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FORCES NECESSITATING THE ADOPTION OF STRATEGIC MANAGEMENT BY FOREIGN AS WELL AS INDIAN COMPANIES

STRATEGIC MANAGEMENT

Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of rm in their external environments. It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources.

FACTORS
Globalization

and Business competition Emergence of regional organizations Allocation of limited resources Information technology Changing societal concerns, attitudes, and lifestyles Regulatory influences and govt. policies

CHANGING INDIAN BUSINESS ENVIRONMENT


Fiscal and Monetary policy changes Banking Sector changes Capital market changes Market driven pricing Public sector policy changes IDR and MRPT changes FDI policy changes Export policy changes Import policy changes

FISCAL & MONETARY POLICY CHANGES


Rationalization of corporate and income tax Rationalization of excise duties Rationalization and reduction in custom duties Lowering of interest rates

BANKING SECTOR CHANGES


Entry of private sector banks Equity dilution in public sector banks Phasing out of priority lending Operational freedom in lending rates Operational freedom in deposit rates

MARKET DRIVEN PRICING


Phasing out of subsidies Phasing out of administered price mechanism Abolition of control on distribution system

PUBLIC SECTOR POLICY CHANGES


Disinvestment of public sector undertakings Reduced role of public sector

IDR AND MRPT CHANGES


Abolition of licensing system except for few industries Concept of asset limit under MRTP act abolished Industries reserved for small-scale sector reduced Capital and investment limits for small-sector raised Joint venture norms eased

FDI POLICY CHANGES


100% equity participation by overseas companies in selected sectors Freedom for buying shares to increase the holding of MNCs in their subsidiaries Counter guarantee by central government for certain sectors

EXPORT POLICY CHANGES


Emphasis on export but without financial subsidies Export income tax free expect in certain cases Norms eased for opening offices/ establishments aboard

IMPORT POLICY CHANGES


More and more items on open general license De-emphasis on quota restrictions De-canalisation of imports Import tariffs as per stipulation of WTO

IMPLICATION OF CHANGES

Opportunities

Entry in business has become easier Process of business restructuring has become easier Acquiring business overseas has been easy Raising of funds has become easy

IMPLICATION OF CHANGES

Threats Increase in competition FII intervention Acute pressure on productive resources

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