AboutLeo Lingham Expertise human resource management, human resource planning, strategic planning in resource, management development, training, business coaching, management training, coaching, counseling, recruitment,
selection, performance management.
Experience 18 years of managerial working exercise which covers business planning , strategic planning, marketing, sales management,
management service, organization development
PLUS
24 years of management consulting which includes business planning, corporate planning, strategic planning, business development, product management, human resource management/ development,training,
business coaching, etc
Question 1. “Business decision-making is an economic process.” Analyze this statement with the help of examples.
2. Does the structure and growth of public sector matches with its objectives? Explain with the help of an example.
.
3. ‘A long term strategy is imperative to achieve a consistent high export growth, control POL imports and achieve a sound BOP position.’ Critically evaluate this statement in the light of BOP crisis faced by India.
4. ‘Economic reforms have taken into account growth but ignored equity.’ Briefly explain this statement.
5. What are the basic functions of money? Explain in detail the derivative functions of money.
6. Write short notes on
a) Economic Environment
b) Public Accountability
c) Industrial Policy of 1956
Answer MANOJ,
HERE IS SOME USEFUL MATERIAL.
ANSWERS FOR Q1-Q5,Q6.
REST 3 Qs ARE CLOSE TO THE INDIAN SCENE,
AND I AM NOT TOO FAMILIAR.
REGARDS
LEO LINGHAM
======================================
1..“Business decision-making is an economic process.” Analyze this statement with the help of examples.
BUSINESS DECISIONS ARE MADE ON THE BASIS
OF THE STRATEGIC PLANNING.
The STRATEGIC PLANNING is THE SEED that
FUNCTIONALLY, provides
-opportunity to determine the environmental impact on the
organization / business.
-opportunity to assess the organization's strengths/ weaknesses.
-opportunity to determine the business opportunities/ threats
to business.
-opportunity to develop strategic plans for the company.
-opportunity to develop long term/short term plans.
-opportunity to develop a vision for the organization.
-opportunity to develop a mission statement for the organization.
-opportunity to develop business objectives for the organization.
-opportunity to develop business strategies for the organization.
-opportunity to develop the action/ implementation planning
guidelines, which provides the platform for
*helps to set up and develop organization and staffing.
*helps to set direction for the organization approach.
*helps to select the right leadership
*helps to select / set the most appropriate control.
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STRATEGIC PLANNING IN BUSINESS IS THE PREMIER FUNCTION,
without this seed,
-you cannot organize your business
-without business organization , you cannot direct
-without direction, you cannot control.
-without control , you cannot get results.
For success/ results in business, you need STRATEGIC PLANNING.
HENCE STRATEGIC PLANNING IS THE PRIMARY seed
OF ANY BUSINESS ORGANIZATION [ SMALL OR LARGE ]
===================================================
The process of strategic planning has become essential for the BUSINESS organization interested in obtaining significant results. It matters little whether the organization is large or small or whether it is in the private sector or government service. When an organization has the need to move into the future with a high degree of confidence in what that future holds, it needs strategic planning. The integrated approach of deciding on a set of long-range goals and then developing the objectives and plans to reach them is the most reliable tool that the organization can use to define its own future and ensure success. In other words, it is the surest way that the management team can become "system makers"––people who are willing to take the time to make things happen instead of responding only when their buttons are pushed.6
THE STRATEGIC PLANNING --the seed -- helps you tie those opportunities to plan and optimize at a high level
over the long term. You can set overall objectives for capital utilization for capital intensive
equipment, inventory and materials (direct and indirect), and labor.
With STRATEGIC PLANNING SYSTEM , you can:
• Drive tactical and operational plans based on STRATEGIC vision and direction
• Optimize asset utilization including capacity and materials
• Support growth by identifying and proactively removing constraints
• Reduce risk by evaluating alternatives and outcomes before deciding
• Simplify make/buy decisions.
THE STRATEGIC PLANNING SYSTEM
integrates the necessary competitive analyses, peer comparisons, and industry averages
that give STRATEGIC Planning the proper context. You see the entire set of
business opportunities and tie the financial analytics to the business issues, activities,
and processes that drive them. The result: a well aligned organization thats positioned
for long-term success.
¥ React faster to market changes
¥ Measure and compare your supply chain performance against competition
¥ Adjust your strategic plan frequently
¥ Analyze the ramifications of M&A opportunities
¥ Avoid excess warehouse capacity and unused equipment
¥ Perform long-range planning and analysis to determine the impact of simultaneous
business decision combinations
¥ Confidently optimize your supply chain network
THE STRATEGIC PLANNING SYSTEM delivers solutions that synchronize corporate planning with operations planning and
execution on a local and enterprise level, to ensure all assets are utilized to achieve strategic
objectives. This enables manufacturers to reduce the cost of goods sold, shorten lead-times for
orders and reduce inventory costs with improved supply chain collaboration and management.
Real Solutions...Measurable Results
=====================================================
. Key elements of the strategic planning process.
1. External Assessment OF THE ECONOMY
Areas for opportunities and threats IN THE ECONOMY
* Markets [ what is the market situation, which is forcing the change requirements
*Customers [ how can service the customer -internal / external -better .
* Industry [ is the industry trend ]
* Competition [ is it the competitive situation
*Factors of business [ causing the change]
* Technology [ is it technology change ]
PLANNING --ENVIRONMENTAL STRATEGY INTERFACE
AS THE BUSINESS EXPANDED, THE OPERATION WAS
AFFECTED BY VARIOUS ENVIRONMENTAL FACTORS
AND HENCE WERE INCORPORATED INTO THE PLANNING.
Political (incl. Legal) [ [Poltical] EST[Environment][Legal] ]
-Environmental regulations and protection
[what are the government regualtions/ protection laws that must be observed ]
-Tax policies
what tax hinder the business and what taxes incentives are available]
-International trade regulations and restrictions
[ does the government encourage exports / with high tariffs on imports]
-Contract enforcement law/Consumer protection
[does the government enforce on consumer protection ]
-Employment laws]
[ is the government encouraging skilled immigrants with temp. permits]
-Government organization / attitude
[ does the government have a very positive attitude towards this industry]
-Competition regulation
[ are there regulation for limiting competition]
-Political Stability
[ politically , does the government have a very stable government ]
-Safety regulations
[ has the government adopted some of the modern safety regulations]
=================================================================
Economic [P[Economics][Social]TEL ]
-Economic growth
[ what is the economic growth rate / what are the reasons ]
-Interest rates & monetary policies
[ are the interest rates under control / is there a sound monetary policies]
-Government spending
[is government spending is significant and is it under control ]
-Unemployment policy
[what is the employment / unemployment policies of the government ]
-Taxation
[ has the taxation encouraged the industry ]
-Exchange rates
[ is there well managed exchange controls and is it helping the industry]
-Inflation rates
[ is the inflation well under control ]
-Stage of the business cycle
[ is your industry is on the growth pattern]
-Consumer confidence
[ is the consumer confidence is high/ strong and if not, why ]
==================================================
Social [ PE[Social]TEL ]
-Income distribution
[is there balanced income distribution policy ]
-Demographics, Population growth rates, Age distribution
[ what is population growth and why ]
-Labor / social mobility
[ what are the labor policies and is there labor mobility]
-Lifestyle changes
[ are there significant lifestyle changes taking place--more modernization/ why ]
-Work/career and leisure attitudes
[ are the population career minded and are seeking better lifestyle]
-Education
[ what are the education policies / is it successful ]
-Fashion, hypes
[are the people becoming fashion conscious ]
-Health consciousness & welfare, feelings on safety
[ are the people becoming health consciousness]
-Living conditions
[ is the living conditions improving fast and spreading rapidly]
=========================================================
Technological [ PES [Technology] EL]
Government research spending
[is the government spending on research and development]
Industry focus on technological effort
[are the industries focused on using improved technology]
New inventions and development
[ are new inventions being encouraged for developments]
Rate of technology transfer
[ is the rate of technology transfer is speeding up ]
(Changes in) Information Technology
[ is the information technology rapidly moving and is there government support]
(Changes in) Internet
[ is the internet usage rapidly increasing and why]
(Changes in) Mobile Technology
[is the Mobile technology rapidly developing and is there government support]
=======================================
BASED ON THE EXTERNAL ECONOMIC ANALYSIS
AND JUDGEMENT.
WE CONDUCT THE FOLLOWING
2. Internal Assessment
Areas for strengths, weaknesses, and barriers to success
ORGANIZATION DIMENSIONS
*Culture [ is the working culture change ]
* Organization [ is the organization demanding change ]
* Systems [ is it the systems change ]
* Management practices [ change in managemement process]
OTHER KEY DIMENSIONS
*Cost‑efficiency[ is it for cost efficiency ]
* Financial performance [ is it for financial performance improvement ]
* Quality [ is it for quality performance improvement
*Service [ is it for service performance improvement
*Technology[ is it for technology performance improvement
* Market segments [ is it for sales performance improvement
* Innovation[ is it for performance improvement
*new products[ is it for new product performance improvement
*Asset condition[ is it for financial performance improvement
*productivity[ is it for financial performance improvement
3. Source Strategic objectives and programs
The critical issues that must be addressed if the organization
Is to succeed
Strengths
Weaknesses
Opportunities
Threat
PRIORITY ISSUES
FROM THE ABOVE , DETERMINE THE CORE ISSUES
WHICH NEEDS TO SOLVED WITH YOUR INVESTMENT.
STRATEGIC PROGRAMS
FROM THE ABOVE CORE ISSUES , DETERMINE YOUR
STRATEGIC PROGRAMS.
Mission STATEMENT
VISION STATEMENT
Your CORE PURPOSE
Your CORE OBJECTIVES
Your Core markets;
Your CORE strategic thrusts.
BUSINESS DEFINITION:
The arena of products, services, customers, technologies, distribution methods, and geography in which you'll compete to get results.
VALUES:
Desired attitudes and behavior toward internal and external stakeholders that
will yield the culture and business results you want and that you will execute and turn into
action through
Product Convenience
Service Image
Target customer Geography
Distribution Product design
Delivery Quality
Value Reliability
Pricing Advertising/promotion
INTERNAL STRATEGIES
People/skills / Facilities
Organizational / Product
structure / development
Management style /Incentives/rewards
Training Spending
Equipment Sourcing/
manufacturing
technology / Systems
R&D / Service
FINANCING / Quality
Strategy Statement Content
v Priorities and Posture
Business unit
Market
Product
Strategic thrust/competitive advantage
External strategies
Internal strategic thrust
Internal strategies
Strategic fixes
--------------------------------------------------
8. Strategic Program Content
LEADERSHIP: who
OBJECTIVES
KEY STEPS: who, what, when
FINANCIAL AND STRATEGIC
GAIN AND COST
PEOPLE: numbers and skills
COORDINATION REQUIREMENTS:
People and organizational units outside your control who must contribute
LEVERAGE: the high leverage individuals and units who must contribute at lower levels
Strategic
‑Accountability~/Reviews
QUARTERLY: Programs and strategic numbers' progress
INDIVIDUAL OBJECTIVES:
Performance appraisal
REWARDS AND CONSEQUENCES: Based on strategic performance of teams and individuals
INFORMAL VIGILANCE
=========================================
SO NOW, WE CAN SEE HOW THE MICRO
BUSINESS DECISIONS ARE AFFECTED BY
THE GENERAL ECONOMIC FACTORS.
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5. What are the basic functions of money? Explain in detail the derivative functions of money.
“Money” is just medium of exchange, unit of account and store of value. This definition of money does not take into account the role of money as “means of stimulation of economic activities” and “equivalent of labor and production”.
In order to correctly understand the essence of money, it is necessary to examine all functions carried out by it. Pursuant to the National Economic Model, money possesses four basic characteristics.
1. Money as means of stimulation of economic activities:
In our model money, functioning as an instrument to stimulate human labor and energy triggers entire economic activity aimed at producing goods and services.
That is, money is not a “neutral” in economics as suggested by some other economic schools. On the contrary, money serves as an instrument to reveal intentions in terms of production and consumption. This function of money is introduced into the economic literature only within the National Economic Model.
2. Money as an equivalent of labor and production:
In everyday life in the absence of money, it is impossible to satisfy even the simplest human needs in food, home, safety and health care, and it is also impossible to put into action human labor to develop country’s natural resources.
Money is an equivalent of labor that is put into action, which produces goods and services.
Money, by means of which the production is triggered, may not have the corresponding equivalent in the beginning. However, in the process of production money is capable of creating its equivalent and even more. Therefore, the cost of money is incomparably lower than the value of goods and services created by the use of factors of production.
This function of money is also introduced into science by the National Economic Model.
In the National Economic Model money circulating in the economy has no cost. Therefore, money that stimulates labor and activates factors of production has no cost either. Money without initial cost by stimulating and involving labor secure production of goods and services and in such manner creates its own equivalent.
Money as an equivalent of labor and production by entering economic system puts into action labor of the unemployed. For example, providing raw materials and financing to build roads can bring many benefits to people in the form of roads. This activity involves labor of people and creates value as well.
3. Money as medium of exchange:
In the economy, all goods and services are purchased with money. This reflects the function of money as medium of exchange. There should be sufficient quantity of money supply circulating in the market for money to fully carry out this function.
In the liberal economy, money in circulation has cost. Money that has cost becomes limitation for production. It also leads to decrease in demand.
When through the system based on interest rate money is withdrawn from circulation (which is one of the key concepts in liberal economics), it hampers a normal exchange in the economy. Liberal economy creates obstacles to money return into the markets by means of additional money supply and opens the door for “money re-sellers”. This limits the ability of society to consumer and even meet the simplest human needs.
The population of Earth is growing. This growing population does not have satisfactory consumption not because the volume of production is not sufficient, but because people do not have money enough for consumption.
In the National Economic Model, money in circulation has no cost. Due to this money returns to the markets, it freely circulates and stimulates real economic activities. The National Economic Model promotes intensive exchange of goods and services and creates conditions for their fair exchange based on their true value.
In the National Economic Model, the supply and demand equilibrium is achieved through the money supply subject to mathematically calculated indicators of demand and supply. Such approach is a formula to secure sustainable economic growth, which is the main objective of economic policy.
4. Money as store of value:
The objective of saving money in the liberal economy is to receive interest on it. Consequently, in the liberal economy as store of value money promotes:
• withdrawal of money from production and thereby from real economy;
• monopolization of capital;
• transfer of goods and services produced worldwide to global forces;
• increase in production costs;
• decrease in demand;
• reduction in workers’ wages of workers and decrease of labor productivity.
Since money in circulation has no cost in the National Economic Model, as store of value it serves to:
• produce goods and services,
• meet daily needs,
• satisfy in mid-run such needs as wedding, traveling, medical care, etc.
As store of value, money in the National Economic Model promotes:
• free circulation of funds;
• increase in production and demand;
• elimination of imbalance in distribution of income.
The incorrect monetary policy carried out up to now limited consuming power of an individual and hampered sufficient use of resources.
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THERE ARE TWO DERIVATIVES.
1.STANDARD OF DEFERRED PAYMENTS.
-as soon as money comes into general use as a
unit of value and a medium of payments, it is
also inevitably become the unit in terms of
which deferred or future payments are slated.
Modern economic requires the existence of a large
volume of contracts of this type. Most of these
are contracts for payment of principal and interest on
debt in which future payments are stated in monetary
units. Some of these contracts are
-few days
-many run for years.
There are also many contracts other than debts,
that are fixed or semi-fixed in terms of monetary
units.
Among these are
-dividends on preferred stock.
-long term leases on real estate / properties
-pension.
If money increases in value through time, it
insures those who have agreed to receive the
fixed amount and heightens the burden of payers.
==================================
2.MONEY AS A STORE OF VALUE.
-As soon as money comes to be used as a unit
of value and as a generally acceptable mean
of payment, it is almost certain to be widely
as a store of value. The holder of money,ineffect,
a holder of generalized purchasing power that
he can spend through time as he sees fit for
the things that he wants most to buy.
He knows it will be accepted at any time for
any goods or service and it will remain constant
in terms of itself.
MONEY IS THUS A GOOD STORE OF VALUE.
with which to unpredictable emergencies and
especially to pay debts that are fixed interms
of money. THIS does not mean that mon.ey has
been a stable and wholly satisfactory store of value.
It can meet this best if its purchasing power remains
constant. In actual practice ,it has performed this
function capriciously.
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ECONOMIC ENVIRONMENT
The economic environment is an amalgamation of various economic factors, such as total employment, productivity, income, wealth, inflation and interest rates. These factors influence the spending patterns of individuals and firms.
Components of the Economic Environment
The economic environment comprises of:
Income and wealth: Income in an economy is measured by GDP, GNP and per capita income. High values of these factors show a progressive economic environment.
Employment levels: High employment represents a positive picture of the economy. However, there are many forms of unemployment, including partial employment and disguised unemployment.
Productivity: This is the output generated from a given amount of inputs. High levels of productivity support the economic environment.
Classifications of the Economic Environment
The economic environment can be classified into:
Microeconomic environment: It includes the economic environment of a particular industry, firm or household and is primarily concerned with price determination of individual factors. The main consideration from a microeconomic perspective is the efficient allocation of resources. This is necessary to maximize total output.
Macroeconomic environment: It includes all the economic factors in totality. The main consideration here is the determination of the levels of income and employment in the economy.
Over the course of the twentieth century, the focus has shifted from cities and countries to the global economy being the chief economic unit.
Factors Affecting the Economic Environment
The economic environment of a nation as well as the world is impacted by:
Inflation and deflation: Inflationary and deflationary pressures alter the purchasing power of money. This has a direct impact on consumer spending, business investment, employment rates, government programs and tax policies.
Interest rates: Interest rates determine the cost of borrowing and the flow of money towards businesses.
Exchange rates: This impacts the price of imports, the profits made by exporters and investors and employment levels (also through the impact on the tourism industry).
Monetary and fiscal policy: This helps in attaining full employment, price stability and economic growth.
The economic environment is also influenced by various political, social and technological factors. These include a change in government and the development of new technology and business tools.
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PUBLIC ACCOUNTABILITY
Definition
Obligations of public enterprises and agencies-who are entrusted
with resources--to be answerable for fiscal and social responsibilities, to
those who have assigned such responsibilities to them.
All governments must fulfil their commitments. They must be fully accountable to their peoples and transparent in the use of public resources. Governments, institutions, and civil society groups must ensure the causes of corruption are aggressively fought, including in the private sector. Governments are obligated under international law to enforce human rights, including economic, social and cultural rights. They must meet this responsibility by delivering economies that are equitable and work for the poorest people, delivering quality universal public services and ensuring decent work for all.
In the formulation of bilateral or multilateral agreements related to aid, debt or trade and investment, governments should neither impose nor accept externally driven conditions making the implementation of the rights above impossible.
Governments should:
Ensure gender equality, social justice and stop all forms of violence against women and uphold women's rights including their political participation and access to resources.
Deliver comprehensive protection of children - legal, physical, social and economic
Enshrine mechanisms with existing and new policies and budgets to ensure equity such as land reform, progressive taxation and poverty reduction strategies.
Implement policies that ensure full and productive employment with special attention to youth employment.
Actively involve civil society, including the poor, women, children and socially excluded groups, including peoples with disabilities, dalits and indigenous peoples in formulation, decision-making and implementation of international and national development priorities, policies and plans.
Enforce and support freedom of expression including freedom of the press and freedom of association.
Develop pro-active national anti-corruption strategies consistent with international conventions on anti-corruption.
Ensure civil society participation on the budgetary process.
Ensure quality, universal public services for all (health and education, water and utilities) and stop privatisation where it causes deprivation and poverty.
Emphasize, in their health policies, preventive health, reproductive health and actively combat the HIV/AIDS pandemic, and diseases associated with poverty.
Ensure adequate housing.
Ensure young people are partners, not only targets, in development and decision-making.
Fully support effective peace-building and conflict prevention strategies and ensure that post conflict reconstruction programmes enshrine social and economic justice, poverty eradication and public accountability.
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