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Q.No 1 The External Analysis examines opportunities and threats that exist in the environment. How is it
done? What should business managers do to access the business environment?
External analysis
Steps for business managers 5 +5 =10
The External Analysis examines opportunities and threats that exist in the environment. Both opportunities and
threats exist independently of the firm. The way to differentiate between a strength or weakness from an
opportunity or threat is to ask: Would this issue exist if the company did not exist? If the answer is yes, it should
be considered external to the firm. Opportunities refer to favorable conditions in the environment that could
produce rewards for the organization if acted upon properly. That is, opportunities are situations that exist but
must be acted on if the firm is to benefit from them. Threats refer to conditions or barriers that may prevent the
firms from reaching its objectives.
The following area analyses are used to look at all external factors affecting a company:
Customer analysis: Segments, motivations, unmet needs
Competitive analysis: Identify completely, put in strategic groups, evaluate performance, image, their
objectives, strategies, culture, cost structure, strengths, and weakness
Market analysis: Overall size, projected growth, profitability, entry barriers, cost structure, distribution
system, trends, key success factors
Environmental analysis: Technological, governmental, economic, cultural, demographic, scenarios,
information-need areas
Goal: To identify external opportunities, threats, trends, and strategic uncertainties

The SWOT Matrix helps visualize the analysis. Also, when executing this analysis it is important to understand
how these elements work together. When an organization matched internal strengths to external opportunities, it
creates core competencies in meeting the needs of its customers. In addition, an organization should act to
convert internal weaknesses into strengths and external threats into opportunities.
What business managers should do?
Here you will get to understand the kind of issues that need to be dealt with in order to understand the business
environment. Firstly
Focus on your strengths.
Shore up your weaknesses.
Capitalize on your opportunities.
Recognize your threats.
Now identify
Against whom do we compete?
Who are our most/less intense competitors?
Makers of substitute products?
Can these competitors be grouped into strategic groups on the basis of assets, competencies, or strategies?
Who are the potential competitive entrants? What are their barriers to entry?
Next evaluate
What are their objectives and strategies?
What is their cost structure? Do they have a cost advantage or disadvantage?
What is their image and positioning strategy?
Who are the most successful/unsuccessful competitors over time? Why?
What are the strengths and weaknesses of each competitor?
Evaluate competitors with respect to their assets and competencies.

2 Differentiate between capitalist and socialist economies.

Differences between capitalist and socialist economies 10
Answer: Socialism vs Capitalism
Socialism is a form of economy that works for equality among the members of society by pooling the resources
of the people to be collectively controlled by the state or the public through communes or councils. There is no
market in a socialist economy and therefore, there is no competition. The quantity of products produced and
distributed is regulated, including the price that the consumer will pay for the products.
Capitalism, on the other hand, is an economic and political system that is based on the principle of individual
rights. It believes that it is inequality that will drive the people to be more innovative and productive. Resources
in a capitalistic society are privately owned by individuals or groups of individuals. These individuals or groups
of individuals freely trade in a market that has a level playing field. The government stays in the background
and allows the forces of supply and demand to freely operate with the guidance of laws and regulations. The
law of supply and demand provides that if the supply is greater than the demand for a particular commodity, the
price of that particular commodity will go down. Conversely the price of a commodity goes up if there is less
supply than the demand.
In socialism, the wealth or the goods and services are distributed to the people based on the work contribution
of an individual to produce such wealth. Socialists believe that if individuals work for the sake of everyone in
society and receive all the goods and services, work ethics will be heightened.

People, on the other hand, are given equal opportunity to work for their own individual wealth in a capitalist
society. Individuals are presumed to be naturally competitive. It is their competitiveness that will drive them to
improve. Individuals or groups of individuals in a capitalist society decide on the quantity, quality and price of
goods they will produce and sell in a competitive market in order to get the amount of wealth they want. No
limits are set to what an individual can earn. This resuls in people having different social status based on the
wealth they have accumulated. Thus, there are rich and poor people in one society. Advocates of socialism
believe that this is dangerous because the accumulation of wealth by a certain few gives rise to dominance that
could lead to the exploitation of people with lesser wealth.

1. Socialism is an economic system based on the principle of equality while capitalism is an economic and
political system based on the principle of individual rights.
2. In socialism, wealth or the goods and services are equitably shared by all members of society based on the
individuals productive efforts while in capitalism, each individual works for his own wealth.
3. Socialists believe that the work ethics of an individual will increase if he receives the goods and services he
needs when he works for everyone else while capitalists believe that it is mans nature of being competitive that
will drive him to work more for more wealth.

3 Discuss the Industrial laws applicable in India.

Explanation of Industrial laws applicable to business in India 10
Following are some of the major laws and key regulations that impact business in India:
The Companies Act, 1956: It is the most important law which regulates all aspects relating to a company as it
lays down the provisions relating to the formation of a company, powers and responsibilities of the directors and
managers, raising of capital, holding company meetings, maintenance and audit of company accounts, powers
of inspection and investigation of company affairs, reconstruction and amalgamation of a company and, if
necessary, its winding up also. The Act applies to the whole of India and to all types of companies, whether
registered under this Act or an earlier Act. But it does not apply to universities, co-operative societies,
unincorporated trading, scientific and other societies.
The Act empowers the Central Government to inspect the books of accounts of a company, to direct special
audit, to order investigation into the affairs of a company and to launch prosecution for violation of the Act. The
Companies Act is administered by the Central Government through the Ministry of Corporate Affairs and the
Offices of Registrar of Companies, Official Liquidators, Public Trustee, Company Law Board and Director of
Inspection, etc.
In response to the changing business environment, the Companies Act, 1956 has been amended from time to
time so as make it commensurate with changing business requirements and to provide more transparency in
corporate governance. It also aims to protect the interests of small investors, depositors and debenture holders,

Industries (Development and Regulation) Act, 1951 (IDRA): This Act provides the Central Government with
the means to implement its industrial policies. The main objective of the Act is to empower the Government to
take necessary steps for the development of industries; to regulate the pattern and direction of industrial
development; and to control the activities, performance and results of industrial undertakings, in the public
interest. The Act empowers the Government in the following ways:
i) To take necessary steps for the development of industries
ii) To regulate the pattern and direction of industrial development
iii) To control the activities, performance and results of industrial undertakings, in the public interest. The Act
applies to the 'Scheduled Industries' listed in the First Schedule of the Act. Small scale industries and ancillary
units are exempted from the provisions of this Act
The Act is administered by the Ministry of Industries & Commerce through its Department of Industrial Policy
& Promotion (DIPP). The DIPP is responsible for formulation and implementation of promotional and
developmental measures for the growth of the industrial sector.
The Indian Contract Act, 1872: Most of the transactions in trade, commerce and industry in India are based on
contracts. The Indian Contract Act, 1872 lays down the general principles relating to formation, performance
and enforceability of contracts and the rules relating to certain special types of contracts like Indemnity and
Guarantee; Bailment and Pledge as well as Agency. It also contains provisions pertaining to breach of a
The Industrial Disputes Act, 1947: This legislation governs industrial relations which involve various aspects
of interactions between the employer and the employees; among the employees as well as between the
employers. The Industrial Disputes Act is invoked for the investigation and settlement of all industrial disputes.
It also addresses the issue of conflict of interests in the industry. The Act also enumerates the contingencies
when a strike or lock-out can be lawfully resorted to and when they can be declared illegal or unlawful. It also
lays down conditions for layoffs, retrenchment, discharge or dismissal of a workman. The circumstances under
which an industrial unit can be closed down are also contained in the Act.
The Act is administered by the Ministry of Labour through its Industrial Relations Division which works in
close co-ordination with the Central Industrial Relations Machinery (CIRM), also known as the Chief Labour
Commissioner (Central) [CLC(C)] to ensure that the country gets a stable, dignified and efficient workforce,
free from exploitation and capable of generating higher levels of output.
The Indian Trade Unions Act, 1926: A Trade union is a voluntary organization of workers pertaining to a
particular trade, industry or a company and formed to promote and protect their interests and welfare by
collective action. Trade unions are an important part of an industrial set up. The Trade Unions Act, 1926 deals
with the registration of trade unions and their rights, liabilities and responsibilities. It also lays down stipulations

to ensure that their funds are utilized properly. It gives legal and corporate status to the registered trade unions.
It also seeks to protect them from civil or criminal prosecution so that they may carry on their legitimate
activities for the benefit of the working class.

4 Write a note on the three pillars of free economy namely liberalization, privatization and globalization.
Effect on Indian economy 5+5= 10

Liberalization, privatization and globalization are the three pillars of economic reforms. Liberalization is the
process of liberating the economy from governmental regulations and control. Privatization primarily means the
transfer of government or publically owned ventures or assets into private hands. And globalization refers to
opening up of the economy to the global economic forces and markets.

Liberalization: The process of liberating the economy from governmental regulations and control is known as
Liberalization. This results in greater freedom for private enterprise that leads to faster economic growth. Over
the last two decades, India has witnessed a gradual liberalization in many major sectors such as industry,
infrastructure, banking, capital market, services and foreign trade. Liberalization allows flexibility and reduces
Privatization: Privatization primarily means the transfer of government or publically owned ventures or assets
into private hands. It also entails entrusting individuals and private economic units to take decisions regarding
business, based on the trends in the market forces without governmental interference. Thus, Privatization means
freedom to own and operate business ventures independently and to take independent business decisions. The
process is known as marketization which is an integral part of privatization. In recent years many developing
nations have gone in for privatization of public sector units.
Globalization: The term open primarily refers to opening up of the economy to the global economic forces
and markets. The world today is moving towards a global economy. Thus globalization of a nations economy
has become necessary in todays economic scenario.

Globalization is the process by which diverse economies of the world become integrated through a global
network of sharing and exchanging products, technology, international trade, investment, labor, information and
economic culture. The integration of national economies into the international or global economy through trade,
foreign direct investment, capital flow, spread of technology etc., helps all economies to benefit from the
process. International banking and the remarkable progress in the field of information technology has helped the
process of economic globalization.
However, it must be borne in mind that though the terms liberalization, privatization and globalization broadly
refer to freedom of operating in a business environment that does not mean that the government has no role to
play. Business organizations must operate within a framework laid down by the government in power. Even the
most open and capitalist economies are governed by the laws and regulations laid down by the Government in
power. The major purpose of business legislation includes protection of companies from unfair competition,
protection of consumers from unfair business practices and protection of the interests of society from unbridled
business behavior. The legal environment becomes more complicated as organizations expand globally and face
governmental structures quite different from those within their own country.

5 Describe the corporate social responsibility of business houses towards human resources with an
example of an Indian Company.
Explain Corporate Social Responsibility 5
Explain CSR with an example of an Indian Company 5
Answer: Responsibility towards human resources
The social responsibility of an organization can be first known from its approach to the internal environment.
An organizations internal environment mainly consists of its human resources. A company which cares forits
internal environment may be able to care for its external environment- society also. A business organization
must be willing to maintain the dignity of every employee as a human being, provide enough opportunities
toeach individual to develop to its maximum potential, satisfy his needs and aspirations. A proper organizational
philosophy and human resource policy is needed to fulfill the responsibilities towards the employees. Fair
wages, proper organizational climate, good working conditions, career prospects, proper facilities for
development and the likes are essential for the growth of the company. All these aspects enhance the sense of
belonging and confidence of the workers in the organization. The vision of Mr. Jamshedji Tata was the same in
1907. Some welfare schemes followed by TISCO since its operation in 1911 are as enumerated below:
a) In India an eight hour shift was first introduced by TISCO in 1912.

b) In 1915, free medical aid to employees and their families was started, while the ESI act came into force only
in 1948.
c) A welfare department was introduced and welfare activities started in 1917.
d) School for the children of employees was started in 1917, although such a provision is not enforced
statutorily even now.
e) For training of employees, a technical training institute was started in 1921.
f) Leave with pay, provident fund and accident compensation was introduced in 1912 much before the Act was
passed in 1952.
g) TISCO started the maternity benefit scheme in 1928.
h) Bonus was introduced in 1934, whereas the payment of bonus act was passed in 1965.
i) Retirement gratuity was introduced in 1937, while the payment of gratuity Act was passed in 1972.
j) Ex-gratia payment for road accidents was introduced by the company in 1979.
Housing schemes, transport facility, games and sports facility, workers education, counseling, career guidance
and the likes are the list of items which an organization can include in its employee welfare programmes in
addition to the statutory welfare programmes. The most important task of an organization is to recognize the
worth and contribution of its employees. Social responsibility of a business organization begins with its own
people on the one hand and its customers on the other.

6 Explain the Indian economy with reference to the service sectors like Education and Health care.
Explain Services sector
Explain the progress made by services sectors like Education and Health care in India 2 +4*2=8 =10
Answer: Service Sector
The Services sector is the largest contributor to the country's GDP (more than half of Indias GDP). It has
maintained a steady growth since 96-97, except for a fall in 2000-2001 which was because of the global dot
com bubble bursting. India has the title of being the worlds second largest fastest growing economy, in the
services sector in particular. This growth has been fuelled by a growing urban middle class, largely English
speaking, which in turn has given rise to the growth in back-office operations such as call centers. The outcome
of economic liberalization that began in 1991 is most significant in the services sector. Due to the services

sector, the tax revenue has seen an increase of more than 40%. The growth in the three segments in the service
sectors trade, hotels, transport and communication; financing, insurance, real estate and business services; and
community, social and personal services are on the rise. The growth in this sector explains the high rate of
growth of the stock market which in turn has resulted in a huge growth in the financial services sector.
The rise in the service sectors share in the GDP marks a structural shift in the Indian economy and takes it
closer to the fundamentals of a developed economy (the industrial and the service sectors in a developed
economy contribute a major share to the GDP while agriculture accounts for a relatively lower share).
Some economists caution that if the service sector bypasses the industrial sector, economic growth can be
distorted. Service sector growth must be supported by proportionate growth in the industrial sector. Otherwise
the service sector growth will not be sustainable. In India we find that the service sectors contribution in the
GDP has sharply risen and that of the industry sector has fallen.
Elementary Education: Expanding the provision of primary, formal and non-formal education to realize the
goal of Universalization of Elementary Education (UEE) for sustaining reforms in education has been done. The
National Programme of Nutritional Support to Primary Education (School Meal Programme) has boosted UEE
in terms of increased enrolment, retention and attendance in primary classes by supplementing nutritional
requirements of children attending primary schools. Nutritious and wholesome cooked meals of 100 gm of
foodgrains are provided free of cost to all children in classes I-V per school day.
Secondary Education: India has at present more than 1.2 lakh institutions catering to secondary education
which serves as a bridge between primary and higher education. With more emphasis on primary education,
enrolment in secondary education is bound to increase.
Higher Education: India has one of the largest higher educational systems in the world. About 71 lakh
students are taught by 3.31 lakh teachers in 15,000 colleges. Central Government provides grants to the UGC
and establishes Central Universities in the country. State government establishes state universities and colleges
and provides plan grants for their development and maintenance.

Health Care: There has been a definite growth in the overall healthcare resources and health related man power
in the last decade. The number of hospitals have grown from 11,174 in 1991 to more than 19,000 now. The
country has one doctor for every 1,800 people approximately. There is an annual pharmaceutical production of
about 260 billion (INR) and a large proportion of these medicines are exported. There is unequal distribution of
resources which apparently creates problems. The ratio of hospital beds to population in rural areas is fifteen
times lower than that of urban areas. The ratio of doctors to population in rural areas is almost 6 times lower
than that to the urban population. Per capita expenditure on public health is seven times lower for rural are as

compared to government health spending for urban areas. Indian public health system is grossly inadequate and
underfunded. As a result of this dismal and unequal spending on public health, the infrastructure of health
system itself is many times ineffective. Initiatives such as AamAdmiBima Yojana and Rastriya Swasthya
Bima Yojana have been made for social sector development.