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MMPC-003: Business Environment

MMPC-003: Business Environment

IGNOU Solved Assignment Solution for 2022-23

If you are looking for MMPC-003 IGNOU Solved Assignment solution for the subject Business Environment, you have come to the right place. MMPC-003 solution on this page applies to 2022-23 session students studying in MBA, MBF, MBAFM, MBAHM, MBAMM, MBAOM courses of IGNOU.

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Assignment Code: MMPC-003/TMA/JULY/2022

Course Code: MMPC-003

Assignment Name: Business Environment

Year: 2022

Verification Status: Verified by Professor

 

1. Define inflation. What are the different methods of measuring inflation and what are the effects of inflation.

Ans) Definition of Inflation: The definition of inflation is one of the most difficult tasks facing economists since it is fraught with difficulties. As a result, this issue lacks a general definition. Numerous economists have offered various definitions, such as Coulborn's that states that inflation is when "too much money chases too few things." According to Crowther, inflation is a condition when prices increase while the value of money decreases. These definitions and others have one or more shortcomings.

 

According to all economists, inflation describes a "persistent" and "appreciable" increase in the level of overall prices. However, there is room for uncertainty because the terms persistent and appreciable are not explicitly defined. For instance, whether a price increase of 1%, 5%, or 30% is considered to be significant, or if another rate is considered to be significant.

 

Due to its dual benefits and drawbacks, the topic of inflation is crucial. In order to encourage manufacturers to increase their supply on the market, prices must rise. However, rising costs put a greater financial strain on consumers and may also cause several political and social issues. A moderate amount of inflation is therefore necessary for an economy. This leads to the following inquiry: What constitutes a moderate pace of inflation? Depending on each nation's level of development, the answer to this question differs. For instance, in the case of India, the Reserve Bank of India (RBI) established the Chakravarty Committee (1985) to study the monetary system and made the recommendation that a 4 percent inflation rate is ideal for India's economic growth.

 

Different Methods of Measuring Inflation

 

There are two standard ways to calculate inflation.

 

Changes in Price Index Number (PIN)

 

By calculating the change in the price index number, the rate of inflation may be calculated.

The equation for this modification is

PINt and PINt-1 are price index number in the current and preceding year.

 

Consumer Price Index (CPI) and Wholesale Price Index (WPI)are two popular price indexes thatare used to measure inflation. Further in India, CPI has 3 sub-components namely CPI rural, urban and combined.

 

GNP Deflator

 

Also referred to as the GNP implicit price deflator. It is known as implicit since it cannot be explicitly retrieved, unlike CPI and WPI. It can be obtained using the formula below.


Real GNP is the GNP at the base year's constant prices, while nominal GNP is the GNP at the current prices. The GNP deflator is regarded as being superior to the other index because it covers a wider range of variables.

 

Effects of Inflation

 

Whether they are consumers, producers, or governments, practically every economic agent experiences the effects of inflation. Depending on the rate of inflation, there will either be a positive or negative effect. You will learn how it affects the distribution of income and wealth, producers, wage earners, borrowers and lenders, as well as several other economic sectors, in this part.

 

2. What do you understand by business ethics? Discuss the importance of business ethics and the ethical issues involved in business.

Ans) Applied ethics includes business ethics. It involves bringing moral or ethical standards into the workplace. The word "ethics" comes from the Greek word "ethos," which means "character or habit" and refers to a person, group, or institution's distinctive character, sentiment, moral nature, or guiding ideas. An organization's or an individual's behaviour is governed by a set of moral principles or norms.

 

Ethics is the study of moral obligations, justification of what is right or wrong for us, other people, and society at large. The study of ethics examines the moral judgments we make while carrying out our tasks. The study of ethics covers moral principles as well as moral decisions that are made through interactions with other people. The rules and laws that govern behaviour when conducting business are often referred to as business ethics. Businesses must strike a balance between the needs of its stakeholders and their drive to increase profits. Trade-offs are frequently necessary to maintain this balance. Rules, both explicit and implicit, are designed to guide businesses in making profits while avoiding damaging customers or society at large in order to meet these special elements of enterprises.

 

Importance of Business Ethics

 

Business ethics are important. Ethics are important because moral behaviour is the best behaviour. However, it is highly challenging to create a code of behaviour on this basis alone in the absence of a time-culture-neutral and context-neutral definition of "right." In essence, it contends that by acting ethically, firms can reduce several risks and enhance their reputation.

 

An organisation will have the best opportunity of learning about potential issues early so that they may be resolved before they become a disaster if it has a good ethical process operationalized in a way that all decision-making processes and structures support it on a daily basis. An ethical reputation has additional benefits in the marketplace.

 

Ways in which Ethics are Important:

 

Important crises like WorldCom, Enron, Lehman Brothers, and others in the US and Satyam in India show us how crucial ethical corporate practises are becoming. The importance of ethics in business can be attributed to a number of factors.

  1. to comprehend the causes of the growing power of corporations in society.

  2. must make certain that society is not harmed.

  3. to more successfully uphold moral standards.

  4. to make it possible for businesses to quickly discover issues with both customers and employees.

  5. to raise the standard of a company's interactions with its important stakeholders.

 

To assure a fundamental level of integrity in the marketplace, the government is interested in upholding moral corporate practises. This increases a country's economic competitiveness on a global scale and enhances its reputation as a business-friendly nation.

 

Predictable ethical behaviour guarantees that commercial expenses like transaction costs, hedging, insurance, etc. are maintained to a minimum, even domestically. The expense of unethical behaviour falls on the government and taxpayers. All firms are affected by a few bad actors' actions, which may also negatively affect the nation's ability to compete internationally.

 

By giving managers the knowledge and resources they need to appropriately identify, diagnose, analyse, and offer solutions to the ethical difficulties and dilemmas they face, ethics can assist in enhancing decision-making.

 

Ethics aid in analysing the causes of this and the methods in which managers and regulators may address such issues to enhance corporate ethics. We can evaluate the advantages and drawbacks of various organisational methods for managing ethics thanks to business ethics. Additionally, corporate ethics provides us with knowledge that transcends the conventional purview of business studies.

 

Ethical Issues in Business

 

There are several goals for company. Wealth motive, profit motive, societal benefit, and overall benefit of shareholders and stakeholders are a few of the motives. Striking a balance between ethics and profit remains a challenge. The organisations uphold their goodwill and reputation as being fair, honest, and essential both at the corporate and business levels, thereby strengthening their image. Organizations anticipate that all employees will treat this legacy of identity with the utmost respect. The organisation makes ethical investments in the context of ethics. The administration of an investment portfolio made up of stock in companies is done according to ethical investment principles. The primary motivation of company is profit. But different economists have promoted different corporate goals, such as maximising utility, wealth, and profitability. However, there are also conflicts of opinion. On the one side, there is the ideology of Karl Marx, which holds that conducting business in order to amass wealth is unethical. Mahatma Gandhi, on the other hand, supported capitalism but advocated trusteeship, the idea that a businessperson should be concerned about the wellbeing of his employees.

 

Examples: The Ambassador from HM and the FIAT were the two main brands in the Indian auto sector at the start of the 1980s. Suzuki was introduced by the Japanese, and Maruti quickly gained notoriety. Following that, many foreign automakers entered the market, including Daewoo, Hyundai, General Motors, Toyota, etc. These multinational corporations each had their unique management philosophy and ethical outlook. Few people worked on vendor connections, while others focused on advertising and building a strong distribution network. Research and Development focused on cost reduction. The Tata Indica vehicle was introduced amid all of this significant marketing effect. Even though the model didn't really compete with the top-tier MNC brands, it was nevertheless able to make a big impact on consumers who supported Tata's ethical guiding principles. Thus, while having little advertising, a product still managed to gain market share because to customers' quick word-of-mouth propagation, which helped Tata establish its brand.

 

The advantages of being ethical:

  1. Favoured by potential employees and the development of a top-notch talent pool.

  2. Fewer personnel are leaving the company, or the attrition rate is lower.

  3. Less employee strikes or labour disputes.

  4. Corporate goodwill increases bargaining power, allowing for cost savings, economies of scale, increased revenue and profits, and longer commercial viability.

 

3. Discuss the structure of capital market in detail.

Ans) Investors can access short-term cash from the money market for a period less than a year. However, business units and investors require money for longer periods of time in order to expand their businesses or upgrade their technologies, so they turn to the capital market for assistance. A capital market is a marketplace for long-term financial instruments or securities with maturities longer than one year. For savings, capital formation, and industrial growth, capital markets are crucial.

 

There are two markets that make up the capital markets: the primary market and the secondary market. The primary market, sometimes referred to as the New Issue Market (NIM), is where the creators of the securities (such as shares and bonds) sell the new issues to investors directly and without the use of middlemen. The term "Initial Public Offering" refers to each time a company offers its securities for sale for the first time (IPO). To raise money for financial purposes, IPOs are issued. Selling new stocks on the primary market is a common way for businesses and the government to raise money.

 

The stock market is another name for the secondary market. It is a location where previously sold shares, bonds, options, etc. are sold and bought. You've probably heard of the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), two stock exchanges in India. The secondary market may be an over-the-counter market or an auction market. Securities are traded on the stock exchange in the auction market. Trading is done electronically in over-the-counter markets because there is no physical location and no use of the stock exchange's trading platform.

 

Financial Instruments

 

The key financial instruments utilised in capital markets.

 

Shares: A share designates a portion of the company's ownership held by the purchaser of shares, often known as shareholders or holders. A shareholder owns a portion of the business, has voting rights, and shares in the business's profits or losses. A dividend is a benefit that shareholders receive from company profits. Let's use an example to better comprehend it. Assume that XYZ Limited is a company and that it requires money (Rs. 100 crore) for more expansion. The business will solicit the public's help in raising this money. The 100 crores of capital are divided into 1,000,000 shares, each worth Rs. 1000. Let's say that investors A and B wish to invest in this business and decide to purchase some shares. Investor A invests Rs. 500000 and Investor B invests Rs. 8000000 in this company, becoming shareholders who would split the company's profit or loss proportionately to their holdings. Investor A buys 500 shares and Investor B buys 800 shares. Additionally, there are two different kinds of shares: equity shares and preference shares.

 

Bonds: Companies, municipalities, and state and federal governments all issue bonds to raise capital for a range of initiatives and endeavours. They are debt instruments in which the entities borrow money at a set or variable interest rate for a predetermined amount of time. In essence, it is a loan contract between a bond issuer and an investor. It is a fixed-income product. In contrast to shareholders, who own the company outright and enjoy voting rights, bondholders do not.

 

Debentures: Debentures are another type of debt instrument that businesses use to raise money, but they are not backed by real property or other forms of security. Debentures are purchased by an investor depending on the issuer's standing and creditworthiness. Debentures have an interest rate that is higher than bonds.

 

Capital Market Intermediaries

 

The capital markets have a wide number of intermediaries, some of which are covered below:

 

Merchant Bankers: The corporation and the investors are connected through merchant bankers. They serve as a consultant who offers advice to business owners from the project's inception through the start of production. "Any person who is engaged in the business of issue management" according to SEBI is defined as "any person that arranges for the purchase, sale, or subscription of securities or acts as manager, consultant, or provides corporate advisory services in regard to such issue management."

 

Underwriters: There is a need for someone who can subscribe to such securities when a firm wishes to go public in order to raise money because the public might not have fully purchased all of its securities. The underwriter completes this task; in exchange, he and the issuing corporation agree that, in the event that a security is not subscribed for, the underwriter will either subscribe for the unsubscribed security themselves or through third parties. For this work, he receives a "underwriting commission" payment. Institutional underwriters (like IDBI and UTI) and non-institutional underwriters are both possible. Each and every underwriter must register with SEBI.

 

Portfolio Managers or Portfolio Management Services (PMS): a specialist who signs a contract with the customer to provide advice, direction, or carry out investment decisions on the client's behalf. Discretionary and non-discretionary portfolio managers are the two categories of portfolio managers. Discretionary portfolio managers are those that autonomously manage a customer's finances in accordance with the needs of the client. While a non-discretionary portfolio manager handles the money in accordance with the client's instructions. Major Portfolio Management Services in India include, among others, Motilal Oswal PMS, Kotak PMS, and ICICI Prudential PMS.

 

Stock Brokers: A stockbroker is a person or business that acts as a go-between for investors and stock exchanges. On behalf of their clients, stockbrokers trade on the stock exchange. They receive commissions or fees for their services. They manage their clients' portfolios, handle all the paperwork and keep track of every transaction, and give investors advice on creating various investment plans in the dynamic world of financial markets. With the SEBI, all stockbrokers are registered.

 

Regulator of the Capital Market /SEBI: The Securities and Exchange Board of India oversees the capital market in India (SEBI). The SEBI Act of 1992 gave the non-statutory organisation, which had been founded in 1988, official authority. The main goals of SEBI are to safeguard investors' interests, develop and regulate the stock market, stop dishonest activities, and regulate and create a code of conduct for intermediaries like brokers and underwriters, among other things. In addition to registering stock exchanges, mutual funds, underwriters, brokers, and sub-brokers, SEBI also carries out a number of other tasks. Levying various fees and other levies supports investor education, audits and inspections of stock exchanges and different intermediaries, and outlaws insider trading and other unfair business practises related to the securities market.

 

4. Describe the key players in the agricultural sector and discuss the role and importance of agricultural marketing.

Ans) Key players in the agricultural sector: With expansion and expanded output, middlemen that specialise in playing marketing roles and are involved in product marketing have played a more active role in the movement of agricultural commodities. The number of mediators can be divided into the following five groups.

 

Merchant Middlemen

 

The products that merchant intermediaries acquire and sell are the ones to which they claim ownership. The sale and buy prices determine whether they make money or lose money. They come in four categories:

 

Wholesalers: those who acquire bulk quantities of agricultural products from farmers or other wholesalers. They combine items from many locations, store produce, and frequently release them during the off-season since they store them during the busiest season for new arrivals.

 

Retailers: They purchase from wholesalers and sell it in tiny quantities directly to customers. In the marketing channel, retailers are the ones closest to consumers.

 

Village merchants: the individuals who travel from village to village selling or buying goods from growers directly The output of farmers who have either borrowed money from the village merchants or who are unable to travel to the market is bought by them. Farmers are also supplied with necessary consumer goods by village merchants. They frequently take on the role of poor farmers' financiers and sell the harvested produce in the local market or in the villages.

 

Mashakakhores: It is a slang name for large retailers that frequently serve as small wholesalers and specialise mostly in selling fruits and vegetables. They typically sell to large clients like hotels, paramilitary organisations, or small vendors. Over time, they began acting like regular merchants, dealing with all kinds of consumers without the requirement of a minimum order.

 

Agent Middlemen

 

They do not actually own the merchandise; rather, they act as clients' representatives. They assist sellers and purchasers in the selling and purchase of goods by serving as mediators between them. They frequently receive commission or brokerage on selling.

 

Agent middlemen are of two types:

 

Commission Agents: A commission agent typically works in the wholesale market and represents either a buyer or a seller as their proxy while purchasing and selling goods.

 

Brokers: They facilitate personal services for their customers in the market while serving as a conduit for communication between buyers and sellers to put them onto the same platform. Depending on the market conditions, they may claim brokerage from buyers, sellers, or both as they only roam to provide their services to clients.

 

Speculative Middlemen

 

These middlemen are the ones who purchase goods at a discount when there are numerous arrivals, typically during the off-season when prices are high. They assume ownership of the product and the associated risk in an effort to profit from it.

 

Processors

 

The ones who hire agents to buy on their behalf from high-production areas and bring on their enterprises either independently or on a custom basis are processors. Agents have the option to store the goods and handle them continuously all year round. They frequently engage in advertising to raise demand for their managed goods and provide farm products added form utility.

 

Facilitative Middlemen

 

These intermediaries, as their name implies, ease the purchasing and selling process and help with marketing. Since the majority of them are labourers who assist in the physical transportation of goods and products while loading and unloading them, they receive their revenue in the form of fees or service charges. Since they allow the weighing of produce and classify goods into several categories, weighmen and graders also fall under this category. It's common to refer to them as the hub of the marketing wheel.

 

This group includes transporters who help transfer produce from one market to another and communication and advertising organisations that significantly aid in decision-making about the purchase of items. Auctioneers who facilitate the exchange of goods by offering them for public bidding by buyers or customers are equally crucial and aid in the improvement of the marketing system.

 

Role And Importance Of Agricultural Marketing

 

Agricultural marketing is essential because it promotes the production and consumption processes. Since it is a significant multiplier of agricultural progress, it also aids in quickening the pace of economic growth. It has been difficult to transition from a traditional to a modern agricultural system, and marketing has been a significant experiment throughout. But marketing's function continues to be crucial. The following examples illustrate the significance of agricultural marketing.

 

Optimization of Resource use and Output Management: An effective marketing system's primary function is to assist the market in reducing losses and accelerating the marketable surplus. Marketing losses frequently result from ineffective product processing, storage, and transportation. An effective marketing wheel will aid in resource and production management, and a carefully planned marketing strategy can aid in the equitable allocation of goods. When everything is considered, it is a contemporary strategy for sustaining growth.

 

Increase in Farm Income: A smart marketing system would strive to reduce the number of middlemen while ensuring a greater level of income to limit the expense of marketing services and malpractices. An effective system ensures higher pricing for agricultural products and encourages farmers to use their extra funds to purchase cutting-edge inputs, which will boost yield and production.

 

Widening of Markets: It is deemed beneficial when a system expands the market by bringing goods to distant regions of the nation and abroad since it continuously raises demand while ensuring a larger income for the manufacturer.

 

Growth of Agro-based Industries: A system that is effective is needed to support the expansion of agriculturally dependent industries, which depend on farm products for the supply of raw materials including cotton, sugar, edible oils, food processing, and jute.

 

Price Signals: Farmers may plan and organise their production in accordance with the demands of the economy thanks to effective marketing strategies. Price signals are sent in order to complete this task.

 

Adoption and Spread of New Technology: Growing always results from responding to requests, implementing the newest technology, and utilising scientific knowledge. However, a technology upgrade takes more capital, and farmers would only invest if they were assured of a profitable return.

 

Employment Creation: This marketing strategy focuses on creating jobs and involves millions of people in tasks like packaging, packing, moving, storing, and dispensing. Direct employees in the marketing system include commission agents, brokers, traders, retailers, weighmen, baggage handlers, packagers, and regulatory officials. Others can hunt for work chances when it comes to the supply of goods and services in addition to them.

 

Addition to National Income: Because they boost the country's gross and net national products, marketing events provide value to the product.

 

Improved Living: Special focus should be paid to development that boosts economic expansion while reducing population poverty and generates more foreign exchange while decreasing economic waste. A key component of overall economic development is the creation of an effective food and agricultural product marketing strategy. The marketing system is essential to the development programmes' success because they are meant to improve people's lives.

 

5. What are the main components of Balance of Payments (BoP)? Discuss the factors affecting the BoP.

Ans) The Balance of Payments (BoP) is made up of two main components:

 

Current Account

 

The transactions for products and services as well as transfers that took place during the current time frame are included in the BoP's current account.

 

Current Account = (value of exports – value of imports) + net transfers from abroad

= net exports + net transfers from abroad

 

The trade balance, which is the net total of a country's exports and imports of goods and services, is also known as the net exports. Since it is impossible to detect services moving across borders, they are frequently described as invisible trade. For instance, the domestic home (or domestic) country is said to be exporting a service when a foreign country pays for the upkeep of its factory in the domestic home (or domestic) country or for the services provided by a domestic resident who is employed in that foreign country. One important service export is tourism.

 

If a country's exports are greater than its imports, the trade balance is said to be in surplus (positive), and if the reverse is true, it is said to be in deficit (negative).

 

Gifts or remittances that citizens of one country send or receive to or from citizens of another country are examples of transfers to and from overseas. If there are more transfers from foreign residents than transfers from domestic inhabitants, the net transfers from abroad is positive. Similar to this, if transfers from foreign countries are lower than transfers to foreign countries, the net transfers from abroad is negative. Transfers also include the total amount of foreign help that a nation received within a specific time period.

 

The current account is in surplus if the right-hand side of the equation is positive (negative) (deficit). It should be emphasised that sizable international transfers could cause the current account to be in surplus even if net exports are negative. However, in order to keep things straightforward, the term "net transfers" will be disregarded in the analysis that follows, and the current account will therefore only include net exports or the trade balance.

 

Capital Account

 

All asset transactions are recorded in the capital account. Any sort of wealth that can be held, such as stocks, bonds, government debt, etc., can be considered an asset. When an asset is purchased, a debit is recorded in the capital account. When an Indian buys a US automaker, the transaction is reported as a debit in India's capital account (as the Indian has to pay in dollars which means that the foreign exchange is going out of India). The capital account of India records asset sales as surpluses, such as the sale of shares of an Indian company to a US client (as sale of assets to foreign country will bring foreign exchange into the country).

 

Taking the two accounts together, the BoP can be summed up as:

 

Balance of Payments = current account + capital account

 

If the current and capital accounts together show a surplus, then the balance of payments is in surplus (deficit) (deficit). Therefore, a current (capital) account deficit by itself does not result in a BoP deficit. It needs to be offset by a sizable capital (current) account surplus. Therefore, it is crucial to remember the fundamental BoP accounting principle.

 

Factors Affecting the Balance of Payments

 

There are two categories of factors that have an impact on the balance of payments (BoP):

 

1) The current account's influencing factors

 

Inflation Rate in the Home Country of the Resident: When compared to its trading partners, the domestic economy's inflation rate is higher, which results in:

a) Cheaper imports that encourage consumers to buy more foreign goods As a result, imports typically increase along with inflation.

b) Increase in the price of exports on the international market, which will make it less likely that foreigners will buy products from the home nation. As a result, exports typically decrease.

 

Therefore, a current account deficit will result from rising imports and declining exports.

 

National Income: Most empirical research indicate that a rise in a country's national income relative to its trading partners may result in:

a) A greater propensity among local consumers to buy more foreign goods will result in a considerable increase in imports and, as a result, a greater outflow of foreign reserves from the nation, which will cause a current account deficit.

b)  In some uncommon circumstances, an increase in national income may also result in an improvement in the current account since it may be linked to an expansion in the economy's production capacity and export surplus output.

 

Government-imposed import restrictions raise the cost of imported items in the domestic market by imposing taxes (such as tariffs) on them. As a result, domestic consumers will spend less on imported goods, increasing the current account. The government occasionally also places quota limitations on its imports, which likewise causes a decrease in imports and results in a current account surplus.

 

Exchange Rate: The prices of domestic currencies are measured using exchange rates in relation to international currencies. The Real Exchange Rate affects the Current Account (RER). A lower RER is linked to higher export numbers and decreased imports, whereas a higher RER is linked to lower export numbers and increased imports. Thus, it may be inferred that a reduction in RER (which could result from currency depreciation) might enhance the current account.

 

1) The factors affecting the Capital Account

a) Taxation of domestic investors who have made investments in overseas markets by the government on their income. Less capital will leave the country as a result.

b) The capital account may be impacted by economic liberalisation.

c) A predicted change in exchange rates may have an influence on capital flows since it frequently affects the projected rate of return on overseas investments.

d) Changes in interest rates relative to other countries may have an impact on international capital flows. Lower capital inflows into the country may result from lower domestic interest rates, whilst higher domestic interest rates may have the opposite effect.

 

6. Write notes on the following:

 

a) Measures to reduce barriers to foreign trade.

Ans) The term "free trade" refers to the removal of all trade restrictions. In order to encourage increased trade and the resulting reciprocal economic benefits, numerous organisations and trade agreements are seeking to reduce trade barriers. The following is a discussion of some of the significant steps done to overcome those obstacles:

 

General Agreement on Tariffs and Trade (GATT): After the Second World War and the Great Depression, there were severe cross-border limitations on international trade. 23 countries joined together in 1947 to sign the General Agreement on Tariffs and Trade in order to do away with those (GATT). GATT provided a venue for settling trade-related issues among its participants and promoted free trade through adequate regulation and a reduction in tariffs.

 

World Trade Organization (WTO) and Regional Trading Agreements (RTAs): The World Trade Organization (WTO), established in 1995 by the GATT members, is based in Geneva, Switzerland, has about 159 member nations, and promotes international trade by lowering trade barriers, establishing multilateral trading systems through Regional Trading Agreements (RTAs), enforcing trade regulations, and offering a venue for the settlement of trade disputes. Additionally, it has the authority to oversee a nation's trade policies and can help the "guilty" members remove any contested trade restrictions that have been put in place. The fundamental tenet of the WTO is non-discrimination, and its members have vowed to treat all trading partners equally. The Regional Trade Agreements (RTAs), an exception to this rule, are discriminatory by nature in that only those who have signed them as members can benefit from better terms for market access. The RTAs do not erect trade barriers with other trading nations; rather, they aim to facilitate commerce amongst their signatories.

 

WTO members may join RTAs subject to a set of requirements that will cover:

  1. creation and operation of free trade zones and customs unions for goods trade.

  2. arrangements on a regional or global scale for developing member countries to trade goods.

  3. pacts governing the trade of services. RTAs generally need to include all commerce in goods and services and support the expansion of free trade among the parties to the agreement.

 

The World Bank and the IMF: Giving poorer countries or economies with less developing economies financial support is the main way to encourage them to participate actively in the global trading system. Two international organisations, the World Bank and the International Monetary Fund (IMF), have this as one of their main shared objectives.

 

With conditions that may involve some of the most difficult financial or economic changes, the IMF provides loans to needy economies. The World Bank, on the other hand, offers economic assistance to the least developed and poorest economies in an effort to improve the lives of the people through community support programmes that are primarily created to ensure the provision of better infrastructure, social services, and health, education, and nutrition.

 

Trading Blocs: In some regions of the world, a collection of nations have come together to permit unrestricted trade in goods and services beyond their shared borders. These nations are referred to as trading blocs.

 

The two most influential trading blocs at the moment are the European Union (EU), which was formed when 27 European countries signed an agreement to open their borders to free trade, and the North American Free Trade Association (NAFTA), an agreement for the mutual flow of trade between the US, Mexico, and Canada.

 

b) Impact of technological environment on international business.

Ans) The enterprises initially relied on a labour staff. However, as technology develops, organisations do not want to fall behind. To advance globally, they have already begun putting newer technologies into practise. Here are a few ways that technology has an impact on the global business landscape.

 

By employing the greatest security experts to prevent unforeseen cyberattacks, technology assists in reducing business security risks. Such hazards are also being reduced through the usage of AI and ML.

 

Technology makes it possible for practically all company processes to be automated, which minimises the need for human labour and guarantees business success. As a result, businesses have seen an increase in sales, revenue, and profit, and thanks to internet use, they have been able to grow globally and online.

 

One of the business-oriented goals that businesses are attempting to achieve is online presence through social media platforms in order to expand with the growth of their clientele. Technology is actually assisting businesses in better establishing themselves in the online world by assisting them in determining their chosen material, the best time to post their service contents, automated posting, and location-specific targeting to develop their business. Google analytics and other tools are quite important in this.

 

Through various computer programming and software, such as AI, ML, and cloud computing, which helps businesses to process more information, sitting anywhere in the world, than manual methods, technology helps in increasing employee productivity for a business, thereby reducing much of human involvement in such tasks. Organizations are also utilising core business technology for online employee performance appraisal information to monitor employee performance and set attainable targets for their staff to meet in order to further the company's aims.

 

Businesses can now outsource some business tasks to other organisations in the domestic and international business framework thanks to business technologies. The two most typical outsourced tasks are customer service and technical assistance. As a result, outsourcing enables businesses to cut operating expenses while concentrating on carrying out the tasks that are under their purview. Businesses can also outsource their tasks to the least expensive locations available, including those abroad, thanks to a number of technology advancements.

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