc is being negotiated with the Southern Africa Customs Union (SACU) and another bilateral trading arrangement with Mauritius is in the process of negotiations. The IBSA, including India, Brazil and South Africa, is also in the pipeline. India has two preferential trade agreements with the Latin American countriesone, with Chile and another, with MERCOSUR. It is advisable to expedite the process of negotiations in Africa to operationalise these RTBs early and replicate the same process with the other countries of the continent on the basis of thorough research for the economic viability of the RTBs. The results of these initiatives might fructify in short to medium terms.

The incentive schemes to promote exports should be designed in such a way which could generate the maximum growth of exports. The export items can be dynamic export items divided and into two categories items. non-dynamic export

Dynamic export items are those which have been experiencing high growth rates for the last many years, whereas non-dynamic ones are having low growth rates, though they may hold high shares in total exports. As per the four-level HS classification, the dynamic products the world over are only 125 items. Out of these dynamic items, India exports 40 items. In the last recovery time, these items played a significant role in reviving Indias overall export growth rate. This time also, these items are expected to record high export growth rates in the period of recovery. There is a need to focus on these dynamic products for the incentive schemes. Q.4 Name five different need characteristics to be analyzed of by the economic

environment strategy.

that

international

marketers and their implications for international marketing

There are a number of steps that need to be taken before you decide to enter international markets. The first step involves an analysis of the international marketing environment through a PEST/STEP analysis. Let's briefly look at some factors that make up a PEST analysis: Political factors Consider: The political stability of the nation. Is it a democracy, communist, or dictatorial regime?

Monetary regulations. Will the seller be paid in a currency that they value or will payments only be accepted in the host nation currency?

Economical Factors Consider: Consumer wealth and expenditure within the country. National interests and inflation rate. Are quotas imposed on your product. Are there import tariffs imposed. Does the government offer subsidies to national players that make it difficult for you to compete? Social Factors Consider Language. Will language be a barrier to communication for you? Does your host nation speak your national language? What is the meaning of your brand name in your host countrys language? Customs: what customs do you have to be aware of within the country? This is important. You need to make sure you do not offend while communicating your message. Social factors: What are the role of women and family within society? Religion: How does religion affect behaviour?

Values: what are the values and attitudes of individuals within the market?

Technological Consider: The technological infrastructure of the market. Do all homes have access to energy (electricity) Is there an Internet infrastructure. Does this infrastructure support broadband or dial up? Will your systems easily integrate with your host country's?

Q.5

Describe any two aspects of the current Indian legal environment and its implications for international marketers entering the Indian market for the first time.

Legal Environment Regulations can sometimes be ambiguous. Because regulations do not allow marketers to plead ignorance, they must themselves somehow try to take control of the situation. They must attempt to conform to the legal requirements for each of the product categories they are selling in the country-markets. Legal Systems: There are two major legal systems:

a) b) a)

Common law system and Statute law system Common Law System

There are some twenty-five common law or British law countries. A command law system is a legal system that relies heavily on precedents an\ conventions. Judges decisions are guided not so much by statutes as by previous court decisions and interpretations of what certain laws are or should be. As a result, these countries laws are tradition-oriented. Countries with such a system include the United States, Great Britain, Canada, India and other British colonies. b) Statute Law System

Also known as code or civil law, include most continental European countries and Japan. Most countries over seventy are guided by a statute law system. As the name implies, the main rules of the law are embodied in legislative codes. Every circumstance is clearly spelled out to indicate what is legal and what is not. There is also a strict and literal interpretation of the law under this system. There are many products that can not be legally imported into most countries. Examples include counterfeit money, illicit drugs, pornographic materials, and espionage requirement. It is usually also illegal to import live animals and fresh fruit unless accompanied by the required certificates. There is no international law per se that prescribes acceptable and legal behaviour of international business enterprises. There are only national laws. This complexity creates a special problem for those companies that do business in various countries, where various laws may demand contradictory actions.

Q.6

Select a product of your choice to be to be introduced in the US market. What are the cultural factors that would have to be considered in developing a marketing strategy for this project.

Factors affect search marketers because they have a direct impact on how people search -- and what the evidence of their search patterns in keyword research actually means. They are, by the way, not in order of importance as that will depend very much on each individual campaign. Language and dialect: Language is a marker for other cultural

differences. A different dialect raises linguistic questions, and also the probability that other cultural factors will be different. Alphabet: Certain alphabets (or non-alphabets in some cases) have a big impact on the way people search. Probably the most extreme and fascinating of these is Japanese, where characters are double-byte and consist of three different types ranging from the original Chinese characters to the more phonetc varieties -- all mixed up to create multiple word spellings and opportunities for search marketers. Religion: Obviously, religion is a strong cultural factor, but most important for search marketers is the way this divides different areas of countries. The state of Bavaria in Germany is strongly catholic, for instance, whereas the rest of Germany is largely protestant. Nearby Austria follows Bavaria's example. You could argue that Bavaria and Austria have more in common than the rest of Germany. Travel distances: I'm always amazed by how large U.S. distances are compared to what we're used to in the U.K. Equally, in the time it takes to cross America, I can cross 40 countries and land in Baghdad. Now there's a thought. Looking at a map associated with your search terms, you might miss that eastern part of Russia is actually not hours, but

days of travel from Moscow by train (trust me I've done it -- it's a long way...). Population density: Take a look at the Netherlands or the Bay Area of the U.S. How do so many people sit inside their cars on the same roads every day? But having been caught regularly in 20-plus mile traffic queues in the Netherlands, you might find that car searches are either for luxury cars with lots of entertainment facilities -- or just as likely for bicyles, which are often quicker. Bicycle, car, bus, train, or underground: How do people typically travel? This will impact not just what products they seek, but also when and where they access the web. Parcel delivery speed expectations: Don't expect to run an ecommerce business in the U.S. if the fastest you can deliver to customers is in three days -- that's just not regarded as acceptable. Meanwhile, two to three days delivery in France would actually be pretty good. As for Italy... let's just say in some countries "arrival" is more important than timescale. Level of education and literacy: Clearly, the level of literacy of web searchers will influence the way people search, but they still need things. Ever thought of creating a visual site where you click on images of things to conduct your product choice? Doing this could win you huge fans in many less well targeted markets. General living standards: Living standards and expectations

generate demand for certain products. Living in a Western European nation, it's likely you'll expect to own a car, rent or buy a house, and eat well. In other countries, food, public transport, and entertainment may well be nearer the top of your list.

Employment regulations: If a particular country makes it expensive to employ people and difficult to un-employ people, then outsourcing could be attractive for them to other markets enabling them to run their businesses more flexibly. Packaging services with your products might make them easier to sell, but the businesses will be searching for things differently. Typical number of children per family: Lowest birth rate in Europe? Often the Italians -- having the Pope living in Rome doesn't seem to matter. Families with one child are different than families of 15 -- each having very different needs and levels of wealth. Explicit or implicit cultural behaviors: Do people say what they mean, or say what you want to hear? This might actually drive more search for things they can't talk about in public. Diet: This affects not just what they buy to eat, but whether they need your stomach drugs or suffer from dyspepsia. Preferred architectural styles: If they have large houses (US), they'll search for big items. If they have small houses (the Brits in particular), dimensions. it will be absolutely essential to include product

BB0024: Introduction to International Marketing Assignment set 2 Q.1 a. Explain the difference between : Tariff and non-tariff barriers

Tariff Barriers Tariffs are taxes that are put in place not only to protect infant industries at home, but also to prevent unemployment because of shut down of domestic industries. This leads to unrest among the masses and an unhappy electorate which is not a favorable thing for any government. Secondly, tariffs provide a source of revenue to the government though consumers are denied their right to enjoy goods at a cheaper price. There are specific tariffs that are a one time tax levied on goods. This is different for goods in different categories. There are Ad Valorem tariffs that are a ploy to keep imported goods pricier. This is done to protect domestic producers of similar products. Non Tariff Barriers Placing tariff barriers are not enough to protect domestic industries, countries resort to non tariff barriers that prevent foreign goods from coming inside the country. One of these non tariff barriers is the creation of licenses. Companies are granted licenses so that they can import goods and services. But enough restrictions are imposed on new entrants so that there is less competition and very few companies actually are able to import goods in certain categories. This keeps the amount of goods imported under check and thus protects domestic producers.

Import Quotas is another trick used by countries to place a barrier to the entry of foreign goods in certain categories. This allows a government to set a limit on the amount of goods imported in a particular category. As soon as this limit is crossed, no importer can import further quantities of the goods. Non tariff barriers are sometimes retaliatory in nature as when a country is antagonistic to a particular country and does not wish to allow goods from that country to be imported. There are instances where restrictions are placed on flimsy grounds such as when western countries cite reasons of human rights or child labor on goods imported from third world countries. They also place barriers to trade citing environmental reasons. Difference between Tariff Barriers and non Tariff Barriers The purpose of both tariff and non tariff barriers is same that is to impose restriction on import but they differ in approach and manner. Tariff barriers ensure revenue for a government but non tariff barriers do not bring any revenue. Import Licenses and Import quotas are some of the non tariff barriers. Non tariff barriers are country specific and often based upon flimsy grounds that can serve to sour relations between countries whereas tariff barriers are more transparent in nature. b. GATT an the WTO

Difference between WTO and GATT WTO had its origin in Bretton woods conference after the end of second world war. It was founded in 1948 with 23 members by the name of GATT [General Agreement on Tariffs and Trade]. But in 1995,GATT was rechristined as WTO.

DIFFERENCES 1. GATT was a provisional legal agreement whereas WTO is an organization with permanent agreements. 2. .WTO has members while GATT had only contracting parties. 3. .GATT dealt only with trade in goods while WTO covers services and intellectual property rights as well. 4. The real critical distinction between GATT and WTO is creation of a binding dispute settlement system. Under GATT contracting parties could bring cases before international body but there was no effective enforcement mechanism. But in WTO an effective enforcement mechanism exists. Q.2 What are the differences between domestic an

international marketing research? In your opinion, which is the most difficult step in conducting international marketing research and why? Exporting and international business can be interesting, exciting and in some cases challenging. In all cases it should be profitable and help a business grow. Doing business internationally is not the same as doing business at home. There are new skills to learn and new knowledge to acquire about the country you will be going into. You will need to learn about the different laws and regulations, the different customer buying habits, and change your marketing strategies and materials to appeal to the new country you are entering. It is important to remember that the way you operate your business will be determined by culture of the market you are entering, not yours. It is important to understand the differences between domestic and international business but they should not inhibit your interest or drive

for success internationally. Rather they should whet your appetite for success. Cultures No two cultures are the same and understanding both the social and business culture in another country is the first key to success. Culture defines everything a society does, from its business practices, to its response to advertising and marketing, to negotiating sales. It is important to include research on the culture of the country(s) that you intend to sell to prior to entering their market. Understanding these, often sensitive, areas will mean that you are better prepared when first entering the market. Although the people that you will deal with will not expect you to be completely in tune with the culture, respect and politeness will go a long way. Level of Competition The level of competition you will experience in foreign markets is likely to be more dynamic and complex than you experience in domestic markets. A good strategic tool to use to determine if you are able to compete in a particular international market is the Porters 5 Forces analysis. This tool will assess your supplier power, buyer power, threat of competitor products and the threat of new entrants to the market. Market Intelligence The key points to determine when gathering market intelligence on the market you intend to enter are: Understanding how the market works Who your direct competition is, and The best market entry strategy.

It may be difficult to find reliable information and data for some markets, particularly less-developed economies as their statistical agencies may not be as sophisticated as developed market economies. However it is important to gather as much information as you can to successful enter the market. Politics/Government/Legal Systems No two countries have the same political and legal systems. Each government has its own policies relating to foreign firms and products. The key is to understand that once you are in a foreign market you must abide by the rules and laws of that country, not the ones in your own market. These laws and regulations can severely impact the potential long term success of your business and it is wise to consult with legal counsel, based in that country, to ensure you reduce the risk of these laws and regulations effect on your firm. International Law Countries determine their laws based on the needs of their citizens not the concerns of foreign companies. By and large, international law is a gentlemen's agreement which is honoured, but not always. For example in areas such as intellectual property, although there are many agreements in place, protecting intellectual property can be time consuming and costly. Technology The degree of technology can vary substantially in foreign markets. If your product or service requires a high degree of technology sophistication to use or implement, then markets with low levels of technology will not be suitable for your business. Media

Advertising your product and service will of course be an important component of your marketing strategy. It is important to be aware of the types of media available and the kind of media your target market uses to gain information about products and services they wish to buy. Not everyone is connected to the internet nor is every customer able to read and write. This does not mean those markets should be ignored. It does mean that how you advertise and market your products will require an examination of the most appropriate media for your target market. Incomplete

BB0026 Introduction to Technology Management Assignment Set 1: Q.1 Explain the role and importance of technology management. Technology Management is set of management disciplines that allows organizations to manage their technological fundamentals to create competitive advantage. Typical concepts used in technology management are technology strategy (a logic or role of technology in organization), technology forecasting (identification of possible relevant technologies for the organization, possibly through technology scouting), technology roadmapping (mapping technologies to business and market needs), technology project portfolio a set of projects under development) and technology portfolio (a set of technologies in use). The role of the technology management function in an organization is to understand the value of certain technology for the organization. Continuous development of technology is valuable as long as there is a value for the customer and therefore the technology management function in an organization should be able to argue when to invest on technology development and when to withdraw. Technology Management can also be defined as the integrated planning, design, optimization, operation and control of technological products, processes and services, a better definition would be the management of the use of technology for human advantage. The Association of Technology, Management, and Applied Engineering defines Technology Management as the field concerned with the supervision of personnel across the technical spectrum and a wide variety of complex technological systems. Technology Management programs typically include instruction in production and operations management, project management, computer applications, quality

control, safety and health issues, statistics, and general management principles. Perhaps the most authoritative input to our understanding of technology is the diffusion of innovations theory developed in the first half of the twentieth century. It suggests that all innovations follow a similar diffusion pattern - best known today in the form of an "s" curve though originally based upon the concept of a standard distribution of adopters. In broad terms the "s" curve suggests four phases of a technology life cycle - emerging, growth, mature and aging. These four phases are coupled to increasing levels of acceptance of an innovation or, in our case a new technology. In recent times for many technologies an inverse curve - which corresponds to a declining cost per unit - has been postulated. This may not prove to be universally true though for information technology where much of the cost is in the initial phase it has been a reasonable expectation. The second major contribution to this area is the Carnegie

Mellon Capability Maturity Model. This model proposes that a series of progressive capabilities can be quantified through a set of threshold tests. These tests determine repeatability, definition, management and optimization. The model suggests that any organization has to master one level before being able to proceed to the next. The third significant contribution comes from Gartner - the research service, it is the hype cycle, this suggests that our modern approach to marketing technology results in the technology being over hyped in the early stages of growth. Taken together, these fundamental concepts provide a foundation for formalizing the approach to managing technology.

Q.2

Explain how the ten basic tenets for the management of

technology is used in an enterprise to operate within a TC framework by taking a sample enterprises to explain. Ten Basic Tenets for the Management of Technology (MOT): A tenet is a principle based on observation, intuition, experience, and in some cases, empirical analysis. Ten tenets are proposed next, as guiding principles for an enterprise to operate within a technology cycle (TC) framework. The tenets recognize that short-term treatments of any issue in general, and technology management in particular, are at best sub-optimizations, and so, will not lead to more long- Lasting solutions in adapting and advancing technology. Let us take some time now to discuss these principles in detail. 1. Value diversification is a poor substitute for MOT:

Value diversification refers to the improvement of stockholders' investments in a company through quick- fix solutions on paper, such as mergers, acquisitions, and other stock-enhancing strategies. Unfortunately, this traditional approach to value enhancement results in mostly short-term gains and long-term pains. Every company ought to identify core technologies and core competencies, and then home them to get the most out of those for innovating products and/or services. When IBM acquired ROLM Corporation many years ago, IBM was trying to complement its core technologies in mainframe computers and personal computers with the core technology of ROLM, communication systems. Unfortunately, this did not work out very well, and IBM eventually sold ROLM. In the early 1980s, McGraw-Hill, whose core technologies are in publishing, books, journals, and related products, went into the personal computer business with Odyssey with a totally different core technology that didn't work, either.

2.

Manufacturability must keep pace with inventiveness and marketability:

In industries, in general, and manufacturing companies in particular, people in manufacturing functions often find themselves coping with increasingly aggressive marketing strategies and design strategies. Manufacturing in the United States is being troubled by intense competition from the Pacific Rim and European trading partners, who are developing new and better technologies and techniques to increase their advantage in product design and manufacturing process (Gold, 1994). Yet, in today's globally competitive marketplace, it is not only a necessity for manufacturability to be in step with marketing and design strategies but also a luxury, serving as an important weapon to chip away the market share of the competition. Timing in designing, manufacturing and marketing products and/or services has become extremely crucial. This calls for what we call modular technologies, which enable a company to have tremendous flexibility to quickly package together innovative products and/or services to beat the competition, let alone to survive the fierce global competition game. 3. Quality and total productivity are inseparable concepts in managing technology: In the 1970s, here in the United States, productivity was of major concern, particularly after the 1973 Oil Embargo, and the ensuing Japanese "automobile attack." In the 1980s, after the famous NBC documentary, "If Japan can, why can't we?" emphasis on quality reemerged with great ferocity and intensity. The Total Quality Management (TQM) movement made quality a common prerequisite for ensuring competitiveness, even in the domestic markets. With the onset of the information superhighways in the late 1980s, and the rapidly changing global communication technology panorama, time has become a third crucial strategic variable in a company's drive to be competitive.

4.

It

is

management's

responsibility

to

bring

about

technological change and job security for long-term competitiveness: We have seen, particularly in the last 5 year that American management has gone on a downsizing binge in the name of streamlining and cost cutting. Often, technological improvements have been associated with such downsizing. Unfortunately, this is a poor business strategy because it under-estimates the employees' ability to manage not only existing technologies that their company has but also their creative capabilities to create and perfect new ones. Employees must feel that they have job security, particularly when they are responsible for suggesting and implementing new technologies. They feel betrayed after they spend hours of hard work designing a technologically advanced environment for greater competitiveness, only to find themselves victims of their own making. This need not be the case. Companies often spend millions of dollars trying to mitigate the negative effects of low morale, job dissatisfaction, and consequent low productivity, following a layoff or cost-cutting measure, right after a major technological change. A smart approach to managing technology is to look at the competitiveness challenge as a holistic one. The Japanese have been excellent in taking such a systematic view while managing all their basic technologies. 5. Technology must be the servant, not the master, the master is still the human being: Until recently, we used to be the masters of technology, our servant. We used to drive technology, but today we have become technology's servant, and technology is driving us. We believe that we have crossed a "technology threshold," whereby our response to technology has become one of catching up. Many companies are unable to cope with

the dramatic changes taking place in the very nature of technologies. This, in turn, puts a company in a reactive posture, rather than a proactive one. Companies which are learning the art of managing new technologies have a better chance at being a technology master instead of a technology servant. The chaos that companies face today in responding to "rapid technologies" can be harnessed as a positive strategy to create opportunities for new products and/or services. 6. The consequences of technology selection can be more

serious than expected because of systemic effects: This principle has major impact on the economic viability of the twenty-first-century organization, because we will be selecting multiple technologies with a rapidity that is hard to comprehend at this time. Product technologies will become obsolete in such short periods of time that they will resemble the toy industry, where the average shelf life of a product may be only one season or sometimes only a month. We are already beginning to see personal computers fall into this category. In the early 1980s, when the personal computer was something new to all of us, the average shelf life was approximately 4 to 5 years for a model to become obsolete. Today, just 13 years later, the average shelf life has been whittled down to less than 1 year. By the time a company decides to update its PC technology to state of the art and acquire it, that technology would just become obsolete. In anticipation of even greater obsolescence, companies will usually wait for newer models in both hardware and software. The rapid turnover in both of these categories of technologies makes it even more difficult to implement newer ones. However, the penalty for not updating can also be severe in terms of lost revenues. 7. Continuous education and training in a constantly

changing workplace is a necessity, not a luxury:

Companies have traditionally slashed the education and training budgets during times of economic downturn. Today, this would be a foolish strategy, because most employees know how to use process and information technologies to the fullest extent. Having spent millions, and sometimes billions of dollars in such technologies, it would be most uneconomical not to get the most out of these expensive technologies. Sometimes, a million-dollar piece of equipment has a 20 percent downtime, costing hundreds of thousands of dollars in lost revenues, simply because operators and engineers have not been rained in all aspects of its operation. The more the education and training for managing technologies, the greater the utilization rates would be, and hence, the greater the economic leverage. For example, in a multinational bank, such as Citibank, the technology group strives hard for customers to do worldwide banking in anyone of 14 languages. The company spends much time and energy educating and training the personal bankers, the customer service representatives, and others, in an effort to offer their clients the ever increasing portfolio of products and services in a competitive manner. Citibank creates its own technologies, continuing education budgets keep raising in well-managed companies. In the years to come, we can only see greater rates of such continuing education, to ensure knowledge and skills in using technologies to their fullest extent possible. 8. Technology gradient is a dynamic component of the

technology management process, to be monitored for strategic advantage: The term technology gradient refers to the technical advantage an enterprise enjoys with respect to its licensees and its competitors. Normally, most sensible multinationals maintain a sufficiently high technology gradient with respect to their licensees, particularly if the latter are even remotely associated with a product line that competes anywhere in the world. This is particularly true when the technologies

are radically new, for example, biotechnology, global networking technology, etc. Technology gradient, which is the subject of another chapter in this handbook, is a powerful concept for managing the technological advantage that the company enjoys with respect to its competition worldwide. Briefly, a company monitoring its technology gradient can be in one of four postures: technology leader, technology follower, technology yielder, or technology loser. Depending on the technology advantage a company wishes to enjoy, it must consciously position itself as one of these. Obviously, the company would want to be in one of these areas, depending on which phase of a product life cycle, no matter how hard it tries to be technology leader in that phase, the returns on its technological investments will be so marginal that it is better off being a technology yielder during that stage for short periods of time ideally., however, a company must overlap its technologies so as to minimize the technology yielding positions and maximize the technology leadership positions. 9. The RTC (Resistance to Change) factor must be carefully analyzed and meticulously monitored for gaining the most out of any technology, particularly a new one: The RTC factor refers to the magnitude and nature of resistance to change. Unfortunately, very little is known about the process of the RTC factor, and the rational means to minimize it. At the same time, however, we now know that a high RTC factor can lead to work slowdowns, poor employee morale, high maintenance costs, and even serious sabotages. Management has to recognize that a creative, lively workforce is better than stagnant, high-priced technology. Research shows that when new technologies are implemented, "total productivity" at first drops because of the natural response of employees-resistance to accept the new technologies as viable meansbefore it picks up again.

10.

Information linkage must keep pace with technology

growth: As pointed out during previous discussion, information networks are evolving so rapidly that unless companies take advantage of linking up to such networks, they lose opportunities for new revenue streams. For example, companies that quickly capitalized on the accessibility to the Internet increased their market share through an exposure of their products and/or services to millions of people around the world. We barely understand the potential of the Internet through the World Wide Web (WWW). Within a company, it has become an absolute necessity to keep all the employees informed of the latest technological developments updates are within offered their on own an company so that so unnecessary customer duplication of costly effort is avoided, and product changes and client on-line basis that responsiveness can be in real time. Time lags can cause serious miscommunications, particularly with multinationals. For example, if a component is eliminated in a product and this information is not communicated to the company's worldwide spare-parts inventory system, retail clerks somewhere in Indonesia or Taiwan may still be carrying the part on shelves unnecessarily, increasing their inventory carrying costs. Companies like Caterpillar and International Harvester maintain global inventory management systems so efficiently that within 24 hours they can have a part made available to any retailer around the world. In such situations, this tenet has even greater relevance and respect. Q.3 How do you assess technology management?

TA is the study and evaluation of new technologies. It is based on the conviction that new developments within, and discoveries by, the scientific community are relevant for the world at large rather than just for the scientific experts themselves, and that technological progress can never be free of ethical implications. Also, technology assessment

recognizes the fact that scientists normally are not trained ethicists themselves and accordingly ought to be very careful when passing ethical judgement on their own, or their colleagues, new findings, projects, or work in progress. Technology assessment assumes a global perspective and is futureoriented, not anti-technological. TA considers its task as interdisciplinary approach to solving already existing problems and preventing potential damage caused by the uncritical application and the commercialization of new technologies. Therefore any results of technology assessment studies must be published, and particular consideration must be given to communication with political decisionmakers. An important problem, TA has to deal with it, is the socalled Collingridge dilemma: on the one hand, impacts of new technologies cannot be easily predicted until the technology is extensively developed and widely used; on the other hand, control or change of a technology is difficult as soon as it is widely used. Some of the major fields of TA are: information technology, hydrogen technologies, nuclear technology, molecular nanotechnology, pharmacology, organ transplants, gene technology, artificial intelligence, the Internet and many more. Health technology assessment is related, but profoundly different, despite the similarity in the name. Forms and concepts of technology assessment The following types of concepts of TA are those that are most visible and practiced. There are, however, a number of further TA forms that are only proposed as concepts in the literature or are the label used by a particular TA institution.[2]

Parliamentary TA (PTA): TA activities of various kinds whose addressee is a parliament. PTA may be performed directly by members of those parliaments (e.g. in France and Finland) or on their behalf by related TA institutions (such as in the UK, in

Germany and Denmark) or by organisations not directly linked to a Parliament (such as in the Netherlands and Switzerland).[3]

Expert TA (often also referred to as the classical TA or traditional TA concept): TA activities carried out by (a team of) TA and technical experts. Input from stakeholders and other actors is included only via written statements, documents and interviews, but not as in participatory TA. Participatory TA (pTA): TA activities which actively, systematically and methodologically involve various kinds of social actors as assessors and discussants, such as different kinds of civil society organisations, representatives of the state systems, but characteristically also individual stakeholders and citizens (lay persons), technical scientists and technical experts. Standard pTA methods include consensus conferences, focus groups, scenario workshops etc.[4] Sometimes pTA is further divided into expert-stakeholder pTA and public pTA (including lay persons).[5] Constructive TA (CTA): This concept of TA, developed in the Netherlands, but also applied and discussed elsewhere[6] attempts to broaden the design of new technology through feedback of TA activities into the actual construction of technology. Contrary to other forms of TA, CTA is not directed toward influencing regulatory practices by assessing the impacts of technology. Instead, CTA wants to address social issues around technology by influencing design practices. Discursive TA or Argumentative TA: This type of TA wants to deepen the political and normative debate about science, technology and society. It is inspired by ethics, policy discourse analysis and the sociology of expectations in science and technology. This mode of TA aims to clarify and bring under public and political scrutiny the normative assumptions and visions that drive the actors who are socially shaping science and technology. Accordingly, argumentative TA not only addresses the side effects of technological change, but deals with both broader impacts of science and technology and the fundamental

normative question of why developing a certain technology is legitimate and desirable.[7] Health TA (HTA): A specialised type of expert TA informing policy makers about efficacy, safety and cost effectiveness issues of pharmaceuticals and medical treatments, see article on Health Technology Assessment.

BB0026 Introduction to Technology Management Assignment Set 2 Q.1 (a) What is technology management and who is the technology manager. Technology Management is set of management disciplines that allows organizations to manage their technological fundamentals to create competitive advantage. Typical concepts used in technology management are technology strategy (a logic or role of technology in organization), technology forecasting (identification of possible relevant technologies for the organization, possibly through technology scouting), technology roadmapping (mapping technologies to business and market needs), technology project portfolio ( a set of projects under development) and technology portfolio (a set of technologies in use). The role of the technology management function in an organization is to understand the value of certain technology for the organization. Continuous development of technology is valuable as long as there is a value for the customer and therefore the technology management function in an organization should be able to argue when to invest on technology development and when to withdraw. Technology Management can also be defined as the integrated planning, design, optimization, operation and control of technological products, processes and services, a better definition would be the management of the use of technology for human advantage. Information Technology (IT) Manager Information technology managers are responsible for implementing and maintaining an organization's technology infrastructure. Businesses rely on a central information processing system to support efficient data management and communications. The IT manager monitors the organization's operational requirements, researches

strategies and technology solutions, and builds the most cost-effective and efficient system to achieve those goals. A bachelor's degree in computer science, management information systems, or a related field is the minimum qualification for an information technology management position. In view of the additional business savvy required in a management position, many aspiring IT managers supplement their computer with an MBA degree. A.1 (b) What management? are the strategic issues in technology

STRATEGIC ISSUES IN TECHNOLOGY MANAGEMENT: Traditionally business firms are defined by markets they serve. Who are our customers? What are their needs? During 1970s and 1980s management were concentrated on industry environment of the firm, its competitive rivals and how to satisfy customers. This perspective is known as market-based perspective. It tends to play the role of internal capabilities of firm. In recent year resource-based views of firm have been developed. It depends upon the bundle of resources, capabilities which are more stable and used for long-term decision-making. DIMENSION MARKET-BASED RESOURCE-BASED Drivers of strategy Customers and Competitors Unique resources Derivatives Resources Market opportunities Strategy profile Positional Core competencies Appropriate contexts Nature Markets Dynamic markets The general technology development strategy principles can be kept in view: i) It is important to be selective in self-development of technology. Emphasis should be given to total integration of all activities in the technology production chain to achieve self-reliance. In selecting areas of development, a country can be inwardlooking in some areas and outward-looking in some other areas.

ii)

iii) iv)

Import substitution can only be a temporary strategy. In the technology production chain, a number of activities involving basic and applied research can be undertaken, but it is important to be able to discard some of the non-productive projects and concentrate, from time to time, upon those which have high commercial potential. Technology development is best achieved through collective effort. Individuality, which tends to aim at being unique rather than practical, should be minimized.

v)

Q.2 (a) "The human being used to be the masters of technologies". Give the comparative analysis on this statement "The human being used to be the masters of technologies". Of course, you we argue that people have become servants to their technology. All us have to do is look at someone walking along with their child but talking on their phone instead of paying attention to the child. Or someone in the middle of a social function checking their text messages. But, to me, these are relatively minor things. In general, we are still masters of technology because they mostly work to improve our lives. We may give up some of our independence when we are always in contact via phones and such, but we get in return things like medical technology that extend and enrich our lives. From the moment that the first human used a tool, technology began it's evolution. This was the moment that humans discovered that they could use the world to suit their needs. It was only a short jump from the first wheel to the technology of today. But does that mean that human beings are still in control? Of course many argue that we've become enslaved to our technologies, as we're dependent on it for everything from knowledge to food to comfort. It has become more of a co-dependent relationship. Technology now does not merely help us achieve our needs but has become a need. In

return, we continue to fuel the development of technology. It needs us, and we need it. Kevin Kelly has an excellent new book "What Technology Wants" which explores the way that technology is evolving. He compares it to the way that biological systems evolve, a scary thought for anyone who's seen a movie like The Matrix where robots actually do take over biological entities. He also explores the relationship that people like the Amish have with technology, refusing to allow technology to become the master instead of the slave by sticking to only the bare necessities. Q.2 (b) How do you justify that risk analysis assess creative and innovative ventures in technology.

Q.3 How does technology helps in cost and high quality. Justify with the example of your own. Whether the economy is in a downturn or not, management will always aim for a more cost effective IT solution. If your current IT infrastructure is hurting your profitability, our expertise is both tested and proven. Also bleeding edge solutions in the industry will enable us to find inexpensive alternatives for you. For instance, have you started to wonder whether having a constantly growing number of servers, many of which are underutilized, is really the norm? Well, that used to be the case. However, with the advent of virtualization and replication, that expensive exercise is steadily becoming a thing of the past.

By implementing solutions powered by these two technologies, organizations can now manage excess storage capacities and hardware resources by performing simpler processes at lesser costs. In addition to that, using the same pair of technologies, companies can also decrease the downtime suffered during maintenance and upgrades. Thus, at the end of the day, not only do companies stand to reduce expenditures, they can also boost revenues as a result of increased productivity time. Do we still have other IT solutions that tackle a different set of problems but arrive at the same outcome, i.e. reduced costs + improved productivity = higher profits? You bet we do. Basically, this is how well help your company arrive at the same winning formula: Provide insights as to where and when changes have to be made. Oftentimes, initiatives to reduce cost and improve productivity are not preceded by the appropriate study especially as with regards to their impact on all departments in the organization. This usually results in unnecessary duplication of resources, a sure way to increase costs instead. Consolidate and automate. Well work within your budget in finding ways to consolidate your applications, hardware, storage, databases, and processes. Then well integrate automation practices to simplify management and maintenance of all these assets. This will substantially free not only your IT infrastructure but also your IT staff, giving them more opportunities to innovate. Create an innovative environment. One of the benefits you gain in having room to innovate is the potential to discover new ways to drive costs even further. A fraction of your savings can then be used to develop even better IT solutions, thus creating a productive cycle: IT solutions > savings and innovation > better IT solutions. Our role is to help you harness your potentials to keep that cycle running.

Work to reduce carbon footprint in all your procedures . By ensuring that energy consumption is brought to a minimum in every step you take, you can rest assured that costs have only one way to go down.

BB0023 Multinationals and their roles Assignment Set 1 Q.1 What is a MNC? Discuss the impact of Foreign Direct Investments in at least two sectors of the Indian economy with examples. MNC : Multi National Companies is a corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. Impact of FDI on Indian Retail Trade Liberalization of trade policies during the last one and half decade has led India to become an investment friendly country. Foreign direct investment (FDI) in this country assumed critical importance in the context of this liberalization. Though India is the tenth most industrialized country in the world, it is well known that it is mainly agro-based with around 70% population engaged in the farm sector. However, in the initial stage of liberalization, FDI was centered on the urban manufacturing sectors because of its civic infrastructure, labour availability, flexible taxation mechanism etc. The success story of FDI in these sectors is known to us. For a long time there were efforts for FDI in the retail sector so that the trader can reap the benefit of FDI. Retail trade contributes around 1011% of Indias GDP and currently employs over 4 crores of people. Recently, a great debate has cropped up against the government plans for FDI in the Indian retail sector. FDI in retail is fundamentally different from that in manufacturing. FDI in manufacturing basically enhances the productive employment in most cases; but FDI in retail trade may create job losses and displacement of traditional supply chain. One of

the main features of rural India is disguised unemployment. Farmers, evicted from the agricultural sector, engage in small retail trades for livelihood. The main fear of FDI in retail trade is that it will certainly disrupt the livelihood of the poor people engaged in this trade. The opening of big markets or foreign-sponsored departmental outlets will not necessarily absorb them; rather they may try to establish the monopoly power in the country. However, so many positive factors are also there in favour of FDI in Indian retail service. Impact of FDI on Insurance sector The insurance sector has been a fast developing sector with substantial revenue growth in the non-life insurance market, but in spite of its huge population, India only accounts for 3.4% of the AsiaPacific general insurance market's value. The cap on foreign companies equity stake in insurance joint venture is 26%, but is expected to rise to 49%. The investment pattern with regard to foreign direct investment (FDI) and inflows from non-resident Indians remains resilient and FDI inflows into the country grew by an impressive 145% between fiscal 2006 and 2007 and by a respectable 46.6% between fiscal 2007 and 2008. However, owing to the economic downturn, the growth in FDI inflows in fiscal 2009 slowed to 18.6% from the previous fiscal. Foreign investment, in addition to technological improvement and expertise, brings with it a plenty of risks. An increase in the size of foreign holding in the insurance sector will certainly expose the country to risks. At the same time, it is important to recognize that FDI in Insurance can address several issues pertaining to the sector such as encouraging development of innovative financial products, improving the efficiency of the Insurance sector.

Q.2

The

technologies for

transferred the latter's

by

the

MNC and

to

their

production units in the underdeveloped countries and appropriate social economic development needed". Do you agree or disagree with this statement. Support your answer with relevant examples. Multinational corporations (MNCs) are huge business organizations which open up income-generating assets in more than one country through branches or their Majority Owned Foreign Affiliates (MOFAs). They are also known as Transnational Companies or Corporations (TNCs). An MNC engages itself in the production of goods or services outside the country of its origin. By opening up income generating assets in more than one country, it makes its presence felt in the global market. It has been estimated that around a quarter of the world economy is being controlled by the big MNCs. The combined sales of these top MNCs are estimated to be much higher than the combined worth of economies of around 182 countries. The MNCs, because of their huge resources and international presence, are able to conjure up desires for their products in the minds of the people in the country of their marketing base. The MNCs are characterized by their huge assets. The principal decisions taken by the company take into account their global market. The emergence of the MNCs has led to the monopolization of the markets. Production and investment have become global as a result of which economic activities pertaining to production; investment and trade are being conducted by the MNCs through their branches or firms in the different countries. Inter-firm transactions have led to the concentration of economic power across the countries. Initially, the development of the MNCs was through 'creeping increment'. Slowly, but steadily, the MNCs have established their subsidiaries beyond their

country of origin, in developed and underdeveloped countries. The MNCs also aid in the transfer of resources from the host country to the country of its operations which includes technical expertise, equipment, managerial and marketing skills, among others. The MNCs help to initiate development the processes of in several and

underdeveloped

countries

through

transfer

capital

technology. To establish a proper base in a foreign country, the MNCs invest in labor, raw materials, advertising and marketing. This helps the underdeveloped countries to develop their resources. The MNCs help in the development of human resource generates further employment and also help to transfer sophisticated western technologies to the underdeveloped countries. The technological expertise, advanced production skills and use of local labor in the units facilitate transfer of technology to those countries. Through Research and Development, the MNCs develop products which are superior in all respects to those which are indigenously produced by the host countries. This induces the indigenous industries to brace up for competition and encourages them to develop superior products. The MNCs, thereby, end the domestic monopoly of the indigenous industries. The MNCs, apart from the transfer of technology for production, sometimes provide marketing services for the export of indigenous products manufactured by the host countries. Exports generate foreign exchange which helps the host country in developing its economy. The MNCs have been quite successful in India. In the post-liberalization era, as the license regime has been more or less abolished the MNCs are thriving in India. They are present in almost every sector of the Indian economy, especially in the consumer durable market and automobiles. Automobile manufacturers like General Motors, Ford, Toyota and Hyundai are making good profits. Korean companies LG

and Samsung have become market leaders in electronic goods. The entire soft drink market of India is being monopolized by US Multinationals Pepsi and Coke. Though the pesticides controversy has affected the popularity of Pepsi, Coke and Cadbury's they are still key players in their segments. Q.3 Briefly discuss the advantages and disadvantages of

MNC's Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. According to ILO report "for some, the multinational companies are an invaluable dynamic force and instrument for wider distribution of capital, technology and employment; for others they are monsters which our present institutions, national or international, cannot adequately control, a law to themselves with no reasonable concept, the public interest or social policy can accept. MNC's directly and indirectly help both the home country and the host country. Advantages of MNC's for the host country MNC's help the host country in the following ways 1. The investment level, employment level, and income level of the host country increases due to the operation of MNC's. 2. The industries of host country get latest technology from foreign countries through MNC's. 3. The host country's business also gets management expertise from MNC's. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's.

5. MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R and D outcomes of MNC's. 7. The host country can reduce imports and increase exports due to goods produced by MNC's in the host country. This helps to improve balance of payment. 8. Level of industrial and economic development increases due to the growth of MNC's in the host country. Advantages of MNC's for the home country MNC's home country has the following advantages. 1. MNC's create opportunities for marketing the products produced in the home country throughout the world. 2. They create employment opportunities to the people of home country both at home and abroad. 3. It gives a boost to the industrial activities of home country. 4. MNC's help to maintain favourable balance of payment of the home country in the long run. 5. Home country can also get the benefit of foreign culture brought by MNC's. Disadvantages of MNC's for the host country 1. MNC's may transfer technology which has become outdated in the home country.

2. As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNC's may kill the domestic industry by monpolising the host country's market. 4. In order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty. Disadvantages of MNC's for the home country 1. MNC's transfer the capital from the home country to various host countries causing unfavourable balance of payment. 2. MNC's may not create employment opportunities to the people of home country if it adopts geocentric approach. 3. As investments in foreign countries is more profitable, MNC's may neglect the home countries industrial and economic development. Q.5 (A) Write Short notes on FERA

The Foreign Exchange Regulation Act (FERA) was legislation passed by the Indian Parliament in 1973 by the government of Indira Gandhi and came into force with effect from January 1, 1974. FERA imposed stringent regulations on certain kinds of payments, the dealings in foreign exchange and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of

currency. The bill was formulated with the aim of regulating payments and foreign exchange. Coca-Cola was India's leading soft drink until 1977 when it left India after a new government ordered the company to turn over its secret formula for Coca-Cola and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA). In 1993, the company (along with PepsiCo) returned after the introduction of India's Liberalization policy. FERA : Regulated in India by the Foreign Exchange Regulation

Act(FERA),1973. Consisted of 81 sections. FERA Emphasized strict exchange control. Control everything that was specified, relating to foreign exchange. Law violators were treated as criminal offenders. Aimed at minimizing dealings in foreign exchange and foreign securities. FERA was introduced at a time when foreign exchange (Forex) reserves of the country were low, Forex being a scarce commodity. FERA therefore proceeded on the presumption that all foreign exchange earned by Indian residents rightfully belonged to the Government of India and had to be collected and surrendered to the Reserve bank of India (RBI). FERA primarily prohibited all transactions, except ones permitted by RBI.

OBJECTIVES : To regulate certain payments. To regulate dealings in foreign exchange and securities. To regulate transactions, indirectly affecting foreign exchange. To regulate the import and export of currency. To conserve precious foreign exchange. The proper utilization of foreign exchange so as to promote the economic development of the country. Q.4 (b) Obstacles of foreign capital in developing economies 1. Political Instability. In most of the developing countries, the governments are not stable. A new government comes into power overnight, either through coup defeat or army take over. The new government introduces a new system of rules for the operation of business which causes frustration and discontentment among the people. How does political instability affect growth is discussed in brief below. (i) Influence of political instability. (ii) The external investors. (iii) Internal investment. (iv) Internal disorder. 2. Corruption. Corruption is another obstacle to economic

development in developing countries. The bribery or gift of money has becomes institutionalized. The govt. officials think bribery is built into

their pay structure. The businessmen, if they are to stay in business, have to pay bribes to different departments of the govt. The employees give gift of money to their superiors. When bribery is an acceptable practice, it then becomes difficult for businessmen and industrialists to take part, stay and grow in business. Bribery thus limits economic development. It is one of the major obstacles to economic growth in Pakistan also. 3. Lack of investment. For an economy to grow, it must have investment. The funds for investment can come either from domestic savings or from abroad. Both these sources of investment funds have their own peculiar problems. 4. Right Education. The provision of right education to the citizens of a country is a necessary component of any successful development strategy. In developing countries, the educational system is defective. There is mush-room growth of English medium schools in cities. The syllabi taught to the students at each level of education reflects the Western culture and not the culture and requirements of their own country. The result is that the students holding degrees remain jobless which creates discontment and frustration among them. The brilliant students of the developing countries go outside the country. The outdated syllabi of various classes, the mass failure of the students in various board and university examinations, outflow of the brightest students from less developed countries to the developed countries (Brain drain) create gaps in business, administrative circles and become obstacles to economic growth. 5. Over Population. In developed countries of the world, only 2 to 4% of the population is engaged in agriculture and produces enough food and fibre to meet the requirements of their citizens and also earn foreign exchange by exporting surplus goods.

6. Inefficient Human Capital. In addition to physical capital, human capital is also limited in developing countries. The quality of population as measured by its skills, education and health is far below the standard in developed countries of the world. Deceases, starvation, glut of unskilled workers stand in the way of economic development of the developing countries of the world. 7. Inadequate infrastructure facilities. The under developed

countries suffer from lack of basic infrastructure such as transport and communication system, power supply, banking and other financial facilities. The provision of inadequate infrastructure facilities stand in the way of economic development of the poor countries. 8. Inappropriate Social Structure. Inappropriate social system such as outdated religious beliefs, caste system, irrational attitude toward family planning etc. is also a constraint on the economic development of developing countries. 9. Market imperfections. Market imperfections in the form of

immobility of factors of production, ignorance of market conditions, price rigidity etc. are serious obstacles in the path of economic development of the backward countries. Q.5 Write a brief note on international HRM strategy FUNCTIONS OF INTERNATIONAL HUMAN RESOURCE

MAJOR

MANAGEMENT International human resource management involves five functional areas we will discuss in detail in this section: 1. recruitment and selection, 2. development and training, 3. performance evaluation, 4. remuneration and 5. labor relations. Recruitment and selection

Recruitment and selection are the processes through which an organization takes in new members. Recruitment involves attracting a pool of qualified applicants for the positions available. Selection requires choosing from this pool the candidate whose qualifications most closely match the job requirements. In companies that function in a global environment we have to distinguish different types of employees. Traditionally, they are classified as one of the three types: 1. Parent country national. The employees nationality is the same as the organizations. For example, a Slovenian citizen working for a Slovenian company in Macedonia. 2. Host country national. The employees nationality is the same as the location of the subsidiary. For example, a Macedonian citizen working for a Slovenian company in Macedonia. 3. Third country national. The employees nationality is neither that of the organization nor that of the location of the subsidiary. For example, an Albanian citizen working for a Slovenian company in Macedonia. Development and training The overall aim of the development function is to provide that adequately trained personnel in a company are capable to fulfil their goals, as well as to contribute to better performance and growth with their work (Armstrong, 1996). The development of employees can be treated as a special field of human resource management that includes planned individual learning, education, organization development, career development and training.

At

the

international

level,

human

resource

development

professionals are responsible for: 1. training and development of employees located in subsidiaries around the world, 2. specialized training to prepare expatriates for assignments abroad, and 3. development of a special group of globally minded managers. Creation and transfer of international human resource development programs may be carried out in two ways: 1. centralized and 2. decentralized. Performance evaluation In companies, the performance evaluation is most frequently carried out for administration or development intentions. For administration purposes, performance evaluation is called for when the decisions on work conditions of employees, promotions, rewards and/or layoffs are in question. Development intention of performance evaluation is oriented to the improvement of the work performance of employees, as well as to the enhancement of their abilities on the ground of the adequate training program and advising employees regarding behavior in the work environment. In Western multinational companies, performance appraisals are usually done yearly and use a standarized evaluation form. Sometimes, the organization also requires supervisions to discuss the results of the appraisals with each employee. Remuneration and benefits Remuneration of employees has a key role in acquiring new employees and is important for employees as well as for the

employers. Pay is the basic resource of living of the employees, while benefits cover better health care, the possibility of spending holidays in the companys holiday facilities at a favourable price and also other advantages. The decisions the employers make concerning remuneration are a factor that has an impact on the expenses of their company as well as on the ability of selling the products at a competitive price in the market (Treven, 1998). The decisions about remuneration may also enhance the ability of the employer to compete for employees on the labor market. The rewards he warrants make the standing personnel either want to keep their jobs or quit. Labor relations The labor relations function identifies and defines the roles of management and workers in the workplace. The concept of labor relations varies greatly in different parts of the world. In the United States, for example, labor relations are often a formal relationship, sometimes antagonistic, between labor and management defined by a union contract. In Japan, the relationship between management and unions is cooperative, and management often appoints union leaders In many countries, the government regulates labor relations practices. Consequently, in this function, more than other human resources management functions, an organization may have to be polycentric. However, even though labor relations are local level issues, it is good corporate strategy to coordinate a labor relations policy across subsidiaries. Q.6 Discuss the organizational structures for multinational

strategies Multinational companies are faced with two opposing forces when designing the structure of their organization. They are faced with the

need for differentiation that allows them to be specialized and competitive in their local markets. They are also faced with the need to integrate. The structures adopted therefore have to find a balance between these opposing needs and also remain in strategic alignment for the company to thrive. Multinational companies have therefore evolved many structural permutations to suit their business needs. Subsidiary Model Owning foreign subsidiaries is one of the most basic structural models of a multinational company. The subsidiaries are self-contained units with their own operations, finance and human resource functions. Thus the foreign subsidiaries are autonomous allowing them to respond to local competitive conditions and develop locally responsive strategies. The major disadvantage of this model however is the decentralization of strategic decisions that makes it difficult for a unified approach to counter global competitive attacks. Product Division Organizational structure of the multinational company in this case is developed on the basis of its product portfolio. Each product has its own division that is responsible for the production, marketing, finance and the overall strategy of that particular product globally. The product organizational structure allows the multinational company to weed out product divisions that are not successful. The major disadvantage of this divisional structure is the lack of integral networks that may increase duplication of efforts across countries. Area Division Organization using this model is again divisional in nature, and the divisions are based on the geographical area. Each geographical region

is responsible for all the products sold within its region. Therefore all the functional units for that particular region namely finance, operations and human resources are under the geographical region responsibility. This structure allows the company to evaluate the geographical markets that are most profitable. However communication problems, internal conflicts and duplication of costs remain an issue. Functional Structure Functions such as finance, operations, marketing and human resources determine the structure of the multinational company in this model. For example, all the production personnel globally for a company work under the parameters set by the production department. The advantage of using this structure is that there is greater specialization within departments and more standardized processes across the global network. The disadvantages include the lack of inter department communication and networking that contributes to more rigidity within the organization. Matrix Structure Matrix organizational structure is an overlap between the functional and divisional structures. The structure is characterized by dual reporting relationships in which employees report both to the functional manager and the divisional manager. Work projects involve cross-functional teams from multiple functions such as finance, operations and marketing. The members of teams would report both to the project manager as well as their immediate supervisors in finance, operations and marketing. The advantage of this structure is that there is more cross-functional communication that facilitates innovation. The

decisions are also more localized. However there can more confusion and power plays because of the dual line of command. Transnational network Evolution of the matrix structure has led to the transnational network. The emphasis is more on horizontal communication. Information is now shared centrally using new technology such as "enterprise resource planning (ERP)" systems. This structure is focused on establishing "knowledge pools" and information networks that allow global integration as well local responsiveness.

BB0023 Multinationals and their roles Assignment Set 2 Q1.Explain the concept of Franchising with an example. List out the advantages and disadvantages of franchising This is another method of technology transfer. It is a form of licensing whereby the franchisee adopts the parent companys entire business format: its name, trademarks, business methods , layout of premises etc. the franchiser provider (in return for a royalty and lumpsum fee) a variety of supplementary management services training, technical advice etc. Hence it retains complete control over how the product is marketed but the franchisee carries the risks of failure and the franchisors capital commitment is typically low. Accordingly, international franchising allows companies to expand rapidly from a limited capital base. Franchising began when investors of new machines, processes or

business methods were forced by lack of finance or inadequate knowledge of the business world into allowing other parties the right to manufacture or otherwise adopt new inventions in exchange for a license fee. Initially business enterprise was provided by franchisees. As the system developed franchisors assumed responsibilities for business organization, trade markets, advertising and sales promotions. Today, franchisers impose levies on franchisees to cover national advertising and servicing cost. The cost of local advertising is borne by franchisees. Successful franchising requires that the product or service involved has a distinct and unique image which is conceptually dissimilar to competing lines. Example Some of the well-known brands in this sector that have received an

overwhelming response in India include Baskin Robbins, Subway, McDonald's, TGI Friday's, Taco Bell, Pizza Hut, Dominos Pizza, Ruby Tuesdays, Barista, Costa, Wetzel Pretzel, Papa John's and KFC. A study has revealed that more than one third of new food outlets are operated through the franchise system. The rapid development of mall culture has also encouraged the growth of food and beverage franchises. Fine dining restaurants, quick service restaurants, cafes and juice bars are among the leading franchised food segments in India. Advantages of Franchising 1. As franchises are self-employed they will be highly motivated to succeed in their own business. There are no strikes, go-slows, work-torules or other industrial problems. 2. While franchisors retain control of distribution systems, new and unfamiliar franchisees. 3. Since large distribution networks are tied to supplies form single companies there exists opportunities for bulk buying of raw materials at big discounts. 4. As a franchise operation grows, trademarks, brand names and products styles become more widely dispersed and familiar to the public. The franchisors name becomes internationally recognized. 5. The nucleus of the franchisors organization remains small and overheads are low. Large profits can result from a limited capital base, yet risks are shared with franchisees. Moreover, routine administration problems are dealt with by outlets not central office. market segments can be entered using the skills, experiences and local background knowledge of neighborhood based

Similar benefits accrue to the franchisees. A franchise can be purchased for less than usually had to be paid for an existing business. Outlets receive advice on book keeping tax liability, training on staff, stock control, layout of premises and related matters. Advertising is dealt with by franchisors leaving outlets free to concentrate on day to day operations technical advice and training will be also available. Another advantage is the product and marketing research activities undertaken by franchisors that small firms could not afford. Also the competition faced by an outlet within a specific locality is restricted by the fact that franchisors will not permit more than one franchisees to operate there. Disadvantages of Franchising 1. Franchisees working methods are controlled. 2. Product specification, quality layout of premises and so on are predetermined. Little discretion is allowed. 3. Royalty payment could be high making profitable an otherwise successful business. 4. High raw material prices might be charged by franchisors and interruptions in supplies can ruin an individual outlet. 5. Franchised outlets cannot be sold without the franchisors

permission. 6. The brand image of the franchised product may deteriorate for reasons beyond the franchisees control, including policy mistakes made by the parent organization. 7. Franchise contracts cover relatively short periods normally five years.

Franchisors may also face disadvantages. They control only the overall format of outlets not day to day operations. Badly managed outlets offering poor quality and inadequate presentation of product can ruin a carefully nurtured public image. Sometimes franchisors insist on inspecting franchisees premises but this can arouse resentment and cause disagreements over how that outlet should be run. Franchisees are not employees they cannot be dismissed and termination of a contract might be difficult. A common problem is that franchises can learn a business from top to bottom while contract expires. Franchisors must rely on outlets to declare honestly their monthly receipts to promote their product vigorously and to employ suitable staff. Aggregate returns to a franchisor are less than would be available were all outlets directly owned and controlled. Q2. Write a short note on transfer pricing and multinational corporations. Concept of Transfer Pricing Transfer pricing may be defined as the pricing of transactions both of commodities and intangibles such as technological services and brand names between different branches of a multinational corporation. It can therefore be termed as clearing price entered in the books for transactions within a firm. The firm in this means the entire business enterprise considered as a unit. The transfer pricing may be symbolically expressed as PC-PWX 100 where PC is price actually paid in a country under study where PW is comparable world market price. Thus transfer pricing refers not only to (a) Transfer of goods from one part of the firm to another but also to

(b) Transfer of patents or rights to use patent processes against payment of royalties (c) Supply of technical services by one part of the from to another part compensated by services fee or managerial fee. Determination of prices in intra-firm trade takes place according to considerations different from those in inter-firm trade. More so, the intra-firm trade is not an insignificant production of trade by the multinational corporation and it gives rise to so many serious issues relating to the effects on trade, welfare and national control. Certain policy implications also are not ruled out. The fact that a transaction involving a transfer or sale of goods takes place within a firm, regardless of whether or not the firms spans different countries and the firm is free within broad limits to assign whatever price it likes to those goods means that the traditional theory of pricing does not apply to the process of transfer pricing. The essential difference is simply that in transactions of the open market or unrelated parties, the buyers and sellers are trying to maximize their profits at each others expense while in an intra-firm transaction the price is merely an accounting devide and the two parties are trying to maximize joint profits. It is possible that the accounting price may approximate the arms length price of the goods but certainly there is no presumption that this should be so any other price is equally plausible. Any discussion of transfer pricing problem has to assume that there exists yardstick by which the effects of the price can be measured there must in other words be an arms length price and the goods may be overpriced is transfer price is higher and under priced if transfer pricing is lower than this price. It is not necessary for there to be an open market price form the firms point of view all that is required is that it should know at what price it would be prepared to

sell to unrelated concerns. When a good is overpriced the firm transfer funds via the pricing channel, form the buying to the selling firms declared profits are thus understated and overstated respectively in comparison with the situation where no intra-firm transactions take place. The reverse happens with under pricing. Underlying considerations of transfer Pricing Various considerations are made for opting the transfer pricing mechanism by the multinational corporations. These may bea) To save tax b) To get round any ceiling on profit remittances c) To reduce the corporations liability in the country where currency is weakening d) To beat down the union demand for higher wages and so on But the objectives of transfer pricing may be grouped under two broad headings those which maximize the present value of MNCs profits and those which minimize present and future risk about the value of profits a) Maximizing Present profits Bearing in mind that the MNCs are concerned to maximize the value of profits of all their operations taken together, a number of conditions can be postulated in which transfer pricing will be used Loss in one Centre of Operations Taxes, Tariffs and Subsidies Multiple Exchange Rates

Quantitative Restrictions Existence of Local Shareholders Exchange Rate Speculation

b) Minimizing Risk and Uncertainty The long term profitability of MNCs is subject to various pressures in the different areas it operates in and the judicious use of transfer pricing to show low levels of profits may well contribute to insure its future existence and stability. The important factors here are Balance of Payments and Exchange Rate Pressures Political and Social Pressures Direct Threats to profits

3. Explain the importance of Foreign Capital in India and list out the various government agencies which are entrusted with the responsibility of controlling the activities of MNCs in the country. Importance of Foreign Capital 1. Increase in resources The most important aspect of the availability of foreign capital is that it adds to the quantum of resources domestically available. This increase in resources helps the country in several ways. In the first place, it makes possible construction of many projects which otherwise would

never have seen the light of the day. Secondly, the availability of foreign capital increases the domestically available resources. The establishment of bigger projects and projects with a high importcontent often increase opportunities of profitable investments in so many other lines. In the absence of such investments, these possibilities would remain dormant. 2. Import of Development Goods Economic development at least in the initial stages, requires the use of certain capital goods and technical know-how which are available only in the developed countries and have therefore to be imported. Of course, the import of such capita goods and technical knowledge is not to be continued forever. 3. Overcoming limitations of exports An alternative to foreign capital is to increase our export earnings so as to make available a greater amount of foreign exchange. But our exports suffer from certain inherent defects which are the result of underdevelopment. For want of manufacturing industries. For a long time, we had to depend on primary products for exports. But the price elasticity and income elasticity of primary goods are very small. A fall in prices of these goods does not bring about a significant increase in the developed countries mean a proportionate rise in the demand for the primary commodities. Further, developed countries themselves have started producing these goods and their production has increased tremendously so that they are now exporting these goods. Besides in the developed countries synthetic substitutes of many commodities based on primary resources have been developed. As a result of all these factors the exports of our country are facing many hurdles. All

these hurdles could be overcome by seeking foreign capital and investment. 4. Meeting prices and payments difficulties The importance of foreign capital and multinational corporations lies in that they help to meet process and balance of payments problems. Development involves diversion of resources to the expansion of the capital goods sector must come from domestic sources. This means that less domestic resources are available for the production of consumer goods, they get incomes which they wish to spend the purchases of consumer goods which are in short supply. The development process thus gives rise to a situation characterized by a rising demand for consumer goods on the one hand and falling supplies of such goods on the other. This leads to a rise in process of these goods. Government Agencies a) The Reserve Bank of Company Affairs b) The Ministry of Company Affairs c) The Ministry of Industrial Development d) The Ministry of Finance But due to lack of coordination of these agencies, there is no systematic control over the operations of MNCs. Such cases are considered by these agencies on its own merit without having any coordinated approach. These agencies are not having any objective criteria for approving applications and the different ministries are adopting mostly lengthy and cumbersome procedure.

In India it was felt that the imports of foreign technology was inappropriate and overpriced and it would enhance the dependence on foreign countries. This belief was strengthen more particularly after of the publication of the study report of Michael Kidron entitled Foreign Investment in India (1965) and the report of the Industrial Licensing Policy Inquiry Committee (1968). As a result, the policy of the Government of MNCs and their operations was progressively tightened in the following ways(i) Restricting the import of foreign technology totally in respect of the production of inessential article and also in those areas where domestic technology is considered adequate enough. (ii) The maximum rate of royalty on permissible foreign technology was laid down. (iii) In respect of some designated industries, foreign investments were allowed in principle only after getting sanction from the administrative body on a case by case basis. (iv) The normal permissible period of agreement was reduced from ten to five years. (v) Restrictions on exports and other marketing matters were not allowed generally and it was insisted upon to have obligation to export a certain proportion of the output. (vi) Inserting a clause in the agreements for granting permission to the importer to sub-license the technology. (vii) In order to consider the applications for approval of technology imports, the CSIR was allowed to look into it and such technology import may be withheld or delayed it if so desires.

Q4. Write a brief note on MNC relations with trade unions. An MNCs ability to shift production between countries gives it an important advantage in negotiations with local trade unions in host nations. Further problems union that have to deal with MNCs include the difficulties of obtaining information of interpreting financial data and of identifying key decision makers within the parent firm. Now how transfer pricing can be used to make a subsidiarys profits appear very low for the purpose of collective bargaining with employee representatives. And there seems to be little enthusiasm on the part of workers in MNC subsidiaries in one country for taking strike action in support of workers in dispute with the same MNCs in other parts of the world. Nevertheless trade unions are themselves increasingly internationally-minded and willing to co-operate across national frontiers. Also unions in one country may look precedents relating to pay and working conditions set in other nations when formulating demands, forcing an MNC to co-ordinate its employee relations strategies centrally in order to present a consistent front. Little transactional employer/union collective bargaining has occurred. However mainly because trade unions are quintessentially national organizations with minimal experience of international affairs. In 1975 the Organization for Economic Co-operation and Development (OCED) issued a set of guidelines for the conduct of industrial relations with MNCs. This is a purely voluntary code which recommends- That the right of employees to join and be represented by trade unions be respected and that MNCs engage in collective bargaining with employees representatives.

- The provision of facilities to employees representatives to help them conduct collective negotiations. - The MNCs gives employees representatives meaningful information for the purpose of collective bargaining including relevant financial information. - Observe standards of employment not les favourable than local norms in the host country. -The training and wherever possible promotion of local workers. - That MNCs give adequate notice of intended closures and relocations of production and discuss with employee representatives measures for mitigating the adverse effects of closures. - Equality of treatment of all groups of employees in relation to recruitment, dismissal, pay, promotion and training. - That MNCs not use the threat of transfer of an operating unit to another country as a bargaining weapon when negotiating with unions.

Q5. Write a short note on designing a global remittance policy.

Q6. Give the structure of balance of payments and explain the causes and correction of balance of payments disequilibrium Structure of Balance of Payment Balance of payment is usually composed of two sections-

 This

The current account The capital account classification is based on the classification of economic

transactions into real transactions and financial transactions. Real transactions are those which are in the real sense of actual transfer of goods and services to foreigners, it creates income for them similarly when they purchase goods and services from foreigners. Thus real transactions are income creating transactions. On other hand financial transactions are those transactions which only involve transfer of money or foreign exchange or claims of money or titles to investment. Financial transactions are called capital transactions. These transactions do not directly influence the level of income of the countries concerned as they are effected only through transfer of claims between the countries. Real transactions are entered into current account while financial transactions are entered into current account. Current account Current account transaction consist of two sub groups1) Merchandize or the trade account 2) Invisible account In trade or merchandized account only the transactions relating to goods are entered, all goods exported and imported are recorded in the trade account, trade in goods is called visible trade because goods are visible items. The difference between the value of commodity exports and commodity imports is called the balance of Trade. If the

value of commodity exports is more than the value of commodity imports, balance of trade is said to be favourable. But if the value of commodity imports is more than the value of commodity exports, balance of trade is said to be adverse or unfavorable. The invisible account usually consists of services account and the gifts or charities account. The services account records all the services exported and imported by residents of the nation. Trade in services is called invisible trade. It consists of such items as banking and insurance charges, interest of loans, tourist expenditure, transport charges etc. Similarly, the gifts or charities account consists of all these received in given away free by residents of the nation. It may be in kind or cash. Capital account The capital account consists of short-term and long-term capital transactions. Capital outflow represents debit and capital inflow represents credit. Capital account consists of the following types of account1) Private capital account 2) International institutional capital account 3) Specie account 4) Government capital account Under private capital account, all the private balance held by corporate bodies or commercial banks are recorded. Private capital account usually consists or short and long term adjustments.

International institutional capital account consists of assistance from international monetary institutions like the IMF, World Bank, International Finance Corporation etc. Specie account records the movements of gold button. The balance on government capital account consists of all

governmental capital transactions in the form of grants or loans, short term as well long term. Causes for Balance of Payment Disequilibrium 1. Natural factors-natural calamities like floods, earthquakes, drought etc. which reduce supply and increase imports. 2. Economic factors like inflation, business cycles, changes in the growth of population, changes in consumer tastes and preferences, development of alternative sources of supply, development of better substitutes, large scale capital movements etc. 3. Political factors like political instability, war etc. Correction for Balance of Payment Disequilibrium There are a no. of measures available for a country to correct the balance of payments disequilibrium. These measures are classified into automatic measures and deliberate measures. The automatic correction worked well under the gold standard. But now there is no country on gold standard and hence it is irrelevant to discuss the mechanism here. The balance of payments disequilibrium may however be automatically corrected under the paper currency standard also. The theory of automatic correction here is that if the market forces of demand and

supply are allowed to have free play, in course of time, equilibrium will be automatically restored. For example, when there is a deficit, the demand for foreign exchange is more than its supply and this results in an increase in the exchange rate and a fall in the external value of the domestic currency. This makes the exports of the country cheaper and imports dearer than before consequently, the increase in exports and fall in imports restore the balance of payments equilibrium. Due to the various problem associated with the policy of automatic correction deliberate measures are widely made use of today. The various deliberate measures are classifies into three kindsa) Monetary measures b) Trade measures c) Miscellaneous measures Monetary measures consist mainly of monetary contraction,

devaluation and exchange control. Trade measures consist of Export Promotion and Import Control measures. Exports may be promoted by reducing or abolishing export duties, providing export subsidy, encouraging export production etc. imports may be controlled by imposing or increasing import tariff, restricting imports through import quotas, licensing etc. Miscellaneous measures include obtaining foreign loans, encouraging foreign investment in the home country, development of tourism etc.

BB0025 E Commerce Assignment Set 1 Q.1 (a) What are procedural overheads you come across in

the traditional commerce?

Q.1 (b) Describe how ecommerce results in reduced cost and time. E-Commerce or Electronic Commerce (EC) is the practice of buying and selling varied good and services on the World Wide Web (Internet). eCommerce in its basic sense means the same as traditional commerce where buyers and sellers come together for doing business by buying and selling goods and services. The difference is that e-Commerce happens over wired communication lines connected throughout the globe where the World Wide Web serves as the central medium for all trading transactions. e-Commerce also happens through the use of more limited forms of communication such as email, facsimile or fax. Advantages of e-Commerce Starting with Electronic Commerce? These are some of the advantages that will help you understand the power of e-commerce applications.

100% Business Uptime

E-Commerce systems are available for people for 24 hours a day, 7 days a week and 365 days a year. They never take a break or close down for the day or take public holidays.

Global Access

e-Commerce systems can be accessible by any one across the World Wide Web. Any person or business having just an Internet Connection can access e-Commerce systems.

Quick Response Time

Transactions can be handled over the Internet instantaneously without high response times, most of the time much faster than offline systems. Messages are delivered to the end of the globe at the snap of finger, enabling quick commerce.

Cost-efficiency

E-Commerce is very cost-efficient and economical. General costs of running a business otherwise are far higher than that operated with the help of technology and e-Commerce. Staffing, middlemen, overhead costs, etc can be reduced drastically making business handling and administration much easier. Most of the transaction procedures can be automated without any human intervention. Q.2 (a) What are the different elements of E-C application? Here are four key elements of e-commerce drawn from the needs of brick-and-mortar businesses and enhanced by technology. Online Storefront - The Product Manager The online storefront is your digital place of business. As with any business you want to customize it to fit your customers buying habits, your chosen branding, and the logistical needs of your business. A product manager lets you enter, store, and share information on products, pick what data is visible to customers, and generally manage the informational aspects of the shopping experience.

To design this well you need to think like a customer. How can they see what theyre getting? Pictures, certainly help, but theyre not the only way to learn about a product. What do other people think of it, has it won any awards, how does it stack up against other products and services? Customers are going to want to make these sorts of comparisons. If you want them to stay on your site, you need to find a way that makes it easy for them to do so. Building an Order - The Shopping Cart There are a number of ways for customers to build their orders, but the most common is the shopping cart. A shopping cart integrates with a storefront so that shoppers can add items to their purchase list without ever leaving the product pages. It also gives shoppers a way to see what theyre planning to order and make changes before completing the sale. The shopping cart software handles everything from when you first indicate you want an item through submitting your delivery address with one exception - the exchange of funds. However, in settings where you do not need to build an order, like for charitable giving, or single product stores, it is possible to remove the traditional shopping card screens from the users experience while retaining all its functionality. Payment - The Merchant Gateway The merchant gateway serves the same function as the electronic card reader in the checkout line at your favorite brick and mortar store. It creates a secure online connection to confirm the availability of funds, initiates an electronic transfer, and creates a record of the transaction. The more reliable merchant gateways also build in safety precautions like address confirmation to cut down on fraudulent purchases. Because much of the information required for the merchant gateway is also used for the shopping cart (amount, address, and so forth) it is

important that your shopping cart software is compatible with your merchant gateway. Fulfillment - Return of the Product Manager and Shopping Cart Just as the Product Manager lets you store and display information for the shopper, it also lets you enter and retrieve information necessary for filling an order (such as product numbers, vendors, and handling instructions). This information is handed off to the Shopping Cart software, which can then generate an order form or report that includes all necessary information from every product in the order. More sophisticated and integrated systems can take this process a step further and automatically generate purchase orders for any additional stock you need. Q.2 (b) Explain the different layers of OSI reference model. The OSI, or Open System Interconnection, model defines a networking framework to implement protocols in seven layers. Control is passed from one layer to the next, starting at the application layer in one station, and proceeding to the bottom layer, over the channel to the next station and back up the hierarchy. Application (Layer 7) This layer supports application and end-user processes.

Communication partners are identified, quality of service is identified, user authentication and privacy are considered, and any constraints on data syntax are identified. Everything at this layer is applicationspecific. This layer provides application services for file transfers, email, and other network software services. Telnet and FTP are applications that exist entirely in the application level. Tiered application architectures are part of this layer. Presentation (Layer 6)

Provide your business with the IT resources it needs: The IBM SmartCloud Simulator is an interactive tour that will show you several ways that you can use and manage this exciting product. This layer provides independence from differences in data

representation (e.g., encryption) by translating from application to network format, and vice versa. The presentation layer works to transform data into the form that the application layer can accept. This layer formats and encrypts data to be sent across a network, providing freedom from compatibility problems. It is sometimes called the syntax layer. Session (Layer 5) This layer establishes, manages and terminates connections

between applications. The session layer sets up, coordinates, and terminates conversations, exchanges, and dialogues between the applications at each end. It deals with session and connection coordination. Transport (Layer 4) This layer provides transparent transfer of data between end systems, or hosts, and is responsible for end-to-end error recovery and flow control. It ensures complete data transfer. Network (Layer 3) This layer provides switching and routing technologies, creating logical paths, known as virtual circuits, for transmitting data from node to node. Routing and forwarding are functions of this layer, as well as addressing, internetworking, error handling, congestion control and packet sequencing. Data Link (Layer 2) At this layer, data packets are encoded and decoded into bits. It furnishes transmission protocol knowledge and management and

handles

errors

in

the

physical

layer,

flow

control

and

frame

synchronization. The data link layer is divided into two sub layers: The Media Access Control (MAC) layer and the Logical Link Control (LLC) layer. The MAC sub layer controls how a computer on the network gains access to the data and permission to transmit it. The LLC layer controls framesynchronization, flow control and error checking. Physical (Layer 1) This layer conveys the bit stream - electrical impulse, light or radio signal -- through the network at the electrical and mechanical level. It provides the hardware means of sending and receiving data on a carrier, including defining cables, cards and physical aspects. Fast Ethernet, RS232, components. Q.3 Summarize the future directions of E-commerce. and ATM are protocols with physical layer

Experts predict a promising and glorious future of ecommerce in the 21st century. In the foreseeable future ecommerce will further confirm itself a major tool of sale. Successful ecommerce will become a notion absolutely inseparable from the web, because e-shopping is becoming more and more popular and natural. At the same time severe rivalry in the sphere of ecommerce services will intensify their development. Thus prevailing future trends of ecommerce will be the growth of Internet sales and evolution. Each year number of ecommerce deals grows enormously. Sales volumes of on-line stores are more than comparable with those of brick-and-mortar ones. And the tendency will continue, because a lot of people are imprisoned by work and household duties, while Internet saves a lot of time and gives opportunity to choose goods at the best prices. Present-day Internet sales boom is the foundation for magnificent ecommerce future.

The quantity to quality tendency of ecommerce is also becoming more and more obvious, as the Internet has excluded geographical factor from the sale. So it doesnt matter any more whether your store is situated in New York or London or in a small town. To survive, merchants will have to adapt rapidly to the new conditions. To attract more customers e-store-owners will have not only to increase the number of available services, but to pay more attention to such elements like attractive design, user-friendliness, appealing goods presentation, future. Of course, those, who acquire e-stores earlier, get better chance for future success and prosperity, though an ecommerce site itself doesnt guarantee you anything. Only an appropriate ecommerce solution in combination with thorough emarketing and advertising can buy you business insurance. they will have to opportunely employ modern technologies for their businesses to become parts of ecommerce

BB0025 E Commerce Assignment Set 2 Q.1 Explain Stretch principle

Q.3 Explain the steps to set up a website The Essential Step-by-Step Guide to Making Your Own Website 1. Get Your Domain Name The first thing you need to do before anything else is to get yourself a domain name. A domain name is the name you want to give to your website. For example, the domain name of the website you're reading is "thesitewizard.com". To get a domain name, you have to pay an annual fee to a registrar for the right to use that name. Getting a name does not get you a website or anything like that. It's just a name. It's sort of like registering a business name in the brick-and-mortar world; having that business name does not mean that you also have the shop premises to go with the name. 2. Choose a Web Host and Sign Up for an Account A web host is basically a company that has many computers connected to the Internet. When you place your web pages on their computers, everyone in the world will be able to connect to it and view them. You will need to sign up for an account with a web host so that your website has a home. If getting a domain name is analogous to getting a business name in the brick-andmortar world, getting a web hosting account is analogous to renting office or shop premises for your business. 3. Designing your Web Pages

Once you have settled your domain name and web host, the next step is to design the web site itself. In this article, I will assume that you will be doing this yourself. If you are hiring a web designer to do it for you, you can probably skip this step, since that person will handle it on your behalf. 4. Testing Your Website Although I list this step separately, this should be done throughout your web design cycle. I list it separately to give it a little more prominence, since too few new webmasters actually perform this step adequately. You will need to test your web pages as you design them in the major browsers: the latest versions of Internet Explorer (version 9 at the time of this writing), Firefox, Opera, Safari and Chrome. All these browsers can be obtained free of charge, so it should be no hardship to get them. Unfortunately, directly testing your site in all these browsers is the only way you can really be sure that it works the way you want it to on your visitors' machines. 5. Collecting Credit Card Information, Making Money If you are selling products or services, you will need some way to collect credit card information. You should read up on How to Accept Credit Cards on Your Website. 6. Getting Your Site Noticed When your site is ready, you will need to submit it to search engines like Google and Bing. In general, if your site is already linked to by other websites, you may not even need to submit it to these search engines. They will probably find it themselves.

Apart from submitting your site to the search engine, you may also want to consider promoting it in other ways, such as the usual way people did things before the creation of the Internet: advertisements in the newspapers, word-of-mouth, etc. There are even companies on the Internet, that can help you create press releases, which may get your site noticed by news sites and blogs.