You are on page 1of 31

Economic factors

NATIONAL LEVEL

Gross Domestic Product


Gross Domestic Product (GDP) is the
broadest quantitative measure of a nation's total
economic activity. More specifically, GDP
represents the monetary value of all goods and
services produced within a nation's geographic
borders over a specified period of time.

GDP RATES

The equation used to calculate GDP is as follows:


GDP = Consumption + Government Expenditures + Investment +
Exports - Imports
The components used to calculate GDP include:
Consumption:
-- Durable goods (items expected to last more than three years)
-- Nondurable goods (food and clothing)
-- Services
Government Expenditures:
-- Defense
-- Roads
-- Schools
Investment Spending:
-- Nonresidential (spending on plants and equipment), Residential
(single-family and multi-family homes)
-- Business inventories
Net Exports:
-- Exports are added to GDP
-- Imports are deducted from GDP

PERSONAL TAX
In India, the Personal Income Tax Rate is a tax
collected from individuals and is imposed on
different sources of income like labour,
pensions,
interest
and
dividends.
The
benchmark we use refers to the Top Marginal
Tax Rate for individuals. Revenues from the
Personal Income Tax Rate are an important
source of income for the government of India.

Personal income tax rate

Taxes

Last

Previous

Highest

Lowest

Unit

Corporate Ta
x Rate

34.00

33.99

34.00

32.44

percent

Personal Inc
ome Tax Rate

33.99

33.99

33.99

30.00

percent

Sales Tax Rat


e

12.36

12.36

12.50

12.36

Percent

corporate tax rate


Definition
A tax that must be paid by a corporation based
on the amount of profit generated. The amount
of tax, and how it is calculated, varies depending
upon the region where the company is located.

Balance of payments
The balance of payments (BOP) is the method countries
use to monitor all international monetary transactions
at a specific period of time. Usually, the BOP is
calculated every quarter and every calendar year.
All trades conducted by both the private and public
sectors are accounted for in the BOP in order to
determine how much money is going in and out of a
country.
If a country has received money, this is known as a
credit, and if a country has paid or given money, the
transaction is counted as a debit.

Theoretically, the BOP should be zero, meaning


that assets (credits) and liabilities (debits)
should balance, but in practice this is rarely the
case. Thus, the BOP can tell the observer if a
country has a deficit or a surplus and from which
part of the economy the discrepancies are
stemming.

Balance of trade
The difference between a country's imports and its
exports. Balance of trade is the largest component
of a country's balance of payments. Debit items
include imports, foreign aid, domestic spending
abroad and domestic investments abroad.
Credit items include exports, foreign spending in
the domestic economy and foreign investments in
the domestic economy. A country has a trade
deficit if it imports more than it exports; the
opposite scenario is a trade surplus.

Monetary policy
Monetary policy is the process by which
the monetary authority of a country controls
the supply of money, often targeting a rate
of interest for
the
purpose
of
promoting economic growth and stability.
The official goals usually include relatively
stable prices and low unemployment. Monetary
economics provides insight into how to craft
optimal monetary policy.

Economic policy
Economic
policy refers
to
the
actions
that governments take in the economic field. It covers
the systems for setting levels of taxation, government
budgets, the money supply and interest rates as well as
the labor market, and many other areas of government
interventions into the economy.
Most factors of economic policy can be divided into
either fiscal policy, which deals with government
actions regarding taxation and spending, or monetary
policy, which deals with central banking actions
regarding the money supply and interest rates.

Govt incentives & subsidies


Measures taken by a government to attract the
development of industry in specified areas.
These include grants for building, works, plant,
and machinery, assistance in encouraging sound
industrial projects,free rent of a governmentowned factory for up to five years, taxation
allowances against investments, loans, and
contract
preference
schemes.

Fiscal deficit
When a government's total expenditures exceed
the revenue that it generates (excluding money
from borrowings). Deficit differs from debt,
which is an accumulation of yearly deficits.

Barriers To Entry
The existence of high start-up costs or other
obstacles that prevent new competitors from
easily entering an industry or area of business.
Barriers to entry benefit existing companies
already operating in an industry because they
protect an established company's revenues and
profits from being whittled away by new
competitors.

Barriers to entry can exist as a result of government


intervention
(industry
regulation,
legislative
limitations on new firms, special tax benefits to
existing firms, etc.), or they can occur naturally within
the business world.
Some naturally occurring barriers to entry could be
technological patents or patents on business processes,
a strong brand identity, strong customer loyalty.

E.g Government regulations - A rule of order


having the force of law, prescribed by a superior
or competent authority, relating to the actions of
those
under
the
authority's
control.
Requirements for licenses and permits may raise
the investment needed to enter a market,
creating an effective barrier to entry.

Barriers To Exit

Obstacles or impediments that prevent a


company from exiting a market.
Typical barriers to exit include highly specialized
assets, which may be difficult
to sell or relocate, huge exit costs, such as asset
write-offs and closure costs, and inter-related
businesses, making it infeasible to sell a part of
it. Another common barrier to exit is loss of
customer goodwill.

A company may decide to exit a market because it is


unable to capture market share or turn a profit or for
some other reason altogether. High barriers to exit
might force it to continue competing in the market,
which would intensify competition.
Specialized manufacturing is an example of an industry
with high barriers to exit, because it requires large upfront investment in equipment that can only do one
task.

High barrier to entry and high exit barrier (for


example, telecommunications, energy)
High barrier to entry and low exit barrier (for
example, consulting, education)

Unemployment in India

Unemployment Rate in India decreased to 5.20 percent


in 2012 from 6.30 percent in 2011. Unemployment Rate
in India averaged 7.58 Percent from 1983 until 2012,
reaching an all time high of 9.40 Percent in 2009 and a
record low of 5.20 Percent in 2012.
Unemployment Rate in India is reported by the Ministry
of Labour and Employment, India.
current unemployment rate: 8.8%
USA 6.1% UK 6.5%

The Government of India has taken several steps


to decrease the unemployment rates like
launching the Mahatma Gandhi National
Rural
Employment
Guarantee
Scheme which
guarantees
a
100
day
employment to an unemployed person in a year.

It has implemented it in 200 of the districts and


further will be expanded to 600 districts. In
exchange for working under this scheme the
person is paid 150 per day.

Orgn level
nature of business
When filling out a form, "nature of business"
refers to the type or general category of business
or commerce you are describing. For example, if
you work at Microsoft, then the nature of your
business is software. If you work at a restaurant,
the nature of your business is food services

Size

Size is many times the driving factor for a company


organizational structure. Smaller or home-based
businesses do not usually have a vast structure
because the business owner is usually responsible for
all tasks.
Larger business organizations usually require a more
intense framework for their organizational structure.
Companies with more employees usually require more
managers for supervising these individuals. Highly
specialized business operations can also require a
more formal organizational structure.

Ownership pattern

Different businesses have their different forms of ownership.


Some comes in the form of sole or single proprietorship;
others are in the form of partnership;
others are in the form of corporation(5 up to 15 individuals)
and
others are in the form of cooperative(25 or more individuals).
These forms of ownership are different in many factors; they
differ from the ownership type, they differ in the division of
labor, they differ in the amount of capital that is needed and
they differ in many else.

Ownership pattern

Strategic Financial Management


introduction

Managing an organization's financial resources so as to


achieve its business objectives and maximize its value.
Strategic financial management involves a defined
sequence of steps that encompasses the full range of a
company's finances, from setting out objectives and
identifying resources, analyzing data and making
financial decisions, to tracking the variance between
actual and budgeted results and identifying the reasons
for this variance.
The term "strategic" means that this approach to
financial management has a long-term horizon.

At the most fundamental level, financial


management is concerned with managing an
organization's assets, liabilities, revenues,
profitability and cash flow.
Strategic financial management goes a step
further in ensuring that the organization
remains on track to attain its short-term and
long-term goals, while maximizing value for its
shareholders.