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Environmental Economics
1.
Define and distinguish between internal environment and external
environment?
The below is an answer to another individuals question. However, you can
gain what you need from it as it relates to the internal and external
environment which I call internal and external driving forces.
Internal and External Driving Force
Thee are two types of driving forces (factors) that affect the way an
organization operates in either a positive or negative way. Internal driving
forces and external driving forces. Internal driving forces are those types of
things, events, situations, that occur within an organization and effect it in
either a positive or negative way. Typically, the internal forces are things that
occur within the organization and are by-and-large under the control of the
organization. Example, does the organization have up to date technology that
has the capacity to hold power programs that can help the organization. Or,
are they working with an old antiquated legacy system that is slow, crashes
frequently, etc. This effects the organizations day-to-day operations. It's
something that in internal and under the control of the organization. Even the
culture of the organization effects the way it operates. In other words, are the
employees happy, do they come into work energized, or do they come to work
dragging themselves in because it's Monday and doing cartwheels out the door
because it's Friday. This effects the way the organization operates in either a
positive or negative way. Once again it is an internal event and under the
control of the organization.
Now to address your question. External driving forces (factors) are those
things, situations, events, that occur outside of the organization and effect it in
either a positive or negative way. Example, the overall economy. This occurs
outside the organization and by-and-large out of the control of the
organization. In other words, are people spending money, or stashing it away
because of financial concerns. This effects the organization. Another example
could be changing demographics. Another, even weather. Weather can effect
organizations such as farmers, ski resorts, catastrophes such as flooding,
earthquakes etc. can effect all organizations. This occurs outside of the
organization, and beyond the control of the organization. Still, it could effect
it in either a negative or positive way. Another important external driving
force would be competition. What is the competition doing, to gain more of
the market share. It's occurring outside of the organization, out f the control of
the organization, can effect it in either a positive or negative w
2.
What are macro environment of business?
Macro Environment<br />For any decision there is n number of factors
which influences the decision. Be it a decision related to any organisation, any
business concern or even an individual. Thus it is per se very much necessary
to understand the influence of each parameter. The factors which influence a
decision are also termed as its environment. The environment can be Internal,
can be controlled by the organisation; Micro, specific to the industry and is
different for different industries; and lastly Macro, generic in nature and
impacts the whole business environment.<br />The Macro Environment
includes all the factors which are external to the firm and which cannot be
controlled by the organisation. And also they are not specific to any industry
but influence all the firms but the influence may be at different level. As a
Marketing manager, on musty have knowledge of different factors which
influences the marketing decision of a firm, And also since they are not
controllable, one must adjust the decisions as per the changes in the
environment.<br />The Important factors comprising the Macro Environment
of Marketing are Demographic, Economic, Socio-Cultural, Natural,
Technological and Political-Legal. Influence of each factor shall be discussed
in detail in the following parameters.<br />Demographic Environment<br
/>Demographic, as the name signifies is related to population and population
mix. It is people who make market. It is they who contribute to demand and
also it is manpower which helps in produce and supply. Thus as a marketer,
on must understand the demographics on the nation and also due to
globalisation, global population also influences the decisions.<br />Population
Growth: <br />India is being ranked second in terms of population after
China. The population as per Census estimates as in July 2009, were 1.17
Billion with growth rate of 1.58%. This provides an exceptional opportunity
for business. The high population growth has attracted many FMCG firms and
retailers in countries like China and India whose markets are yet
unexplored.<br />Population Mix:<br />Not only the Growth but also the
composition of population is important. For instance in country like Japan,
where major proportion of population is aged has attracted Pharma firms. And
similarly In India where population is composed of Youths has made the firms
to position themselves as pro-Youth, like MTV, Adidas, Coke etc...<br
/>Household pattern:<br />The household pattern, like Large Families, small
families or nuclear families, also influence the marketing decision. In rural
areas of India where still the trend of large and joint families is pertinent, the
purchasing decision is influenced by most of the family members and in case
of urban India where Nuclear families are in trend, the decision is taken by a
single user. <br />Geographical Shift:<br />In country like India, where a
language changes every 100 miles, a culture changes every 10 miles, the
marketer must have knowledge of the culture and language of the region to
position its product in better way.<br />Economic Environment<br />As we
know demand is defined as Desire for a product backed by willingness and
ability to pay. Thus it is not only the people but also their ability to buy a
product is vital for a marketer. Ability to pay can be measured in terms of
Income distribution, economic condition of the nation, Credit availability.<br
/>India being an emerging economy with a GDP of $1.22 Trillion and
Percapita Income of $2932 (PPP Terms) has lots of potential for the markets.
This also impacts the general economic conditions of the economy. The
availability if Infrastructure, the business development, the policies etc...<br
/>The Distribution of Income is also one of the important parameters that
shall be considered. A high unequality in distribution will lead to limited
potential as the market is widely controlled by few rich as they have the
purchasing capability. India with Gini Coefficient of 0.72 which implies there
is 72% inequality.<br />Credit availability and saving trends in an economy
has an influence on the purchasing ability of the consumer. The availability of
Hire purchase options, availability of Home loans and other loans has boosted
reality sector as well as White goods market in India. Similar cases can b of
USA where realty sector was at a high boom because of sub-prime lending
which exponentially increased the credit availability options.<br />SocioCultural Environment<br />Culture is set of beliefs and customs pertinent in a
society. A marketing campaign must be in tandem with the beliefs. The
market should adjust the disicions with respect to the cultural and social;
beliefs. For Instance McDonalds had to stop its products containing Beef as
cow is regarded as goddess in India. But in many cases firms are able to dilute
the cultural beliefs by exposing them to a new culture. This can be validated
by the fact that Archie’s ha made its market in India by promoting different
occasions like Valentine’s Day, Fathers Day and friendship day.<br />Also
the companies who are in tandem with the cultural beliefs and who promote
the culture is able to attract the loyal customers more easily and can retain
them more effectively.<br />Natural Environment<br />Nature is the source
of raw material for the production a product. The raw material may be
renewable, infinite or depleting. In all the cases the raw material shall be
preserved and wastage must be minimised.<br />Also the pollution should be
minimised to preserve the ecology. Marketers in the current scenario try to Go
Green and promote the Eco friendly Concept. For Instance Idea promoted
Save Paper, and many companies are promoting Go Green campaign.<br
/>Technological Environment<br />It is technology changes every fort night.
Obsolesce has become faster than it is spelt. Thus a marketer must be aware of
recent technological updates. Being technologically upgraded and using the
latest technology provides competitive advantage over the competitors. There
are unlimited opportunities for Innovation and every competitor tries to
exploit the new usage of the product. The innovation can be in terms of new
usage, new package, new material, and new method of production or even
new kind of promotion. The recent era has seen many indescribable
Innovations like Tata Nano, Apple I phone, Kindle E-reader, M-Commerce,
Micro Credit and the list continues. Thus there are unlimited opportunities to
discriminate the product by using technology.<br />Political and Legal
Environment<br />It consists of Government Regulations, policies, social
groups etc... Any kind of business must be abided by the legal policies of the
nation. The Law is for the purpose of protecting customers from exploitation
by the business man, to protect interest of society and also to protect
companies from unfair competition. There are various kinds of laws in India
like Consumer Protection Act
3.
What is the nature of the economic system and how does it provide
opportunities to business?
An economic system is the combination of the various agencies, entities (or even sectors as
described by some authors) that provide the economic structure that defines the social
community. These agencies are joined by lines of trade and exchange along which goods, money
etc. are continuously flowing. An example of such a system for a closed economy is shown in the
flow-diagram. The economics system involves production, allocation of economic
inputs, distribution of economic outputs, Landlords and land availability, households (earnings
and expenditure consumption of goods and services in an economy), Capitalists, Banks (finance
institutions) and Government. It is a set of institutions and their various social relations.
Alternatively, it is the set of principles by which problems of economics are addressed, such as
the economic problem of scarcitythrough allocation of finite productive resources.[1] An economic
system is composed of people, institutions, rules, and relationships. For example,
the convention of property, the institution of government, or the employee-employer relationship.
Examples of contemporary economic systems include capitalist systems, socialist systems,
and mixed economies. Today the world largely operates under a global economic system based
on the capitalist mode of production.
"Economic systems" is the economics category that includes the study of such systems.
Types
Marxist-Leninist Communist states (red) and formerly Communist-run (orange) countries of the world.
There are several basic questions that must be answered in order for an economy to run
satisfactorily. The scarcity problem, for example, requires answers to basic questions, such
as: what to produce, how to produce it, and who gets what is produced. An economic system is a
way of answering these basic questions, and different economic systems answer them differently.
Many different objectives may be seen as desirable for an economy, like efficiency,growth, liberty,
and equality.[3]
Economic systems can be divided by the way they allocate economic inputs (the means of
production) and how they make decisions regarding the use of inputs. A common distinction of
great importance is that between capitalism (a market economy) and socialism (economic
planning).
In a capitalist economic system, production is carried out to maximize private profit, decisions
regarding investment and the use of the means of production are determined by competing
business owners in the marketplace; production takes place within the process of capital
accumulation. The means of production are owned primarily by private enterprises and decisions
regarding production and investment determined by private owners in capital markets. Capitalist
systems range from lassiez-faire, with minimal government regulation and state enterprise, to
regulated and social market systems, with the stated aim of ensuring social justice and a more
equitable distribution of wealth (see welfare state) or ameliorating market failures (see economic
intervention).
In a socialist economic system, production is carried out to directly satisfy economic demand
by producing goods and services for use; decisions regarding the use of the means of production
are adjusted to satisfy economic demand, investment (control over the surplus value) is carried
out through a mechanism of inclusive collective decision-making. The means of production are
either publicly owned, or are owned by the workers cooperatively. A socialist economic system
that is based on the process of capital accumulation, but seeks to control or direct that process
through state ownership or cooperative control to ensure stability, equality or expand decisionmaking power, are market socialist systems.
4.
Define the concept of national income and distinguish between GDP GNI and
GNP.
Gross National Product (GNP) is the market value of all products and services produced in
one year by labour and property supplied by the residents of a country. Unlike Gross Domestic
Product(GDP), which defines production based on the geographical location of production, GNP
allocates production based on ownership.
GNP does not distinguish between qualitative improvements in the state of the technical arts
(e.g., increasing computer processing speeds), and quantitative increases in goods (e.g., number
of computers produced), and considers both to be forms of "economic growth".[1]
Gross National Product (GNP) is often contrasted with Gross Domestic Product (GDP). While
GNP measures the output generated by a country's enterprises (whether physically located
domestically or abroad) GDP measures the total output produced within a country's borders whether produced by that country's own firms or not.
When a country's capital or labour resources are employed outside its borders, or when a foreign
firm is operating in its territory, GDP and GNP can produce different measures of total output. In
2009 for instance, the United States estimated its GDP at $14.119 trillion, and its GNP at $14.265
trillion.[2]
The GNI consists of: the personal consumption expenditures, the gross private
investment, the government consumption expenditures, the net income from assets
abroad (net income receipts), and the gross exports of goods and services, after
deducting two components: the gross imports of goods and services, and the indirect
business taxes. The GNI is similar to the gross national product (GNP), except that in
measuring the GNP one does not deduct the indirect business taxes.
GNI versus
GDP
For example, the profits of a US-owned company operating in the UK will only count towards US
GNI and UK GDP. If a country becomes heavily indebted, and pays large amounts of interest to
service this debt, this will be reflected in a decreased GNI but not a decreased GDP. If a country
sells off its resources to entities outside their country this will also be reflected over time in
decreased GNI, but not decreased GDP. Therefore, the GDP appears more attractive for
countries with increasing national debt and decreasing assets.
GNP is a concept that goes hand in hand with GNI, GDP, and NNI. In contrast to the GNI, the
GNP does not account for the balance of cross-country income, such as interest and dividends.
In contrast to the GDP, the GNP account for the values of products and services based on
citizenship of the owners rather than the territory of the activity
5.
What is planning? What is its rational?
Planning in organizations and public policy is both the organizational process of creating and
maintaining a plan; and the psychological process of thinkingabout the activities required to
create a desired goal on some scale. As such, it is a fundamental property of intelligent behavior.
This thought process is essential to the creation and refinement of a plan, or integration of it with
other plans, that is, it combines forecasting of developments with the preparation of scenarios of
how to react to them. An important, albeit often ignored aspect of planning, is the relationship it
holds with forecasting. Forecasting can be described as predicting what the future will look like,
whereas planning predicts what the future should look like.[1]
The term is also used for describing the formal procedures used in such an endeavor, such as
the creation of documents, diagrams, or meetings to discuss the important issues to be
addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning has a
different meaning depending on the political or economic context in which it is used.
Two attitudes to planning need to be held in tension: on the one hand we need to be prepared for
what may lie ahead, which may mean contingencies and flexible processes. On the other hand,
our future is shaped by consequences of our own planning and actions.
The counterpart to planning is spontaneous order.
What should a plan be?
A plan should be a realistic view of the expectations. Depending upon the activities, a plan can be
long range, intermediate range or short range. It is the framework within which it must operate.
For management seeking external support, the plan is the most important document and key to
growth. Preparation of a comprehensive plan will not guarantee success, but lack of a sound plan
will almost certainly ensure failure.
Planning - a result-oriented process - can be summarized in 3 easy steps:
1. choosing a destination, 2. evaluating alternative routes, and 3. deciding the specific
course of your plan.[2]
[edit]Purpose
of a plan
Just as no two organizations are alike, neither are their plans. It is therefore important to
prepare a plan keeping in view the necessities of the enterprise. A plan is an important
aspect of business. It serves the following three critical functions:

Helps management to clarify, focus, and research their business's or project's
development and prospects.

Provides a considered and logical framework within which a business can develop and
pursue business strategies over the next three to five years.

Offers a benchmark against which actual performance can be measured and reviewed.
[edit]Importance
of the planning process
A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities.
Preparing a satisfactory plan of the organization is essential. The planning know the business
and that they have thought through its development in terms of products, management,
finances, and most importantly, markets and competition.
Planning helps in forecasting the future, makes the future visible to some extent. It bridges
between where we are and where we want to go. Planning is looking ahead.
6.
Explain about rural employment programmes?
The Right to Information Act
Main article: The Right to Information Act 2005
The Right to Information Act 2005 is an Act to provide for setting out the practical regime of right
to information for citizens to secure access to information under the control of public authorities,
in order to promote transparency and accountability in the working of every public authority, the
constitution of a Central Information Commission and State Information Commissions and for
matters connected therewith or incidental thereto.[6]
The Act specifies that citizens have the right to:

inspection of work, documents and records.

taking notes, extracts or certified copies of documents or records.

taking certified samples of material.

obtaining information in the form of printouts, diskettes, floppies, tapes, video cassettes
'or in any other electronic mode' or through printouts.
The Right to Information Act makes the common man up to date. His role in government's
decision-making process has been redefined by the Act. The Right to Information Act is an
effective tool to control corruption, make government accountable, and curb the arbitrary use of
power.[7] The Act has now been amended to provide for disclosure by government in all nonstrategic areas.
[edit]Mahatma
Gandhi National Rural Employment Guarantee Act
Main article: Mahatma Gandhi National Rural Employment Guarantee Act
A NREGS Worksite in Kerala
This Act came into force on February 2, 2006. The twin objectives of the Act are augmenting
wage employment and strengthening natural resource management. As per the Mahatma Gandhi
National Rural Employment Guarantee Act, job cards are issued to the rural unskilled labour by
guaranteeing work for 100 days in a financial year at a minimum daily wage of Rs.100. It is the
largest programme in the world for rural reconstruction. [8] The scheme covered 604 districts in
India in three phases and provided employment opportunities for more than 4.47 crore
households in 2008-09.[9] The total outlay for the scheme is $8 billion during 2009-10.
NREGA creates transparency and accountability in governance. All NREGA beneficiaries now
have accounts with banks or post offices. The scope of the programme is limited to unskilled
manual labour. The scope can be extended through increased land productivity. Land productivity
can be maximized through better convergence of NREGA with other programmes.[10] Sustainable
development is the ultimate goal of NREGA. M.S. Swaminathan, Father of Green Revolution in
India argues that there is a synergy between National Food Security Act and NREGA. [11] NREGA
through its diversified programmes on human development helps to ensure food security for all. It
is the realisation of Gandhi's dream to make India self-sufficient. The scheme has now been
renamed asMahatma Gandhi Rural Employment Guarantee Act. Gandhiji taught us how unskilled
manual labour can be made use of for the betterment of society.
7.
Explain the instruments of monetary policy?
Monetary policy rests on the relationship between the rates of interest in an economy, that is,
the price at which money can be borrowed, and the total supply of money. Monetary policy uses a
variety of tools to control one or both of these, to influence outcomes like economic
growth, inflation, exchange rates with other currencies and unemployment. Where currency is
under a monopoly of issuance, or where there is a regulated system of issuing currency through
banks which are tied to a central bank, the monetary authority has the ability to alter the money
supply and thus influence the interest rate (to achieve policy goals). The beginning of monetary
policy as such comes from the late 19th century, where it was used to maintain the gold standard.
A policy is referred to as contractionary if it reduces the size of the money supply or increases it
only slowly, or if it raises the interest rate. An expansionary policy increases the size of the money
supply more rapidly, or decreases the interest rate. Furthermore, monetary policies are described
as follows: accommodative, if the interest rate set by the central monetary authority is intended to
create economic growth; neutral, if it is intended neither to create growth nor combat inflation; or
tight if intended to reduce inflation.
There are several monetary policy tools available to achieve these ends: increasing interest rates
by fiat; reducing the monetary base; and increasing reserve requirements. All have the effect of
contracting the money supply; and, if reversed, expand the money supply. Since the 1970s,
monetary policy has generally been formed separately from fiscal policy. Even prior to the 1970s,
theBretton Woods system still ensured that most nations would form the two policies separately.
Within almost all modern nations, special institutions (such as the Federal Reserve System in the
United States, the Bank of England, the European Central Bank, the People's Bank of China, and
theBank of Japan) exist which have the task of executing the monetary policy and often
independently of the executive. In general, these institutions are called central banks and often
have other responsibilities such as supervising the smooth operation of the financial system.
The primary tool of monetary policy is open market operations. This entails managing the quantity
of money in circulation through the buying and selling of various financial instruments, such as
treasury bills, company bonds, or foreign currencies. All of these purchases or sales result in
more or less base currency entering or leaving market circulation.
Usually, the short term goal of open market operations is to achieve a specific short term interest
rate target. In other instances, monetary policy might instead entail the targeting of a specific
exchange rate relative to some foreign currency or else relative to gold. For example, in the case
of the USA the Federal Reserve targets the federal funds rate, the rate at which member banks
lend to one another overnight; however, the monetary policy of China is to target the exchange
rate between the Chinese renminbi and a basket of foreign currencies.
The other primary means of conducting monetary policy include: (i) Discount window lending
(lender of last resort); (ii) Fractional deposit lending (changes in the reserve requirement); (iii)
Moral suasion (cajoling certain market players to achieve specified outcomes); (iv) "Open mouth
operations" (talking monetary policy with the market).
8.
What do you understand by meaning of globalization?