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Management Consulting/ms -9 Managerial Economics and ms-3 Economic and Social Environment


sir please give me some guideline for following question

1. Consider a monopolist facing the following demand and cost curves.
  P = 50 - 2Q          C = 25+10Q
         (Hint:  Total demand at any point P will be the summation of two quantities)
  Suppose the firm is able to separate its customers in two distinct markets with the following demand functions.
  P1 = 40 - 2.5Q1          P2 = 90 - 10Q2
  From the above equation calculate the following:
i)   Total demand
ii)   Marginal  Revenue
iii)   Marginal Cost

2.   Suppose you are working as a marketing head for an organization producing soft drinks. The company is planning to float a new juice which is blue in color. What lessons from the concept of price elasticity can you draw while fixing the price for this new product?  


1. What is the exact position of China in so far as its economic system/structure and the role of the Government are concerned?  How would you describe its economic system?

2.   Name and briefly describe a sick unit with which you are familiar or identify one such unit and briefly attempt the following:
  a)   Factors which caused sickness, including management failures and the present position.
  b)   Measures, if any, initiated for ensuring its healthy functioning.

3. Collect data on foreign technical and financial collaborations for the last ten years and write a detailed note on the annual trends of these collaborations.

6.Suppose you are working as a marketing head for an organization producing soft drinks. The company is planning to float a new juice which is blue in color. What lessons from the concept of price elasticity can you draw while fixing the price for this new product?       

Pricing is an important part of your marketing mix strategies. Pricing can help or hinder your product or service sales. Given that your product is good quality, that it has the features and benefits that your buyers want and need, that it is differentiated from your competition, and that it has a good cost structure and a good, strong promotion and distribution program, your pricing strategy for your product or service can help you sell it, or not. Pricing strategies can have a very direct impact on growing your market share.
Four alternative pricing strategiess for your business are:
•   Generic or economy pricing. This strategy treats generic or economy-type brands with a low price - the value to the buyer is in the low price. Your business approach to this pricing strategy must be rooted in a low cost structure, minimal features, minimal promotion but still solid (not extravagant) benefits.
•   Differential Pricing. With this strategy, you might choose to price your product differently by buyer type (e.g. retail store, online store, a department store), by geographic region (e.g. the California market might be higher priced than Illinois), by volume purchased (e.g. a customer buying a large volume would receive a different price than one buying a small volume), by national account segment (e.g. you might negotiate special differential pricing with a national account versus the price you would charge to a local account). With all of these differential prices, there must be a justifiable reason for the price differences.
•   Premium Pricing. This strategy is commonly used for luxury items or high end, high value goods, such as expensive jewellery, boats, planes, estates, etc. Only use this strategy if your product's value is recognized by your market as being a premium or luxury good.
•   Captive Product or Companion Product Pricing. This pricing strategy is also used in product line pricing. This strategy bundles, and usually packages, like products together to be priced as companions (for example, a mixer and a mixing bowl) and as captives (for example, pens that have to have a specific refill (not generic), razors that can only use a specific blade, etc.). Captive or Companion product pricing often relies on packaging to offer the two products in one package (for example, a trial pack of blades with the razor; one pen refill packaged with the pen; or the tape refill with the tape dispenser). Then when those blades, refills or other companion products are used, the price to buy new blades, refills or other products is significantly higher than the original priced package.
Thoroughly analyze your product, your buyers, your competitors (and their possible actions and reactions), and your market before you decide which pricing strategy would best-fit your business. Then review pricing strategy by product, and by product line, on a regular basis to make sure that the fit remains the best.

Is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation. Pricing should take into account the following factors:
•   Fixed and variable costs.
•   Competition
•   Company objectives
•   Proposed positioning strategies.
•   Target group and willingness to pay.
Pricing Strategies
An organisation can adopt a number of pricing strategies. The pricing strategies are based much on what objectives the company has set itself to achieve.
Penetration pricing: Where the organisation sets a low price to increase sales and market share.
Skimming pricing: The organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer.
Competition pricing: Setting a price in comparison with competitors.
Product Line Pricing: Pricing different products within the same product range at different price points. An example would be a video manufacturer offering different video recorders with different features at different prices. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits.
Bundle Pricing: The organisation bundles a group of products at a reduced price.
Psychological pricing: The seller here will consider the psychology of price and the positioning of price within the market place. The seller will therefore charge 99p instead £1 or $199 instead of $200
Premium pricing: The price set is high to reflect the exclusiveness of the product. An example of products using this strategy would be Harrods, first class airline services, porsche etc.
Optional pricing: The organisation sells optional extras along with the product to maximise its turnover. This strategy is used commonly within the car industry.


1.What mix of products are you offering? The mix of
products you have available will either limit or broaden
the pricing strategies available for you to use. If you feel
that a particular strategy would assist you in achieving
your pricing objective, then you may want to consider
making changes to your product mix.

2.Who or what is your target market? The demograph-
ics of your target market will help you identify appropri-
ate pricing objectives and strategies. Are target custom-
ers interested in value, quality, or low cost?

3.are you distributing your product wholesale or
retail? Your method of product distribution can impact
the pricing objectives and strategies you are able to use.
Direct marketing gives you more control than wholesale
marketing over how products are grouped, displayed,
and priced.

4. What is the estimated life cycle of your product/ser-
vice? The life cycle of your product can impact your
choice of pricing objectives and strategies. With a short
estimated life cycle, it will be necessary to sell greater
quantities of product or generate larger profit margins
than with products where the life cycle is longer. Longer
life cycles give you more time to achieve your pricing

5.What is the projected demand for the product? When
demand for a product is expected to be high, you have
more flexibility in choosing pricing strategies because
customers are less likely to be concerned with price and
packaging since they really want your product. For ex-
ample, consider the prices people are willing to pay when
new video game consoles debut.

6.are there other entities, such as the government,
that may dictate the price range for your product?
Some products, such as milk, have government-imposed
regulations limiting the price that can be charged. Be
familiar with any pricing regulations that apply to your
industry or product.

Pricing Objectives
Many pricing objectives are available for careful consider-
ation. The one you select will guide your choice of pricing
strategy. You’ll need to have a firm understanding of product
attributes and the market to decide which pricing objective to
employ. Your choice of an objective does not tie you to it for
all time. As business and market conditions change, adjusting
your pricing objective may be necessary or appropriate.
How do you choose a pricing objective? Pricing ob-
jectives are selected with the business and financial goals
in mind. Elements of your business plan can guide your
choices of a pricing objective and strategies. Consider your
business’s mission statement and plans for the future. If one
of your overall business goals is to become a leader in terms
of the market share that your product has, then you’ll want
to consider the quantity maximization pricing objective as
opposed to the survival pricing objective. If your business
mission is to be a leader in your industry, you may want to
consider a quality leadership pricing objective. On the other
hand, profit margin maximization may be the most appropri-
ate pricing objective if your business plan calls for growth in
production in the near future since you will need funding
for facilities and labor. Some objectives, such as partial cost
recovery, survival, and status quo, will be used when market
conditions are poor or unstable, when first entering a market,
or when the business is experiencing hard times (for example,
bankruptcy or restructuring). Brief definitions of the pricing
objectives are provided below.
Partial cost recovery—a company that has sources of
income other than from the sale of products may decide to
implement this pricing objective, which has the benefit of
providing customers with a quality product at a cost lower
than expected. Competitors without other revenue streams
to offset lower prices will likely not appreciate using this ob-
jective for products in direct competition with one another.
Therefore, this pricing objective is best reserved for special
situations or products.

***Profit margin maximization—seeks to maximize the per-unit
profit margin of a product. This objective is typically applied
when the total number of units sold is expected to be low.

***Profit maximization—seeks to garner the greatest dollar
amount in profits. This objective is not necessarily tied to the
objective of profit margin maximization.

***revenue maximization—seeks to maximize revenue from
the sale of products without regard to profit. This objective
can be useful when introducing a new product into the mar-
ket with the goals of growing market share and establishing
long-term customer base.

***Quality leadership—used to signal product quality to the
consumer by placing prices on products that convey their

***Quantity maximization—seeks to maximize the number of
items sold. This objective may be chosen if you have an un-
derlying goal of taking advantage of economies of scale that
may be realized in the production or sales arenas.

***status quo—seeks to keep your product prices in line with
the same or similar products offered by your competitors
to avoid starting a price war or to maintain a stable level of
profit generated from a particular product.

***survival—put into place in situations where a business needs to
price at a level that will just allow it to stay in business and cover
essential costs. For a short time, the goal of making a profit is
set aside for the goal of survival. Survival pricing is meant only
to be used on a short-term or temporary basis. Once the situa-
tion that initiated the survival pricing has passed, product prices
are returned to previous or more appropriate levels.

INTERNAL / EXTERNAL  Factors Affecting Pricing Decision

The final price for a product may be influenced by many factors which can be categorized into two main groups:
•   Internal Factors - When setting price, marketers must take into consideration several factors which are the result of company decisions and actions. To a large extent these factors are controllable by the company and, if necessary, can be altered. However, while the organization may have control over these factors making a quick change is not always realistic. For instance, product pricing may depend heavily on the productivity of a manufacturing facility (e.g., how much can be produced within a certain period of time). The marketer knows that increasing productivity can reduce the cost of producing each product and thus allow the marketer to potentially lower the product’s price. But increasing productivity may require major changes at the manufacturing facility that will take time (not to mention be costly) and will not translate into lower price products for a considerable period of time.
•   External Factors - There are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market.
Internal Factors
The pricing decision can be affected by factors that are controlled by the marketing organization. These factors include:
Company and Marketing Objectives
Marketing decisions are guided by the overall objectives of the company. While we will discuss this in more detail when we cover marketing strategy in a later tutorial, for now it is important to understand that all marketing decisions, including price, work to help achieve company objectives.
Corporate objectives can be wide-ranging and include different objectives for different functional areas (e.g., objectives for production, human resources, etc). While pricing decisions are influenced by many types of objectives set up for the marketing functional area, there are four key objectives in which price plays a central role. In most situations only one of these objectives will be followed, though the marketer may have different objectives for different products. The four main marketing objectives affecting price include:
•   Return on Investment (ROI) – A firm may set as a marketing objective the requirement that all products attain a certain percentage return on the organization’s spending on marketing the product. This level of return along with an estimate of sales will help determine appropriate pricing levels needed to meet the ROI objective.
•   Cash Flow – Firms may seek to set prices at a level that will insure that sales revenue will at least cover product production and marketing costs. This is most likely to occur with new products where the organizational objectives allow a new product to simply meet its expenses while efforts are made to establish the product in the market. This objective allows the marketer to worry less about product profitability and instead directs energies to building a market for the product.
•   Market Share – The pricing decision may be important when the firm has an objective of gaining a hold in a new market or retaining a certain percent of an existing market. For new products under this objective the price is set artificially low in order to capture a sizeable portion of the market and will be increased as the product becomes more accepted by the target market (we will discuss this marketing strategy in further detail in our next tutorial). For existing products, firms may use price decisions to insure they retain market share in instances where there is a high level of market competition and competitors who are willing to compete on price.
•   Maximize Profits – Older products that appeal to a market that is no longer growing may have a company objective requiring the price be set at a level that optimizes profits. This is often the case when the marketer has little incentive to introduce improvements to the product (e.g., demand for product is declining) and will continue to sell the same product at a price premium for as long as some in the market is willing to buy.

Marketing Strategy
Marketing strategy concerns the decisions marketers make to help the company satisfy its target market and attain its business and marketing objectives. Price, of course, is one of the key marketing mix decisions and since all marketing mix decisions must work together, the final price will be impacted by how other marketing decisions are made. For instance, marketers selling high quality products would be expected to price their products in a range that will add to the perception of the product being at a high-level.
It should be noted that not all companies view price as a key selling feature. Some firms, for example those seeking to be viewed as market leaders in product quality, will deemphasize price and concentrate on a strategy that highlights non-price benefits (e.g., quality, durability, service, etc.). Such non-price competition can help the company avoid potential price wars that often break out between competitive firms that follow a market share objective and use price as a key selling feature.

For many for-profit companies, the starting point for setting a product’s price is to first determine how much it will cost to get the product to their customers. Obviously, whatever price customers pay must exceed the cost of producing a good or delivering a service otherwise the company will lose money.
When analyzing cost, the marketer will consider all costs needed to get the product to market including those associated with production, marketing, distribution and company administration (e.g., office expense). These costs can be divided into two main categories:
•   Fixed Costs - Also referred to as overhead costs, these represent costs the marketing organization incurs that are not affected by level of production or sales. For example, for a manufacturer of writing instruments that has just built a new production facility, whether they produce one pen or one million they will still need to pay the monthly mortgage for the building. From the marketing side, fixed costs may also exist in the form of expenditure for fielding a sales force, carrying out an advertising campaign and paying a service to host the company’s website. These costs are fixed because there is a level of commitment to spending that is largely not affected by production or sales levels.
•   Variable Costs – These costs are directly associated with the production and sales of products and, consequently, may change as the level of production or sales changes. Typically variable costs are evaluated on a per-unit basis since the cost is directly associated with individual items. Most variable costs involve costs of items that are either components of the product (e.g., parts, packaging) or are directly associated with creating the product (e.g., electricity to run an assembly line). However, there are also marketing variable costs such as coupons, which are likely to cost the company more as sales increase (i.e., customers using the coupon). Variable costs, especially for tangible products, tend to decline as more units are produced. This is due to the producing company’s ability to purchase product components for lower prices since component suppliers often provide discounted pricing for large quantity purchases.
Determining individual unit cost can be a complicated process. While variable costs are often determined on a per-unit basis, applying fixed costs to individual products is less straightforward. For example, if a company manufactures five different products in one manufacturing plant how would it distribute the plant’s fixed costs (e.g., mortgage, production workers’ cost) over the five products? In general, a company will assign fixed cost to individual products if the company can clearly associate the cost with the product, such as assigning the cost of operating production machines based on how much time it takes to produce each item. Alternatively, if it is too difficult to associate to specific products the company may simply divide the total fixed cost by production of each item and assign it on percentage basis.

External Market Factors
The pricing decision can be affected by factors that are not directly controlled by the marketing organization. These factors include:
Elasticity of Demand
Marketers should never rest on their marketing decisions. They must continually use market research and their own judgment to determine whether marketing decisions need to be adjusted. When it comes to adjusting price, the marketer must understand what effect a change in price is likely to have on target market demand for a product.

WHAT LESSONS FROM  THE concept of price elasticity can you draw while fixing the price for this new product?

Understanding how price changes impact the market requires the marketer have a firm understanding of the concept economists call elasticity of demand, which relates to how purchase quantity changes as prices change. Elasticity is evaluated under the assumption that no other changes are being made (i.e., “all things being equal”) and only price is adjusted. The logic is to see how price by itself will affect overall demand. Obviously, the chance of nothing else changing in the market but the price of one product is often unrealistic. For example, competitors may react to the marketer’s price change by changing the price on their product. Despite this, elasticity analysis does serve as a useful tool for estimating market reaction.
Elasticity deals with three types of demand scenarios:
•   Elastic Demand – Products are considered to exist in a market that exhibits elastic demand when a certain percentage change in price results in a larger and opposite percentage change in demand. For example, if the price of a product increases (decreases) by 10%, the demand for the product is likely to decline (rise) by greater than 10%.
•   Inelastic Demand – Products are considered to exist in an inelastic market when a certain percentage change in price results in a smaller and opposite percentage change in demand. For example, if the price of a product increases (decreases) by 10%, the demand for the product is likely to decline (rise) by less than 10%.
•   Unitary Demand – This demand occurs when a percentage change in price results in an equal and opposite percentage change in demand. For example, if the price of a product increases (decreases) by 10%, the demand for the product is likely to decline (rise) by 10%.
For marketers the important issue with elasticity of demand is to understand how it impacts company revenue. In general the following scenarios apply to making price changes for a given type of market demand:
•   For elastic markets – increasing price lowers total revenue while decreasing price increases total revenue.
•   For inelastic markets – increasing price raises total revenue while decreasing price lowers total revenue.
•   For unitary markets – there is no change in revenue when price is changed.

concept of price elasticity

-price  elasticity  of demand = $2 per bottle

-P1  original  price  of  the  bottle.[ say =100]

-Q1 the  original  volume  sold,  when  the  price  was  P1

-P2  the  new   price  of  the  bottle .[ 110 , an  increase  of  10% ]

-Q2 the   new    volume  sold,  when  the  price is    P2 [ 110 ]

2 =[Q1-Q2] / [P2-P1]   X  [ P1+P2 ] /  [Q1+Q2 ]

2=[Q1 - Q2] /  [110 - 100]  X  [100+110 ] X  [Q1+Q2 ]

2=[Q1 - Q2 ] /  10  X   210 / [ Q1 +Q2 ]

2 =21 [ Q1  - Q2 ]  /  [Q1+Q2 ]

Q2 =19/23  OF   Q1

WILL  FALL   BY    [ 17-18 ]  %  ,   IF  THE  PRICE  IS  RAISED  BY  10%.

MS -03
2.   What is the exact position of China in so far as its economic system/structure and the role of the Government are concerned?  How would you describe its economic system?

In the past several months, faced with complicated internal and external economic environment, we have stuck to the basic working principle of “making progress while maintaining stability”, and properly handled the relations between economic development, economic structure adjustment and inflation expectation management, resulting in stable and relatively fast economic development.
#To be exact, in the first half of this year, compared with the same period of last year, China’s GDP grew at 7.9 per cent, fiscal revenue increased by 12.2 per cent and total volume of exports and imports increased by 8 per cent. The economic growth rate was within China’s expected targets and the overall economic performance has gained the designation of slow yet stable growth.
#From the above-mentioned figures, we can see that China’s economic growth rate had slowed down a little bit, so some people are worrying whether China’s economy will risk “double dip” or even a “hard landing”. In my opinion, people don’t have to worry about the growth slowdown or a certain degree of economic decline, for, apart from the impact of the European debt crisis and weak foreign demand, this was mainly the result of the Chinese government’s positive macro-control. In addition, the fundamentals of China’s economy remain unchanged and stable.
#The development process of the industrialisation, urbanisation and the service sector shows that there is great potential in the two basic demands of investment and consumption, which will further strongly fuel China’s economic growth.
#The government’s macro-control will help ease the pressure of price rise, remove the bottleneck restriction by resources and environment. Moreover, it is conducive to give impetus to the speed-up of structure adjustment, pattern transformation and the promotion of sustainable development.
#Today China does not just pursue the economic growth “speed”. However, due to the huge inertia of economic operation, in particular under the current circumstances of world economic depression, it is imperative to be vigilant of the impact that quick economic slowdown might have on employment and enterprise operation, as well as fiscal and financial sectors.
#In this regard, China promptly conducted slight anticipatory adjustment and fine-tuning in its macro-control at the end of last year and put forward in explicit terms policy priority in May this year, which was “to place stable growth in a more important position”.
#A combination of policies and measures have been functioning: consecutive lowering of reserve requirement rates and benchmark interest, advancing structural tax reduction, strengthening support to small and micro businesses, encouraging private investment, promoting consumption of energy-saving products and starting a number of “12th Five-year Plan” key projects.
#In the first half of this year, China braved economic difficulties and hardships in developing its economy and the series of “maintaining stable growth” policies and measures had achieved initial fruits, witnessing a general momentum of slow yet steady macro-economic growth, decline in the degree of price rise and orderly advancement of structural adjustment.
#Measures of “maintaining stable growth” have been given full play.
#The following data offers a profile of the new trend of China’s economic performance:
#• The investment growth rate increased from 20.1 per cent in the first five months of this year to 20.4 per cent in June.
#• The increase in fixed asset loans of Chinese enterprises at the end of June was 0.4 per cent higher than at the end of March this year.
#• Bank credit accelerated explicitly. A recent report showed that the HSBC PMI of China’s manufacturing sector rose to a five-month high of 49.5 in July.
#According to the analysis of the latest data, some new highlights and changes can be seen in China’s economic structure in the first half of this year: thanks to the structural adjustment and technological innovation, China’s overall energy consumption declined by 4.1 per cent; while energy consumption of GDP per capita declined by 3.4 per cent.
#Economic figures such as investment, exports and GDP growth rate of the central and western provinces were higher than the national average, and a “wild geese flying” pattern of regional co-ordinated development was formed.
#Added value in newly emerging industries and high-tech and new-tech industries saw a growth rate of 12.3 per cent, exceeding the average of enterprises above standard scales by 1.8 per cent.
#Industrial structure adjustment was advancing actively.
#Recently, Hu Jintao presided over a meeting of Political Bureau of the CPC Central Committee on China’s economic situation and economic work.
#At the meeting, he put forward six proposals on the economic work for the second half of the year, requiring profound understanding of and high attention to the outstanding contradictions and problems of China’s economic operation, and putting “maintaining stable growth” as the top priority.
#In conclusion, despite the slowdown of China’s economic growth and the arduous internal and external development situation, we can see that the Chinese government and people have the confidence, favourable conditions and strong capability to maintain stable and relatively fast economic development continuously.
The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2010 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high inflation resulting largely from its credit-fueled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to near 9% for 2011. An economic slowdown in Europe is expected to further drag Chinese growth in 2012. Debt overhang from the stimulus program, particularly among local governments, and a property price bubble challenge policy makers currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China has made only marginal progress toward these rebalancing goals.
GDP (purchasing power parity)
$11.29 trillion (2011 est.)
$10.34 trillion (2010 est.)
$9.356 trillion (2009 est.)
note: data are in 2011 US dollars
GDP (official exchange rate)
$6.989 trillion
note: because China's exchange rate is determine by fiat, rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China's output; GDP at the official exchange rate substantially understates the actual level of China's output vis-a-vis the rest of the world; in China's situation, GDP at purchasing power parity provides the best measure for comparing output across countries (2011 est.)
GDP - real growth rate
9.2% (2011)
10.5% (2010)
9.2% (2009)
GDP - per capita (PPP)
$8,400 (2011 est.)
$7,500 (2010 est.)
$7,000 (2009 est.)
note: data are in 2011 US dollars
GDP - composition by sector
agriculture: 10.1%
industry: 46.8%
services: 43.1% (2011 est.)
Population below poverty line
note: in 2011, China set a new poverty line at RMB 2300 (approximately US $363; this new standard is significantly higher than the line set in 2009, and as a result, 128 million Chinese are now considered below the poverty line (2011)
Labor force
795.5 million
note: by the end of 2011, population at working age (15-64 years) was 1.0024 billion (2011 est.)
Labor force - by occupation
agriculture: 36.7%
industry: 28.7%
services: 34.6% (2008 est.)
Unemployment rate
6.5% (2011 est.)
6.1% (2010 est.)
note: registered urban unemployment, which excludes private enterprises and migrants was 4.1% in 2010
Household income or consumption by percentage share
lowest 10%: 3.5%
highest 10%: 15%
note: data are for urban households only (2008)
Distribution of family income - Gini index
48 (2009)
41.5 (2007)
Investment (gross fixed)
54.2% of GDP (2011 est.)
revenues: $1.646 trillion
expenditures: $1.729 trillion (2011 est.)
Taxes and other revenues
23.6% of GDP (2011 est.)
Budget surplus (+) or deficit (-)
-1.2% of GDP (2011 est.)
Public debt
43.5% of GDP (2011)
43.5% of GDP (2010)
note: official data; data cover both central government debt and local government debt, which China's National Audit Office estimated at RMB 10.72 trillion (approximately US$1.66 trillion)in 2011; data exclude policy bank bonds, Ministry of Railway debt, China Asset Management Company debt, and non-performing loans
Inflation rate (consumer prices)
5.4% (2011 est.)
3.3% (2010 est.)
Central bank discount rate
2.25% (31 December 2010 est.)
3.25% (31 December 2010 est.)
Commercial bank prime lending rate
6.56% (31 December 2011 est.)
5.81% (31 December 2010 est.)
Stock of money
$2.434 trillion (31 December 2008)
$2.09 trillion (31 December 2007)
Stock of narrow money
$4.599 trillion (31 December 2011 est.)
$4.046 trillion (31 December 2010 est.)
Stock of broad money
$13.52 trillion (31 December 2011 est.)
$11.01 trillion (31 December 2010 est.)
Stock of quasi money
$4.523 trillion (31 December 2008)
$3.437 trillion (31 December 2007)
Stock of domestic credit
$10.72 trillion (31 December 2011 est.)
$8.868 trillion (31 December 2010 est.)
Market value of publicly traded shares
$3.408 trillion (30 December 2011 est.)
$4.028 trillion (31 December 2010)
$5.008 trillion (31 December 2009 est.)
Agriculture - products
world leader in gross value of agricultural output; rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish
world leader in gross value of industrial output; mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites
Industrial production growth rate
13.9% (2011 est.)
Electricity - production
4.604 trillion kWh (2011)
Electricity - production by source
fossil fuel: 80.2%
hydro: 18.5%
nuclear: 1.2%
other: 0.1% (2001)
Electricity - consumption
4.693 trillion kWh (2011)
Electricity - exports
19.06 billion kWh (2010)
Electricity - imports
55.45 billion kWh (2010)
Oil - production
4.073 million bbl/day (2011)
Oil - consumption
9.4 million bbl/day (2011 est.)
Oil - exports
506,500 bbl/day (2011 est.)
Oil - imports
5.08 million bbl/day (2011 est.)
Oil - proved reserves
14.8 billion bbl (1 January 2011 est.)
Natural gas - production
102.5 billion cu m (2011)
Natural gas - consumption
129 billion cu m (2011 est.)
Natural gas - exports
3.21 billion cu m (2011 est.)
Natural gas - imports
30 billion cu m (2011 est.)
Natural gas - proved reserves
800 billion cu m (1 January 2011 est.)
Current Account Balance
$280.6 billion (2011 est.)
$305.4 billion (2010 est.)
$1.898 trillion (2011 est.)
$1.578 trillion (2010 est.)
Exports - commodities
electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment
Exports - partners
US 17.7%, Hong Kong 14.1%, Japan 7.8%, South Korea 4.4%, Germany 4% (2009)
$1.743 trillion (2011 est.)
$1.327 trillion (2010 est.)
Imports - commodities
electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals
Imports - partners
Japan 11.2%, South Korea 9.3%, US 7%, Germany 5.3%, Australia 4.7% (2009)
Reserves of foreign exchange and gold
$3.236 trillion (31 December 2011 est.)
$2.895 trillion (31 December 2010 est.)
Debt - external
$697.2 billion (30 September 2011 est.)
$548.9 billion (31 December 2010 est.)
Stock of direct foreign investment - at home
$776 billion (31 December 2011 est.)
$578.8 billion (31 December 2010 est.)
Stock of direct foreign investment - abroad
$322 billion (31 December 2011 est.)
$317.2 billion (31 December 2010 est.)
Exchange rates
Renminbi yuan (RMB) per US dollar -
6.4614 (2011 est.)
6.7695 (2010 est.)
6.8314 (2009)
6.9385 (2008)
7.61 (2007)

3.   Name and briefly describe a sick unit with which you are familiar or identify one such unit and briefly attempt the following:
  a)   Factors which caused sickness, including management failures and the present position.
  b)   Measures, if any, initiated for ensuring its healthy functioning.

Name:india  garment  exporters  private ltd

The  organization, I am  familiar  with  is  a
-a  large  manufacturer  of  garment  products
-the products  are  used  as  daily  usage
-the products  are  distributed through  the distributors
-the  products  are  sold  to various  countries
as  well  as  to  various  manufacturing  companies.
-the  company employs  about  185  people.
-the  company  has  the following  functional   departments
*finance/ administration
*warehousing/  transportation



[provided  incentive to train managers in HOUSE
and weekend courses]
[provided  incentives and recognitions for
innovations ]
[provide special  budget for acquiring new/
modern technology]
[ provided   trade schooling
and incentives for  employees  to  go  for  training.]
[gradually   discouraged by monitoring ]
[developed  a  special  inventory plan  for raw  materials]

[developed  a  special  budget  plan  for  new equipments]

[developed  a  special  budget  plan  for  working  capital]


[bought   2  generators  to  pad  up  the  energy  plan ]


[negotiated  a  better  overdraft  plan  with  the bank]


[installed  a  better  planning  / budgeting  system ]

5.   Collect data on foreign technical and financial collaborations for the last ten years and write a detailed note on the annual trends of these collaborations.

Foreign collaborations Into the Indian Market has been on the rise since past few years, especially with the boom in the IT sector. Manufacturing, banking, healthcare and textiles are among the other important sectors where foreign ventures have taken place in the Indian market.
The period 1991-2000 saw total number of collaborations in the decade surpassing the total number of all the collaborations in the 4 decades preceding it.
Indeed, the total number collaborations in the 9 years of post- liberalization
(1992-2000) period is observed to be 17810,
while in the 41 years of pre- liberalization
(1951-91), there were only 15105 foreign collaborations.

India is thus banking on expert
technological support for goods and services at an accelerated pace than in the preliberation
era. The rise in number is substantial in the post liberalization era, 10- fold compared to the decade of 1950s, 5- fold compared to the decades of 1960s and
1970s and 2-fold compared to the decade of 1980s
IN THE  2001—2010  PERIOD,
there were only 25000 foreign collaborations
The data thus, indicates that in the post-liberalisation era, the country is entering into foreign collaborations for a variety of reasons rather than for importing technology to build industrial base or to bridge the technology gaps, most important among them
being to increase variety for meeting the customers’ choice of products and services,
which is a major shift in pattern of collaborations in the post- liberalization period.
In term of level of collaborations in the post liberalization era (1992-2010) by number,
USA tops the list followed by Germany, the Great Britain and Japan. This is followed by Netherlands, Mauritius (!), Italy, France and Switzerland. The next few places have
been occupied by the south- east Asian countries, nearly. Singapore, Korea(s), Australia and Hong Kong, which did not have any collaborations in the preliberalization
era, They have pushed other leading European countries namely Denmark, Austria,. Sweden & Belgium to the next lower position East European
technology providers of pre- liberalization era, the giant like USSR, Hungry, Poland,
Romania etc., are pushed down to positions lower than even the countries like
Luxembourg, indicating a major shift in both, the geo-political considerations as well
as the main purpose of foreign collaboration (bridging the technology gaps).
Two more striking observations may be worth noting. Firstly, unlike the popular
perception in the west, the foreign collaborations with east- European countries
(U.S.S.R, Poland, Hungary, Romania, etc) have been far lower (10%total) than the
western developed countries, which constituted the balance 90%. Secondly, the giants
of Europe, namely Germany and the Great Britain have badly lost out to USA in
terms of number of collaborations with India in the post liberalization era. Indeed, the
entire west European block has now lost its business closeness with India to the USA
and to some extent even to the south- east Asian countries as discussed later.
Foreign Collaboration by Trade Blocks
Total Total
NAFTA   26%
EC 6876  23%
Total  57%
Others 43%
Grand Total 100%
there is a major change in
the proportion of technological & financial collaborations in the post- liberalization period, the proportion of financial collaboration, which was only 45% in 1992, has jumped to 69% by 2000, a dramatic rise, indeed a paradigm shift.
THEN  IN  2010  TO  72% IN FINANCE.




The shift in the nature of foreign collaboration points towards increasing interest of
foreign partners in playing an active role in the management of the Indian venture
rather than being contended with sale of technology. It also raises a possibility of
concern of both (Indian and foreign) partners to do business together in India, than only
Indian patterns’ desire for bridging technology gap. Another possibility, extending from this, which needs a more detailed examination, is that perhaps the foreign
collaborations in post liberalization are more of partnerships for trading foreign
goods and services with little valve addition rather than high value addition seeking import of manufacturing technology, which has been the key concern in the pre liberalization era.

Sectors in India attracting collaboration  from foreign countries are:

•   Telecommunications that includes services of cellular mobile, radio paging, and basic telephone
•   Chemicals
•   Metallurgical industries
•   Food processing industries
•   Transportation industry
•   Pharmaceuticals and drugs
•   Fuels
•   Electrical equipments that includes electronics and computer software
•   Services sector that includes non- financial and financial
•   Gypsum and cement products
Countries interested  in collaboration  in India are:

•   U.K
•   U.S.A
•   Sweden
•   France
•   Switzerland
•   Malaysia
•   Singapore
•   Japan
•   Germany
•   Netherlands

•   The manner in which a firm chooses to enter a foreign collaboration.
•   >International franchising
•   >Branches
•   >Contractual alliances
•   >Equity joint ventures
•   >Wholly foreign-owned subsidiaries
•   />Investment approaches:
•   >Greenfield investment (building a new facility)<br />Cross-border mergers<br /
•   >Cross-border acquisitions<br /
•   >Sharing existing facilities<br /
•   The Strategic Logic Behind collaboration

•   >Resources seeking – looking for resources at a lower real cost.
•   >Market seeking – secure market share and sales growth in target foreign market.
•   >Efficiency seeking – seeks to establish efficient structure through useful factors, cultures, policies, or markets.
•   >Strategic asset seeking – seeks to acquire assets in foreign firms that promote corporate long term objectives.
•   > Enhancing Efficiency from Location Advantages
•   >Location advantages - defined as the benefits arising from a host country’s comparative advantages.- Better access to resources
•   >Lower real cost from operating in a host country
•   >Labor cost differentials
•   >Transportation costs, tariff and non-tariff barriers
•   >Governmental policies
•   >Improving Performance from Structural Discrepancies
•   >Structural discrepancies are the differences in industry structure attributes between home and host countries. Examples include areas where:
•   >Competition is less intense
•   />Products are in different stages of their life cycle
•   >Market demand is unsaturated
•   >There are differences in market sophistication
•   >Increasing Return from Ownership Advantages
•   >Ownership Advantages come from the application of proprietary tangible and intangible assets in the host country.
•   >Reputation, brand image, distribution channels
•   >Technological expertise, organizational skills, experience
•   >Core competence – skills within the firm that competitors cannot easily imitate or match.
•   > Ensuring Growth from Organizational Learning
•   >MNEs exposed to multiple stimuli, developing:
•   >Diversity capabilities
•   >Broader learning opportunities
•   >Exposed to:
•   >New markets
•   >New practices
•   >New ideas
•   >New cultures
•   >New competition
•   >The Impact of  collaboration on the Host Country
•   > Employment
•   >Firms attempt to capitalize on abundant and inexpensive labor.
•   >Host countries seek to have firms develop labor skills and sophistication.
•   >Host countries often feel like “least desirable” jobs are transplanted from home countries.
•   >Home countries often face the loss of employment as jobs move.
>Merchant banking
>Portfolio Management Services
>Investment Advisory Services
>Financial Consultancy
>Stock Broking
>Asset Management
>Venture Capital
>Custodial Services
>Factoring<br /
>Credit Reference Agencies
>Credit rating Agencies
>Leasing & Finance
>Housing Finance
>Foreign Exchange Brokering
>Credit card business
>Money changing Business
>Micro Credit
>Rural Credit

Implications of Findings

A steep rise in the number of foreign collaboration is a direct indication of the fact that country is increasingly banking on the other countries for the introduction of
new products and technologies, rather than developing them through domestic efforts. This is in complete contrast to the pre- liberalisation  policies of importing
technology to enhance domestic technological capabilities of the country.. It can help
in meeting the needs and serving the domestic market, but not so much in technology development for increasing competitiveness of India.
The infrastructure created may even help in becoming a global outsourcing point, but
that will give reduce the status to that of a small, ancillary supplier, who does not have any bargaining power (and hence can not expect capturing substantial portion of
value created by him in the whole value chain, leave alone controlling the capture of
value creation), and will always remain at the mercy of main product manufacturer.
It may help in earning a bit of foreign exchange to reduce foreign exchange crisis, but can in no way increase competitiveness to become a global player.
An alarmingly large number of small Indian partners, with high financial interest of foreign party, indicate that these are more of trading or marginal value addition outfits, engaged in distribution of foreign goods rather than potential major manufacturers with
strong technological prowess. They may neither have resources nor inclination to
engage in R & D work to increase competitiveness of India, but may only be interested
in quick profits in the liberalised regime, when the going is good, and be instrumental in
making India only a global market as well as cause drain on precious foreign exchange.
The country needs to seriously engage in new product development activity as outlined earlier, developing new product with local endowments and designs and
vendor bases, branching off from the existing applications, developing technology for
scaling up the products of Indian origin. It requires development of attitudes and
orientation of frame-bending and frame-braking8 while thinking of organization innovations and new product development.
Importing technology at successive levels of up-gradation in the name of modernization and on the logic of “India does not need to reinvent the wheel” is not a tenable one.
New product development is not reinventing the wheel. If it is so, every developed country is doing so on an ongoing basis. The present approach of importing
technology for “catching up by latching up”10 does not help in development of real technical expertise, but instead generates a myth, a misplaced belief and false sense of technical expertise, which fails to meet the demands of competition.
Further, it must be realized that the principles of science are more universal and generalisable than those related to the business. The moment one moves to
application of the scientific principle to develop product and services, they tend to be
less applicable due to the influence of the geo-political, socio-culture context of the COUNTRY.

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Leo Lingham


management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc


18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc


24 years in management consulting which includes business planning, strategic planning, marketing , product management,
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