V Liberalization of the economy means to free

the economy from direct or physical

controls imposed by the Government.
V The various types of controls are as follows:
-Industrial licensing system
-Price control or financial control on
goods
-Import license
-Foreign exchange control
-Restrictions on investment by big
business houses
V
bolition of Industrial Licensing and
Registration.
V Freedom for expansion and production to
Industries
V Freedom to import capital goods
V Freedom to import technology
V Free determination of Interest rate
V Improvements in Industries & service sector
V Free flow of FDI & MNC.
V Improvement in means of communication and
Transport.
DIS
DV
NT
GES OF
LIBER
LIS
ION
Danger in political independence.
Underdeveloped countries fail to increase
their exports in comparison to imports
V Privatization of Industries means opening
the gates of Public Sector to Private
sector
V The term privatization is used in two
sense
V Transferring the ownership of public
sector to private sector
V Management and controlling of public
sector by private sector without
transferring the ownership
V Disintegration of Socialist Economies
V Inefficient public sector
V Burden on the Government
V Inefficient management control
V To increase the efficiency and competitive
power.
V To reduce deficit financing and public deficit
V To strengthen industrial management
V To earn more and more foreign currency
V To make optimum use of economic resources
V To achieve rapid industrial development
V There are four important modes of
privatization. They are:

(a) Franchising, (b) Contracting, (c) Leasing,

and (d) Disinvestment.
V Itis the dilution of stake of government to a
level where there is no change in the control to
dilution that results in the transfer of mgt.
V Government ownership is diluted beyond 51%.
V In India, disinvestment of government share of
equity in PSUs is predominant. It started in 1992
immediately after the New Economic Policy.
V In india , there is not complete disinvestment ,
the government keep a dominant control.
V Gov. could only disinvest 1% to 35% shares of
PSUs on an average.
V The shares of efficient and profit-making
companies are disinvested more than the
potentially sick or sick companies.
V more in central PSUs than state PSUs
Privatization covers three sets of measures
1. OWNERSHIP ME
SURES
V Total denationalization
V Joint Venture
V Liquidation
V Management buy-out

ë

2. ORG
NIS
TION
L ME
SURES
V Leasing
V Restructuring( Financial, Basic )

3. OPER
TION
L ME
SURES
V Grant of autonomy to PE s in decision making
V Provision of incentives to the employees
V Freedom to acquire certain inputs from the
market.
V Globalization is the process by which a firms
activity become worldwide in scope
V Doing or planning to expand , the business
globally
V Giving distinction between the domestic
market & foreign market
V Basing product development and production
planning on the global consideration
V Global sourcing of factors of production
V Global orientation of organizational
structure and management culture
1. NEW M
RKETS
V Growing global markets in services
V New financial markets
V Global Consumer markets with global
brands

ë

2. GROUPS

V The World Trade Organization

V Regional Blocs
V More policy Coordination groups-
G-77,G-7, OPEC, OECD

3. NEW RULES
ND NORMS
V Multilateral agreements in trade new
agendas on environment and social
conditions
V New multilateral agreements for services
property rights and communication.

4. NEW TOOLS OF COMMUNIC

TION
V Internet and electronic communication
V Cellular phones
V Fax machines
V Faster and cheaper transport
V Computer aided design
V Human Resources
V Wide Base
V Growing Entrepreneurship
V Growing Domestic Market
V Niche markets
V Expanding Markets
V Economic Liberalization
V Competition
V Government Policy and Procedures
V High cost of basic inputs
V Poor Infrastructure
V Resistance to change
V Poor Quality Image
V Supply problems
V Small Size
V Lack of Experience
V Limited R&D and marketing research
V Growing Competition
V Trade barriers
1. Technological Advancement In
communication: This made it possible to
know in an instant what is happening in
different parts of the world.

The flow of information,by the Internet, can

enable developing countries to from each
other and from industrial countries.
V Improvements In Transportation And
Technology: this is reducing the costs of
shipping goods by water, ground and air.
This can facilitate the movements of goods.

V =ther Factors:
Rising educational levels, technological
innovations, and the economic failures of most
centrally planned economies.
The important trends in Globalization are the following:

(a) International Trade:

1.Trade has grown twice as fast as global GDP

in the 1990·s and the of developing countries
has risen from 23 to 29 percent.

2. There is a shift in trade, which has created a

new pattern in the international exchange of
goods, services, and ideas.
3.
dvances in information technology helps to
link firms from developing countries into
global production networks.

4. The tremendous growth of trade in services

and, more recently, of electronic commerce is
also a part of the new trade pattern.
V b) International Financial Flows:

1.There has been increase in international

capital flows of developing countries. However,
the financial crisis of 1977-99 have put it down.

2. flows are started to rise again. The financial

performance of emerging markets in the 1990s
made capital account liberalization an
attractive option for developing countries.
3.The East
sian meltdown has enhanced the
attractiveness of long-term capital investment.

4. Countries have started to recognize that

foreign direct investment brings with it not only
capital but also technology, market access and
organizational skills.
V C)International Migration:
1.
long with goods, services, and investment,
people are crossing borders in large numbers.

2.
ccording to World Development Report
1999-2000, each tear between 2 million and 3
million people emigrate, with majority of them
going to just 4 countries: the United States,
Germany, Canada and
ustralia.
3. The market for highly skilled workers will
increase