AN APPRAISAL OF BUSINESS AND FINANCIAL OBJECTIVES OF

STRATEGIC INVESTMENT DECISION MADE BY AN ORGANIZATION

AND IMPACT ON KEY STAKEHOLDERS

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 CHAPTER 1

INTRODUCTION

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INTRODUCTION

1.1 COMPANY PROFILE

Study is conducted on Kerala based Catholic Syrian Bank (CSB). The beginning of Indian
Banking is in 20th Century. The innovative founders of Catholic Syrian Bank Ltd also found this
period to be a flash of chance to promote the creation of a bank. The Catholic Syrian Bank Ltd
was born on Nine decades ago, on 26th November 1920 in Thrissur. Then CSB become one of
the highest banks in the South, because of their unique style in services. The founder directors of
the bank were people having high reputation known for their foresight, honor and creativity. The
policy they laid down has been regularly advocated by the consecutive generations who funneled
the destiny of the institution. The bank launched business on January 1st, 1921 with an
authorized capital of Rs.5 lakhs and a paid up capital of Rs. 45270/-

During the first two decades of its working, the Bank focused only in Kerala. During the period
many small banks came to the threshold of collapse. It shakes the confidence of the public and
solved with the process of consolidation. The strategy of mergers and amalgamations of small
banks with higher banks brought the banks under control of main authorities, thereby making the
industry's base strong. In 1964-65, The Catholic Syrian Bank Ltd took part in taking over the
liabilities and assets of five small/medium sized banks in Kerala. In 1975 Bank entered the field
of foreign Exchange. At a very early stage, the Bank accepted modernization or systematization
as an effective tool of management. The Catholic Syrian Bank Ltd did not wait behind in taking
up the challenge and more than 75% of its clientele belong to small and economically weaker
strata of Society. The Bank has a solid rural base with around 80% of the branches in rural and
semi- urban areas. Investments in money market and capital market instruments are being
lengthened and phases are being taken to have an in house equity research wing so as to face the
challenges of the future. The Bank has also geared up its machinery to increase its market share
of corporate finance in the days to come. The real inner strength of a growing organization lies in
its staff resources. The Bank has been singularly fortunate all these years in creating an
environment in which the employees at all levels could play their role.

Their contribution to the growth of this institution has been precious. The Bank has a very
vigorous team on its Board of Directors who is managing the fortune of the Bank prominent to

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growth and prosperity. Now, the bank has a linkage of over 430 branches and more than 240
ATMs through India. The Bank also plans to open more number of branches in a phased mode.

1.2 BANKING INDUSTRY

Banking Industry is the vital industry among all other in the economy. Even though it is fully
service oriented business, this industry can keep up balanced system in society. Let’s start with
RBI (Reserve Bank of India). Like central bank in foreign country, Reserve Bank of India is
considered as the controller of all the banks in India. RBI has full power to control the activities
of other banks in India. They can fix interest rate, cash reserve ratio etc. to help the industry to
keep a healthy competition and working condition. They can supervise them to check, whether
they are performing their duties, rules and regulation on the way that settled by the RBI. And
they also check whether they are going against their principles or behave against any ethical
activities. Banks deals with basic financing activities like collecting cash and lending money to
customers. Now a day’s bank is establishing their services to more technological oriented in
order to develop their business. Such criteria includes online payment from you are, easily
transaction from one account to other without any time lag. This development reduces the people
tension about bank formalities. And it also helps the bank to create a progress in their business.
Compared to other financial institutions or any other intermediaries, bank is considered as the
best option to keep our saving secured and to get a moderate rate of return. In case of shares, and
other financial instruments they are secured enough, even though it provide high rate of return if
it gets high profit in return from their business. So banks are considered as the safest way to keep
their money and valuables and thereby increase their demand in society. Now banking industry
flourished in the present economy.

1.3 PROBLEM STATEMENT

Each decision is crucial as it involve risk factors. Business is a risky activity that that needs lots
of decision for the attainment of good results as well as to compete with competitors. Sometimes
organization is in need of more sources for the smooth running of business activities, it is
necessary to invest in the business. And sometimes company may have to invest in different
companies in order to get maximum return, and how to select the best investment decision that
helps the company to gain more. It is also important that the gain will cause any impact on key

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stakeholders and necessary to assess the business objective and finance objective. While
concentrating on gain it is also necessary to understand will that investment can return as per the
company’s expectation. And it is also important to verify the guarantee on the amount returned
with capital appreciation. This study is going to concentrate on the various strategic decision
aspect of Catholic Syrian Bank in their banking business. Main issue or problems in this study
are what is the current methodology they opted for the investment purposes? Why they are
sticking to the same one? It is also necessary to find out, is this strategies are affecting the
business and financial functions of the business. What are factors that may affect the
Stakeholders especially the shareholders, employees and management?

1.4 LIMITATIONS OF THE STUDY

The limitations of doing this project for the company CSB - Some of the data were not available
in the internet. Had to omit few data that was not available in the net. There was the problem of
unavailability of primary data for this project. The primary data had to be collected directly from
the company, and this access was denied. The company's continuing loss making was another
big challenge faced. To find out the ratios sometimes was very difficult as most of the figures in
the company's balance sheet showed negative figure. The company was in a loss making stage
and this resulted in finding of ratios very much difficult. Most of these ratios found out are in
negative figures, and at many times I thought my calculations were wrong.

1.5 RATIONALE

The reason to choose this topic and the company is because the banking industry in booming and
growing at a faster rate after the demonetisation they make a huge potential market entrance so
other banking companies are in treble. The banking industry faced an extraordinarily turbulent
year in India through unprecedented disruption. Extreme pricing pressure accelerated market
exits and industry consolidation, Even though the transition is turning out to be stressful entailing
massive dislocation in the short run, the new industry structure will ultimately prove beneficial
for the sector. Studying this company performance analysis can give us an understanding as to
what is driving the growth of this industry and how the company outperformed itself during the
demonetisation.

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1.6 ACADEMIC SIGNIFICANCE OF THE RESEARCH

These years I have studied more about financial aspects and I thought to examine and study the
annual financial statements of the bank for the stipulated period. This study will pave the way to
the academic as well as general public about the overall efficiency at which the largest
commercial banks are serving. This study will also help to understand the financial performance
of the banking sector. Apart from this, this study will throw light on the different aspects where
the Catholic Syrian Bank excel and how the banks will provide an opportunity in balancing its
activities to achieve the best performance.

1.7 RESEARCH OBJECTIVES

● To examine the investment decision made by organization

● To analyze the impact on its interested parties due to the investment decision
● To evaluate the business and financial objective
● To study the benefits that they can raise from the investment decision

1.8 RESEARCH QUESTIONS

The research questions that are hoped to be answered in this study are:

● How is the growth and performance of the company?

● How is the financial positions of the company?
● Is the company attractive for investors?
● How much will the company grow in the future?
● Which are the areas the company can improve to remain competitive?

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 CHAPTER 2

LITERATURE REVIEW

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 1. LITERATURE REVIEW

Literature review is the data that collected from studies that already conducted in previous years.
In this section details related to the current study get compared. Thesis, journals, magazines and
websites are the main source of the literature review. It is the processes of collecting the
summary related to title and present the details in a summarized format.

(Ashoka, 1983) “In studies saving generation on deployment, he promote discuss the level and
determinants of investment, stream of resources to and from the rural sector in the form of
financing liabilities and assets. The general picture of rural saving is conquered by household
sector that has been experiencing increased share year by year. Hence, to attain the investment
targets of the seventh five year plan, the behaviour of household saving is significant”.

(Pandey, 2000)Research studies the effect of job characteristics; by analyzing examine the job
characteristics model and group effectiveness on job involvement conducted study with
including sample of professional groups, to get a wider coverage. They are also focusing on
management of essential guidelines that helps to maintain employee’s positive attitude and
minimizing negative aspects; towards organization. In this study motivating factors of employees
job characteristics are classified as low moderate and high motivating potentials. Employees are
also classified as low moderate and high according to their level of performance. This factors are
independent whereas job involvement, job satisfaction, organization commitment are dependent
variables. Study took different types of employees from different professions. From different job
groups technical job has emerged most motivating job and bank job is least motivating. Other
jobs are nursing, teaching; Vs LIC have very small change in motivating potential compared to
others. Researcher suggest that lower the group effectiveness, lower the receptivity to change
and higher the group affect higher the receptivity to change. In case of job satisfaction teaching

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group is most satisfied compared others and LIC group has stood second followed by technical
and banking group, whereas nursing is least satisfying group.

(Karthikeyan, 2001) has conducted research on “Small Investors’ Perception on Post Office
Saving Schemes and found that there was substantial change among the four age groups, in the
level of awareness for Kisan Vikas Patra (KVP), National Savings Schemes (NSS), and Deposit
Scheme for Retired Employees (DSRE), and the overall score confirmed that the level of
awareness among investors in the old age group was higher than in those of the young age group.
According to the conducted study, no difference was detected between male and female investors
except for the NSS and KVP. Out of the factors scrutinized, provisions of life and tax
reimbursements were the two major ones that impact the investors both in semi-urban and urban
areas”

(.D, 20004)Examined that the investment is either certain or uncertain. And it depends upon the
business environment. So investment decision either change the business or it will remain
constant. Firms with higher amount of outstanding debt are normally averse to take new
investment projects. Suggest a negative relationship between investment rate and indebtedness of
firm.

The Indian Household Investors Survey, (2004) concluded by saying “investment preferences
among household investors have important socio-economic implications. Such preferences
influence the direction in which, and the channels through which, household financial savings
would flow. A developing economy, like India, needs a growing amount of household savings to
flow to corporate enterprises. Such flow can grow on a sustained basis if, and only if, there is an
effective system to ensure that the enterprises receiving the flow are sound and will make proper
use of the money provided. In the absence of effective checks on mismanagement and
misappropriation at the corporate enterprise level, the saver’s investment preference is turned
away from corporate shares and securities towards other savings instruments”.

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& Anne Leah Jones 2005) discovered that there was a growing interest in investor psychology as
a potential explanation for stock price movements. The authors constructed a measure called an
Equity Market Sentiment Index’ (EMSI) using publicly available data. The index measured the
market’s willingness to accept the risks inherent in an equity market at a given point in time.
Daily price movements in the Massachusetts Bloomberg Index were found to be significantly
related to investor sentiment. In fact, the results further indicated that the lagged values of the
EMSI better explained the changes in the market. Short-run changes in the market index were
driven primarily by the investor sentiment rather than by the index’s own price momentum.

(Aman Srivastava 2006) observed that investment decisions were based on personal analysis
than brokers’ advice. The current market price was a better investment indicator for the investors
than the analysts’ recommendations. The study found that information played an important role
in investment decisions.

(Kumar, 2007) In their study analyzed “the retail investors’ preference with regard to trading
platforms: traditional trading and online trading. They also covered the actual problems faced by
the retail investors using either of the platforms. Researchers attempted to understand investors’
perception about online trading and compared existing usage of online trading platform with the
traditional trading platform. They found that retail investors in India are conservative and
majority of them felt safe with online trading as it is more transparent and lessens the chances of
fraud”.

(Myeong-gu Seo & Lisa Feldman Barrett 2007) found that individuals who experienced more
intense feelings achieved higher decision making performance. Moreover, individuals who were
better able to identify and distinguish among their current feelings achieved higher decision
making performance through their enhanced ability to control the possible biases induced by
those feelings.

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(Meenu Verma 2008) found that the investment choice depended on and was affected by the
demographic variables such as gender, age, income, education, occupation as well as by the
various personality types such as conservative, medium conservative, moderate, medium
aggressive and aggressive. The investment preferences were dynamic due to the changes in the
social, economic and political atmosphere, as well as the introduction of new investment
avenues.

(Rajat, 2009) Examined “investment pattern of retail investors of Garhwal in Uttrakhand, and
analyzed the perceptions and behaviour of the retail investors in the region with an objective to
design effective investment literature and policies. The study shows a clear shift in investment
trend from instruments offered under post offices and government schemes towards banks,
equity shares and mutual funds. They also suggested that, similar studies should be conducted in
different regions of India to develop a comprehensive understanding of trends in investment
among the retail investors across the country”.

(Lyons 2010)” The goal of this paper is to understand the effect of family decision-making on
the investment decisions of married men and women. Using data from the Survey of Consumer
Finances, we investigate how the spouse’s relative control over financial resources in the
household and the life-cycle stage affect the investment choices of married women and men. The
results show that married women who have more control over the financial resources are less
likely to invest their defined contribution plans (DCPs) in risky assets. Also, women who are
married to relatively older men are less likely to take on risk with their DCPs. There is little
evidence that the wife’s characteristics affect the investment decisions of married men”.

(Srinivasa 2011) found that equity investors in the Bombay stock exchange considered
themselves quite independent of any influence from outside. Investors their personal feelings,
although it is quite a mystery just how the investors’ own subjective judgments were formed.
Nevertheless, the average investor fancies himself or herself free of any direct influence and
shows a puzzling total disregard for matters concerning their personal financial needs. This study
examined the factors that appeared to exercise the greatest influence on the individual stock.
Further, this study included factors investigated by preceding studies and the behavioral finance

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theories. The study concluded that decisions to purchase stock depended on economic criteria
combined with many other diverse variables.

CHAPTER 3

RESEARCH METHODODLOGY

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 3. RESEARCH METHODOLOGY

From the French word “recherché” the word research originate, which means “to go about
seeking”. The people who conduct the research are known as the researcher. He/she will be
curious about the topic and the find proper solution to the problem. For a successful research
there will be goal to achieve or to find the solution for the problem. Research is a phenomena
and process that occurs in day to day life. Every problem has a solution, and finds out the
problem and tackle that problem is the function of research. Research may be from scientific or
unscientific reasons, or may be conducted in a theoretical or practical situation. Research
methodology is a systematic process to tackle problems. “The procedures by which researcher
goes about their work of describing, explaining and predicting phenomena are called research
methodology”. Research methodology provides basic knowledge and guidance for the work plan
of research.

In research methodology the researcher should collect the information that is necessary for the
project. Such data can collect from two different sources, Primary data and secondary data.
Primary data include different methods to collect information. They are questionnaires,
observations, interviews and schedules. Such information is collected directly from the sample
group and details collected from the sample will be more accurate as it doesn’t include any
mediator. Another way to collect the information is secondary data collection. It will be already
available in the market. Sources for secondary data are also divided as published and
unpublished data. Magazines, newspapers, public records, journals, banks stock exchange etc.
are the different sources available, as published data. And unpublished data like diaries, letters,
unpublished biographies and autobiographies are also available.

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3.1 RATIO ANALYSIS

To conduct the study and analyze the related topics of CSB, it is better to use ratio analysis. That
helps to identify the company’s current financial positions and their performance level. Let’s
start with the net working capital of the business. Even though it includes short term fund, it is
necessary to maintain a proper standard. Net working capital is generally defined as the
difference between the current assets and current liabilities. Current asset include cash,
marketable securities, account receivables and inventories whereas, current liabilities include
account payable, accrued wages, taxes and other accrued business. Ratio Analysis is the
important tool to check the financial condition of the organization.

Ratios can be classified into five categories, and it includes:

Liquidity Ratio

Liquidity ratio focus on availability of the cash to meet the short term needs. And also helps to
understand the firm’s ability to convert the short term asset into cash. Liquidity ratio has two
other sub classifications that are current liquidity ratio and acid test ratio.

Current ratio

It shows the actual availability of liquid cash in business to meet its short term obligation.

Current ratio = current assets/ current liabilities

High current ratio indicates that company is having better performance in maintain liquidity in
business. Low current ratio indicates that company is not well in maintaining liquidity.

Quick Ratio

It is also known as acid ratio. In this ratio it is assumed that inventory and other short term assets
are considered as non-cash items, as it have less liquidity. So in quick ratio it excludes inventory,
prepaid expenses, deferred income tax, etc.

Quick ratio = Quick Assets/Current Liabilities

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Usually this ratio includes cash and cash equivalents. So it is not used in crisis situation in a
business.

Asset Management ratio

Asset management ratio is focuses on the efficiency of firm to manage the assets properly. Better
utilization of resources will help the business to progress in low expenditure. It should take care
of the investment approach in assets of the firm. Too much investment will affect the operating
capital, whereas low investment affects the profitability of the business. It is also known as Asset
turnover ratio and Asset Efficiency ratio. Management should specifically analyze and decide
where to invest, how much to invest and when to invest, in order to manage the effectiveness of
business enterprises.

Inventory Turnover Ratio

Inventory turnover means how many times the stock is sold and restocked each year. If the
turnover is very high that means firm is in danger due to stock outs. And turnover is low there
may be a high chance for obsolete inventory.

Inventory Turnover Ratio = Net Sales/Inventory*365

It is easy to get the days’ sales in inventory, when we have inventory turnover ratio.

Days’ sales in Inventory= 365 days/inventory turnover*365

Or

Days’ sales in inventory = Inventory/ cost of goods sold*365

Inventory turnover ratio will vary in each company.

Average Collection Period

It means the number of days the company takes to collect its credit collection from its customers.
It is also known as Days’ sales outstanding or Days’ sales in receivables. To understand the
actual debtors in business, balance sheet will provide correct information.

Average collection period = 365 days/ sales receivable

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 Or = receivables/ sales per day

Credit sales are promoted only with the intention to create more
sales and thereafter to increase the profitability of business. So less collection date indicates
credit collection is done on paper time. Otherwise there is a chance to have bad debt.

Fixed Asset Turnover

Fixed asset is used for the production or providing services to the business. Plant, machinery,
building etc. are comes under this category. This ratio analysis is done for checking the firm’s
efficiency and effectiveness to handle those assets. Fixed assets are very expensive and it should
take care properly.

If any carelessness results in damage of fixed asset that results in damage of fixed asset that
results in huge loss.

Fixed asset Turnover ratio = sales/ net fixed assets

Or = Annual sales/net fixed assets (average)

To check the company performance it is necessary to compare the firm with other in same
industry or can compare with previous annual report.

Net Working Capital Turnover

To generate short term fund for paying short term obligation, working capital have to work hard.
Higher the values better the results.

Net Working Capital Turnover = Sales/Net Working Capital

Total Asset Turnover

Like the word meaning total assets, this ratio considers all assets in balance sheet to verify the
efficiency of the business or management. Higher turnover ratio shows that the assets are
managing efficiently.

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 Total Asset Turnover = Sales/ Total assets

DEBT MANAGEMENT RATIO

With the expectation of getting more gain from the new assets sometimes firms may invest or
purchase asset with the financial support from others. In other words firm may borrow money for
gaining more from new technologies or equipment. But it will exceed the borrowing cost.

Debt Ratio = Total Debt / Total Assets = Total Assets - Total owner’s Equity/ Total Assets

Debt to Equity Ratio = Total Debt / Total Owner’s Equity = Total – Total Owner’s Equity/Total
Owner’s Equity

Equity Multiplier = Total Assets / Total Owner’s Equity

This ratio is also known as long term solvency Ratio. Debt is good to a limit. It is useful in case
where there is a lack of fund. And debt is good to get tax allowance. As interest paid is an
expense and it will deductible from tax. But it is necessary to keep the debt within limit
otherwise the firm will be in huge burden.

Interest Coverage Ratio

Interest coverage ratio is a part of debt management ratio, as it looks the ability of firm to pay.

Interest Coverage Ratio = EBIT/ Interest Charges

(Earnings before Interest and Tax)

Profitability ratio

Profitability ratios measured firm’s capacity to generate profit from business. It can measure the
company’s performance and compare it with the firm in same industry or by comparing the
results with previous year performance.

Gross Profit Management

Gross Profit is that generated from the goods and services and to manage that profit.

Gross Profit Management = EBIT / Total Operating Revenue

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Net Return on Asset

Net Return on asset is the ratio that conducted for the investors, because they need to know to get
net review in net return on asset.

Net Return on Asset = Net Income / Total average assets

Gross return on asset= EBIT / Total Average Asset

There are some more ratios that able to identify the return that can generate from the investment.
And they are:

Return in common equity

Stakeholders are interested in their ratios to measure the return to stockholders on stockholder’s
investment in company.

Return on common equity = net income stockholder/Average common equity

Dividend payout Ratio

This ratios are basically for identify the income after taxed the money company are able to paid
to stockholders.

Dividend payout ratio = Total cash dividend / net income

Investment Turnover Ratio

It is the return that the business can raise by funding. Investment turnover ratio will help to know
the effect on finance and business objective by this investment.

Investment turnover ratio = Net Sale / (Shareholders’ Equity + Debt Outstanding)

Market value ratio

Here discussed the ratios on the enterprises side, now going to consider investors point of view,
using some other ratios:

Market/ Book Ratio = (Market price / shares)/ (Book Value/share)

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P E Ratio = market price/shares / earnings per share

Dividend yield = Dividend per share / Market price per share

3.2 STAKEHOLDERS

Strategic investment decision not only made changes in financial and business objectives, but
also cause impact on its key stakeholders. In a business stakeholders are classified as follows:

INTERNAL CONNECTED EXTERNAL

Shareholders Government
Directors Customers Local
Managers Supplier Community
Employees Advisers Pressure Groups
Consultant Media
Competitors
TABLE 3.1

Internal stakeholders are directly linked with management functions in a business.

Directors take initiation for supervising the different areas in business as well new projects or
topics. They will handle salary, share option, job satisfaction, status, bonuses and perks.

Stakeholder’s response to changes in a changing environment is very crucial to the business

development.

Managers are concerned with assigning work to workers in order to achieve the profit of
business through efficiency in activities. They are concentrated on allowing bonuses, profit
maximization, pleasing shareholders and growing the business.

Employees are people who are assigned to do their duties with full effort and interest. There by
generate maximum output for the business. They needs high pay, job security, good working
condition, fair treatment, fringe benefits, training, health and safety in return for their service.

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Connected stakeholders also have direct relation with business; like without shareholder raising
financing is very difficult. All connected stakeholders are very important for the proper running
of business.

External stakeholders are not directly involved in business. But in most case their action will
reflect equal or proportionate change in business. Governments changing policies and updating
their rules and regulation especially in case of business is the best example for that.

To study the stakeholders’ behaviour and to understand their response towards change in
working environment will also affect the business’ strategic decision making. So it is necessary
to identify what are the reactions from the stakeholders and who all are the different stakeholders
who respond to the new decision made by the business board. Stakeholders are different types
like showed above. So it is quite natural that there will also be a chance to show different level of
interest and different level of response.to identify the level of interest from the interested parties
this study is using Medelow’s Matrix. It helps to study the attitude of shareholders, when they
are setting out strategic project. This matrix is classified on the basis of two key factors, level of
interest and level of power. Every stakeholder has their own power to an extent. But the level
varies. People who have high power and high interest in business activities will have to manage
closely, to fully engage these people at any cost. Maximum effort is very necessary to satisfied
them. People who have high power and less interest in business will have to manage by keep
satisfied with valuable information, but it doesn’t disturb them by bored with the message.
People who have low power and high interest on business should sufficiently inform the major
information in order to prove that there are no other issues. This people might help to sort out the
problem that arising in the industry. So it is necessary to keep them informed only with the major
information. In mendelow’s matrix, this is the last category of people that having low interest
and low power in business, this category don’t have to inform information frequently. Just keep
an eye on this category in order to check whether their level of interest or power changes is.

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3.3 ETHICS

In simple words, Ethics means a guideline that shows how to behave, what is good and bad. It is
the principle of scruples that how an individual should perform. Ethics is related in one or other
ways in almost all sectors. Ethics should be build up on the basis of culture that each individual
from. It varies according to the variation in culture. Organization is a place where many people
having unlike characteristics came from different cultural background working together for
achieving the same goal. So it is necessary to keep up a business ethics within the business.

Business Ethics is the application of moral or ethical values to the business environment in order
to maintain satisfy or protect the employees, several related parties and the society that the
company get their sources. It is also known as corporate ethics. Now a days business is focusing
upon the gaining more and more profit, by forgetting the ethical values they have to consider. So
to prevent such activities against ethical values, it is necessary to create an awareness and
measures to keep going through the guidelines of business. Ethics are basis of respect towards
each other in a working environment. There are many reasons for maintaining the ethical values
within the business environment.

Ethics can influence the strategic Decision making in Business: If the firm is able to follow the
ethical values in business, it will ensure the ethical performance of leaders and workers. And
their ethical behaviour towards society will help the business to take suitable decision that is
acceptable to the interested parties in an organization.

Ethics will help to attract more employees: a firm having ethical values in it can treat their
employees in a way they are expecting. So there will be high morale from them. Employees
having high level of morale towards the company are considered as the great asset. And it will
motivate them to perform as possible as they can.

Raise level of employee’s retention: Employees need a good working environment. People who
have good motivation and support from superiors will generate more confidence to work. Ethics
include providing the necessities to the employees along with their remuneration. When the
organization is ready to go through the same, there is no other reason for leaving the
organization.

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Ethics can reduce the cost: Employees who are satisfied with the organization will provide
maximum return from their activities. Employee’s efficiency in work will reduce the cost of
production in business. And at the same time employee’s interest in company to retain in
business will also help to reduce the cost. An employee is selected to the business through many
procedures like recruitment. All these procedures have to meet various expenses. Each time
recruiting the employees will increase cost of business. So ethics can help to increase the
retention of employees and thereby reduce the companies’ expense as well as increase the profit
level.

Ethics create customer loyalty: some of the business enterprises are concentrated only in profit
appreciation, instead of taking care of customer’s interest. Obviously profit making is the final
gal of objective, but at the same time they have to maintain ethics in their activities. Consumers
are considering being the king. As competitors increases customers can decide from where to
buy and how much price they can afford. So business should limit their profit percentage to their
products. It will create an interest in customer’s mind that, company is going through the ethical
manner and their level of satisfaction will increases day by day. If the company is able to create
that level of interest or confidence, they can easily create a loyalty from the consumers.

Ethical business attracts Investors: Generating confidence and believe in society about the
business activities is not considered as a small matter. Once we create it and maintain that
properly it will attract more investors. It is only possible if company keeps ethics within it.

It is a key to improving productivity: people will perform their duties efficiently if they got a
confidence upon organizations ethical values. Their efficiency in work will result in the overall
development of business.

Ethical activities develop reputation: Business should ensure that they are going through the
actual ethical background that they supposed to go. And if they go like that they can attract the
customer’s interest. It will raise the goodwill of company.

It enhances Partnership: if the business is generating high reputation, they can easily attract
outsiders like consumers, other parties to engaging with the current business. Partnership is a
format of business that helps to devo their existing business.

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Resource Utilization: Sometimes resource available may be limited or unlimited. So it is
necessary to use such limited resources very carefully, in order to retain the remaining resource
and use it whenever we want. Ethics will limit the wastage.

Ethics can promote corporate governance: Corporate governance is necessary to find out
whether the business is conducting with the prescribed rules and regulations. Ethics is also like
that. If the company prefers ethical activities, definitely corporate governance will be a part of it.

3.4 SWOT ANALYSIS

Strategic investment decision may result in the growth of business result or in loss. And its effect
will definitely affect the interested parties in the business. To study the effects of investment both
in financial and business objective SWOT analysis plays a vital role. In order to maximize the
available opportunity and minimize the negative impact of threat and weakness that may face by
business. Investment decision involves high degree of risk, so it is necessary to go through
SWOT analysis. SWOT analysis consist of four elements, they are strength, weakness,
opportunities and threat. Strength and weakness of a business is conducted to be the internal
factors. Strength of a company could be in managing the branding process quickly and
comprehensively. Its weaknesses could lie in the distribution of products, or payment delays.
These are internal problems / issues and have to be understood and dealt with on an ongoing
basis. Often consultants are called in to assess these two aspects on the belief that an outsider
could give more insights into the company.

The two external factors, opportunities and threats, are not in the company's control. The
environment, composed of social, economic, legal, regulatory, national and even international
events, has to be constantly perused to track these. It will help to find out the positive or negative
of business and its interested parties. Opportunities and threats also show the position and
negatives that may have to face from the business environment that is outside the business.

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Research methodology is the process of knowing more about the topic which is focused for the
study. In this study many theoretical aspects helps to build up the actual concepts of the topic
discussed in the project.

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