Archives for Business GD Topics

Export Stagnation-Causes and Cures

Export is a common term used for trading the business. To be more specific in common words, exporting is the process of making the goods and services of one country to other countries. India has been a big dependent on exports to earn foreign exchange, to market its surplus, to unleash its marketing potentiality and scope of produces from India. Since economic reforms in 1991, India opened a gateway to concentrate on exports to earn in foreign currency for the purpose of:

  • Business expansion
  • Foreign Currency earning
  • Increase its foreign exchange reserves

Whatever may be cause, at present export stagnation in India is the primary cause for the perplexity of the traders. Not only the products, services but also Talent export is stagnated due to global pressure of varied causes.

Causes for Export Stagnation

  • Inferior goods and services: The production of goods and offered services are not in the area of superior quality considered with other countries.
  • Lack of resources: India does lag behind, in possessing few resources like product, talent related.
  • Lack of exporting facilities: The exporting facilities with proper marketing and warehousing facilities are the misfortune which hinders the exporting activities.
  • Government policies: To conserve national resources and avoid the shortage of few supplies in the domestic market, government follows stringent policies in exporting. Recently ban on onions to Pakistan is an example of government policy that have stagnated the exports.
  • Political factors: The exports are subject to political relations that are bound to market risks, so depending upon the relations and agreements formed upon the business tours and political agendas formed while touring other countries the exports are influenced.
  • Market factors: Demand and supply for the goods drive the production and makes them available in the market. Availability of alternative products and demand for Indian tagged products makes the products suffer with proper demand.
  • Economic inactivity: Due to recession or the stagnation of economic activity or inflation occurring in the country influence the rate at which exports are carried on which affects the foreign currency earnings.
  • Tariffs: With the regional cooperative agreements and bilateral trade agreements are in raise further influence the exports from one country to other country.

Apart from the above said causes there exist several factors like seasonal, production, social, cultural, geographical factors, that influences the export stagnation.

 

Cures for Export Stagnation

Due to several causes that hinders the export stagnation, few measures with proper execution makes the situation best for export promotion. The cures that would promote exports are:

  • Developing qualitative products and services: Producing qualitative products and offering qualitative services not only promotes the brand and also boosts the sales and profits with zooming the export and making the customers for the selection of this brand for consumers usage.
  • Improving trade relations: Improving trade relations with other countries helps in promoting our products in their markets with easy access to hit their customer base.
  • Improving marketing and financial facilities: With an improvement in marketing facilities like branding, warehousing, pricing strategies, non-conventional ways to access foreign markets and with the cooperation of banks like EXIM to follow its recommendations in marketing may benefit a lot the exports from India.
  • Boosting political relations: Improving political relations with countries with which trade fetches more profits are highly recommended which not only gets a trade surplus but also contributes for strong political and socio-cultural relations improvement.
  • Gaining business knowledge: To do a business it would be good to know the knowledge about the export business and to communicate professional which adds advantage and avoids the interference of middlemen in your business.
  • Fostering talent: With the global evolution of business, one has to encourage the youth to know more about the exporting business by imparting the required skills and knowledge with giving inputs related to the business with which a company or a trader deals with.
  • Government policy: Government should ease its exporting policy by giving more royalty and profit share in the foreign exchange earned with international trade that further encourages the business with passion.
  • Mitigating market challenges: Meeting the global standards with proper production and marketing strategies along with maintaining relations with buyers, suppliers and checking for possible threats, risks, and improving the business domain.
  • Changing business philosophy: With the growing concern of customer orientation, Customer relationship management, providing competitive substitutes of products/services, satisfying the consumers with all required facilities will throttle the export business

All the above pointed cures will make certain the export to get its top notch to drive the business at front row making the economy more flourishing.

Developing countries need trade; not aid.

Developing countries are called as third world countries which have gained momentum through their privatisation and globalisation process due to economic reforms and extinction in the trade barriers overseas in recent times. The need of the hour, for these countries seems to be trade; but not aid. Aiding these countries will benefit in terms of providing:

  • Loans-to combat the scarcity of financial resources.
  • Rebates-to attract the business from these countries offering rebate.
  • Trade Discounts-helps in mobilizing resources cheaply.
  • Loan waive-to decreases the interest rate burden.
  • Technology-to improve quality.
  • Skills-to impart superior production methods.
  • Market scope-to increase the availability of products.

The above methods will aid directly or indirectly, the developing countries to attain the production at a reasonable price with good quality. But, the question here is to provide them the trade opportunities. To increase trade from developing trades, the need of hour for encourage is:

  • WTO Support: World Trade Organisation must support by curtailing the tariff rates on the exports done by developing countries, which will fetch a fair return on the investment to produce the products. And should not impose the subsidy restrictions on agriculture which harms the agrarian economies by causing acute grain shortage making the developing countries vulnerable to starve for food grains.
  • Trade Disputes: Disputes at international trade must be adjusted in favour of developing countries, as these countries lag behind in terms of production facilities, resources.
  • Strengthening of global trade: Through agreements and upgraded understanding, global trade must be strengthened by freely giving market access for its overseas sales.
  • Restriction on Dumping and Licensing: Dumping must be eradicated without violating the developing countries policies in importing the foreign goods. Licensing for business should be made ease for operational feasibility.
  • World Bank: World Bank should regulate its loan schemes to favour the trading of developing countries.

While the Liberalisation, Privatisation, Globalisation has opened gates for global economic revenue creation to the developing countries, the interest in its favour is still in stake, causing much burden by posing restrictions on local ruling, through big trading organizations like World Bank, IMF, WTO. All these organizations together with the developed countries must ensure free and easy trading opportunities which make them grow economically.

Privatisation will lead to less corruption

Arguments towards the topic

Privatization of business means transfer of ownership to private parties rather than public. Privatisation makes any business to keep the people in discipline by making every person sharing their hand in responsibility and accountability. Thus, the corruption that exists in a prolific pattern in public sector is not seen in private sector, due to the fear of losing one’s job. As the private organizations makes individualistic pattern more powerful rather than collective decision and decision making is done in a fast pace, any negligence towards the work will attract penalty or punishment. This type of working culture encourages good work culture by avoiding corruption. Privatized organizations collectively work to make profits and any type of in-disciplinary action will be punished. The accountability further creates an opportunity to increase an individual’s working knowledge and skills. Few factors which curbs corruption through privatization are:

  • Performance orientation-increases knowledge and skills of the employee.
  • Marketability scope-increases production by providing more functions.
  • Least Political Influence-helps in free decision making.
  • Accountability-makes responsible.
  • High salaries-controls easy money making attitude.
  • Increased job satisfaction-controls corruption and increases productivity.

Arguments against the topic

Privatisation dents the constitutional values of our country, as it doesn’t want to make private solely responsible for management and maintenance of organizations. Due to privatisation, concentrate of wealth in few business people takes place and the public will suffer with accountability deficit on human norms. The factors which lead to dissatisfaction for privatisation are:

  • Monopoly-results in dominance of businessmen.
  • Liberty-which causes unaccountability.
  • Risk-decisions taken may tumble the business.
  • Insecurity among employees-due to no permanency of employees continuance.
  • Dissatisfaction-due to low number of welfare facilities
  • Rise in corruption-above all factors aggravate the corruption.

Both the public and private sectors have the risk of rising corruption. The view that, privatisation will lead to less corruption should not be taken for granted. However, the policies framed by our rulers and the procedures with which these social evil is tackled is the main concern with which corruption can be wiped out of the society.

Is the business of business only business?

The main objective of any business is survival, which means continuing its business, which is possible through earning profits which makes a business flourish through proper marketing and production strategies. But the resources for production or services come from the society, for which there will be an obligation to pay back to the resources that society gave to the business. Which is generally called social responsibility. No one element; either profits or only social responsibility makes a business survive for a long run.

Arguments towards the topic

Business of business is only business, because without making profits or expected returns on the investment, no organization supports its life in the challenging business environment. The profit orientation makes more people to establish organizations which drives the economy by providing ample employment opportunities, income earnings and also creates business, marketing opportunities to the business people dependent on the product sales. With the economy which comes through profits of running an organization, all sectors will receive a part in earning income through the circle of income. Business should be run for the purpose of business only, as it has positive outcomes like:

  • Creates more employment opportunities
  • Boost the economy
  • Helps in establishing more organizations
  • Creates market for the product
  • Increases sales
  • Helps in organizational expansion

Arguments against the topic

Purpose of any business is not solely doing business. It has legal compliances and moral obligations to fulfill. If profits only looked for, then there exists an unequal distribution of income. Concentration of income in few hands leads to market influence lead by these people. Which affects the market and sales that makes the rates to tumble and leads to black marketing of the products? Any business has a moral obligation of maintaining ecological balance and should contribute to the growth of society by fulfilling their Corporate Social Responsibility (CSR), through which it gets its resources like material, technical, human, financial resources. So paying to society will improve the band image which positively promotes the products of that company. Government also encourages by slashing the corporate tax for fulfilling such social responsibilities. Following ethics in production, providing employment opportunities, imparting the employees with safety and security measures forms the primary duty of any company which contributes to the belongingness of the employee to the organization with which they work.

Is Globalization Really Necessary?

Liberalised economic policies lead to globalisation, which is a combination of integrity in technological, socio-cultural, political and economical components. It facilitated the flow of human capital, financial capital along with cultural blend by erasing the cultural and geographical barriers through channelized transportation and improvised communication facilities.

Arguments towards Globalisation

The globalisation trends have shown wiping out of most of the barriers, which countries have to trade their surplus. It helped many countries to flourish economically through mutual cooperation in the agreed sectors. Technologically upgraded system of functioning is witnessed along with introduction of socio-cultural changes, which has added new spice to the global economic growth. In India, globalisation lead to building of MNC’s which shaped the economy and futures of young talents. Effects of globalisation changed the every facet of life through its advanced communicating technology. The uptrend in growth of many third world nations was due to availing the global opportunities rose from globalisation. Job market was cheered up by more opportunities and financial markets seen foreign currency flowing into the country as foreign investments. With the human capital entering into the country changed the socio-cultural interactions establishing a new arena of working culture with ethics. Deterministic feature of globalisation paved path to establish political connections in setting up cooperative societies and regional cooperative organizations to enhance the internal trade between a group of countries sharing common features either in area or economic conditions.

Arguments against Globalisation

Globalisation poses threat to domestic growth of the Small Scale Industries by counteracting on the production which strives a lot to combat with the high quality products that are globally manufactured. Shut down of such industries withdraw the employment opportunities which puts the banks loans in a insolvent condition. For the question, Is globalisation really necessary? The answer should definitely be “No”, because of its vicious culture that induces into our country with the name of “growth.” Globalisation leads to uncontrollable domination of MNC’s over local governments which tend to break the rules and manipulating them for their profit oriented needs. Domestic industries suffer a lot along with the people who directly and indirectly depends on it for employment and growth opportunity often distressing them. The industries which withstands with the global competition in addition suffer to grab the market space lagging behind creating leads and sales. Culture also poses a vital role in its diminishing point which enters with the name of “change”, which changes the behaviour and attitudes of the working class which is a strong con for the Indian tradition and culture.

As every other aspect in the life, globalisation has also its pros and cons which depend on the shade of its perspective. Pros have to be implemented while ejecting the cons and lay a ladder for the economic growth and global well being.

Is MNCs Superior to Indian Companies?

MNCs are superior to Indian Companies

Due to the global business, MNC’s spread their branches across the world. It gave an opportunity to grow by providing employment, introducing cross culture, making the skilled manpower, effectively contributing to the economy. Apart from these providing high standards of living, good working culture, maintenance ethics in business forms the branches that supports the growth of MNC’s and is certainly superior to Indian companies in terms of all these parameters and also provides high quality products. Not only these, but developing the standards of society by paying back in the form of Corporate Social Responsibility, MNC’s are superior in all terms of its operational and non-operational terms. The points that strongly supports that MNC’s are superior to Indian companies are:

  • Global business outlook and operational efficiency
  • High end technology
  • Highly specialized and skilled labour
  • Strategic business views
  • Superior quality

 

Indian Companies are superior to MNC’s

Indian companies are very young in their establishment and are going through a fast pace of growth with innovative ideas, constant up gradation and challenging the MNC’s by providing the superior quality and services. After the liberalization in India in 1991, due to economic reforms introduces, private companies in India started to crack the whip to accumulate the business efficiency they need in the long and short term and making Indian companies superior to MNC’s.

  • Superior quality
  • Attachment with local bodies
  • Corporate responsibility
  • Skilled and knowledgeable employees
  • Usage of high end technology
  • Innovation in both execution and framing the plans

Thus the question rose like, Is MNC’s superior to Indian companies? has faded in recent years by properly formulating the success ideas with competiveness and through fresh global outlook.