Political and Social Envt.

8/2/2019 Political and Social Envt.

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Political and Legal EnvironmentAnti Trust litigation

Environment protection lawsTax lawshttp://www.taxrates.cc/html/argentina-tax-rates.html

Special Incentives

Foreign Trade RegulationsAttitude towards foreign companies

Stability of Government

Corruption Perception Index: 87/178 (2010)


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Competition Act

Prohibition of Anti Competitive Agreements

(Global Lysine Cartel-5 firms-2 Japanese,2 S.Korea+1 U.S Archer DanielsMidland-Hi penalty imposed)

Prohibition of Abuse of Dominance(Microsoft-IE, German Govt. asked Wal-Mart to raise prices)

Regulation of Combinations

(Opposition of Merger of staples and Office Depot)

Competitive Advocacy


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Political Environment Influences business from multi angles viz. Deciding, promoting,

fostering, encouraging, sheltering, controlling the business

activities. Country with stable political system enjoyed the successful

business operation. E.g U.S.A

Bureaucratic decision making versus quick decision making.

As many as 8,500 public sector enterprises brought under privatesection over 80 countries up to 1991.

Command sectors in market economies and market sector incommunistic countries.

Former U.S.S.R allowed Pepsi when India didnt permit it.

Political Relations and International Relations

Friendly diplomatic relations between India and the former U.S.S.Rnot only helped Indian co. but also MNCs operating in India .


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Political Risks

Confiscation

Nationalization of a property without compensation. Chinese govt.seizure of U.S property in 1949 when Chinese communist party

came in power.

Nationalization

Shifting the ownership of private property from private individualsto the Government. Burma nationalized entire foreign trade.

Poland and Czech communists nationalized 100% of their

economy. Nationalization of commercial bank in 1969.

The same factor was responsible for nationalization of privatesector firms in Cuba in 1960.


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Domestication

Foreign business firms relinquish control and ownership in

favor of domestic investors either partly or fully.Barclays Bank in South Africa,1st Jan.,2006 ABSA group acquireBarclays Bank.

How to Minimize Political Risk: Stimulation of Local Economy: by investing in the priority

areas/portfolios, may encourage local cos. by purchasing rawmaterial from them

Assist local companies in technological aspects. Provide employment to Nationals.

Sharing ownership through J.V

CSR


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Venezuelan President Hugo Chavez has orderedcar makers in his country to "share" their

technology with local businesses. "the

populist leader has threatened to expropriate

Toyota Motor Corp.'s local assembly plant if

the Japanese car maker doesn't produce more

vehicles designed for rural areas and transfer

new technologies and manufacturing methodsto its local unit.


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Socio Cultural Environment Lifestyle Changes-(HUL CEO

confronted in rural South- Fabric

Conditioner/hair conditioner )

Consumer Activism

Growth Rate of population India 84

Rank-1.34

Age Distribution of population-

Harley Davidson

Regional shifts in Population- Hukou

Life Expectancies

Total population: 66.08years

male: 65.77 years

female: 67.95 years (2009 est.)

Sex Ratio-940 females/1000 males


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Birth rates- India Rank 87/221 ,21.76 ,China-150, Japan-220.ranking as per Birth Rates.docx

DINK

DIWK

SSDW

Role ofChildren

HDI

Culture

Human Development Index

http://www.indexmundi.com/india/


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Examples

Social acceptance- Marlboro

Established Social values- helping others, DaagAche hai.

Changed Social Changes- Fair & Lovely to Fair and

Handsome. Fair & Lovely- Matrimonial to Career

Established Social values substitution of product

in the established social values- Sweets on Diwali& other occassions to Celebrations.


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Hofstede Study and Indian Society

Power Distance Index (PDI)- India Rank 77, - Hi level inequality of power & wealth in the

society, accepted as cultural norm.

Individualism (IDV)- 42, avg. of collectivism & individualism

Masculinity (MAS)- Indias ranking Hofstede Dimension at 56, with the world average just

slightly lower at 51. The higher the country ranks in this Dimension, the greater the gap

between values of men and women. It may also generate a more competitive and assertivefemale population, although still less than the male population.

Uncertainty Avoidance Index (UAI) lowest ranking Dimension -(UAI) at 40. On the lower end

of this ranking, the culture may be more open to unstructured ideas and situations.

Long-Term Orientation (LTO) India rank is 61.A higher LTO score can be indicative of aculture that is perseverant and parsimonious.

World averages are 55 43 50 64 45


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Chinese society as per Hofstede

World averages are55 43 50 64 45

China 80 20 50 35 118

India 77 42 56 40 61


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Technological Environment Spending by government for R&D

Total Industry spending for R&D.

Patent Protection

New Products

Commercialization and Transfer from lab to Market

Place- Agility


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Technological environment

Changing Workplace- SOHO

Brick and Mortar- Click- Click

and Mortar Models

Use of Robotics, CAD, CAM,

etc.

Impact on Communication:

Teleconferencing replacing

physical meetings.

Recruitment-vi sumes, Social

N

etworking sites


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Investment in Technology

Advanced countries spend considerable amount on R&D nearly 4-5 % of their GDP.

India- 0.8%-1%

Germany spend 50% of its R&D budget on product Innovation and remaining 50%on process innovation.

Japan spends only 30% on product Innovation and remaining 70% on process

innovation.

USA spends 70% on product innovation and 30% on process innovation.

Japanese companies introduce the product in 3 years whereas US firms need 5

years for the same job

Zinnov Mgt. consulting: Global R&D expenditures have declined for the first time

in 6 years.

Countries Dominating R&D in particular sector

R&D in Software, Semiconductor Technology N. America

R&D in Telecom Sector N. America and Europe

R&D in automotive Sector Japan and Europe


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Indias Stand on R&D

The number of core researchers in India was about 1.5 lakh as compared to China's

8-10 lakh.

Number of persons doing research and development in Scandinavian countries is

7,000 per million of population and

In U.S 4,700 per million of population.

In India, there are 156 researchers per million of population.

Of the 0.8% expenditure in India, 80% is by public sector while the private sector

share is only 20%.

In China and the US, the public sector share is only 30% each while in Japan it is

only 18%.

China- Govt. plan to increase R&D expenditure from current level of 1.7% to 2.5%

of GDP by 2020. (HBRDec,2010)


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Indias Stand on R&D contdd..

To increase number of researchers in the country, university system will have tobe strengthened by expanding and upgrading infrastructure as presently R&D

quality in university is negligible.

The 11th Plan allocations for scientific departments including departments ofscience and technology and atomic energy, has been increased three folds to Rs

75,304 as compared to Rs 25,301.35 crore of 10th Plan Period.


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The worlds Most Innovative companies

1. Apple

2. Twitter3. Facebook

4. Nissan

5. Groupon

6. Google7. Dawning Information Industry

8. Netflix

9. Zynga

10.Epocrates

39 Shaadi.com

http://www.fastcompany.com/most-innovative-companies/2011/

Political and Social Envt.

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