Book- Francis Cherunilam

A MAN WHO CANNOT SIT STILL……AND

CANNOT SAY NO………IS NOT FIT FOR
BUSINESS
 According to L.H.Haney, “ Business may be
defined as a human activity directed towards
producing or acquiring wealth through
buying or selling goods”
 Business may be understood as the organized
efforts of enterprises to supply consumers
with goods and services for a profit
 Business environment is the sum of those
inputs to an organisation which are under the
control of other organisations or interest
groups or are influenced by interaction of
several groups, such as economy.
 Business ecology is similar to human ecology.
 Success of business depend upon resources it

command (physical resources, financial,

human resources, skills and adaptability to
the environment)
 Internal environment/External Environment

Internal Env External Env

Business
Decision
 A business has certain mission, objective and a
strategy to achieve them.
 All these are dependent upon the environment.
 Should go for SWOT analysis.
 Internal Environment
Value system- Mission, business policies,
objectives
Management structure and Nature- BOD, extent
of professionalism of management
Internal Power relationship- Relationship between
employer-employee
Human Resource
Company Image and Brand Equity(Brand Equity is
the value and strength of the Brand that decides
its worth.)
Miscellaneous Factors- Physical assets and
facilities, R&D, Marketing Resources
External Environment
Micro Environment
Suppliers- Risky to depend upon a single supplier

Customers

Competitors

Marketing Intermediaries- Transportation firms,

warehouses, Marketing service agencies

Financiers

Publics
 Macro Environment
Global Environment
Political Environment
Ideology of political party
Political stability
Economic Environment
Economic condition
Economy system
Economic policies
Economic growth
Interest rates
Currency exchange rates

Legal Environment
Companies Act
Consumer protection Act
Competition Act
SEBI guidelines
Technological Environment
Natural Environment
Natural resources
Weather and climate conditions
Port facilities
Locational aspects
Demographic Environment
Size of population
Age composition
Educational Level
Urban rural population
Socio-Cultural Environment
 A cycle or series of cycles of economic expansion
and contraction.
 The term business cycle (or economic cycle)
refers to economy-wide fluctuations in
production or economic activity over several
months or years.
 Business cycle refers to upturn and downturn in
the level of economic activity that extends over a
period of time
 There are four phases of business cycle which are
generally labeled as Boom, Recession, Trough
and Recovery
 BOOM: A period of fast economic growth. Output
is high due to increased demand, unemployment
is low. Business confidence may be high leading
to increased investment. Consumer confidence
may lead to extra spending.
 RECESSION: A period where economic growth
slows down and the level of output may actually
decrease. Unemployment is likely to increase.
Firms may lose confidence and reduce
investment. Individuals may save rather than
spend.
 Depression: High unemployment
Very low confidence
Little spending
Very low output

 RECOVERY: A period when the economy moves

between recession and a boom.
Increasing employment of
resources+Increasing consumer + business
confidence Increasing spending Increasing
output
 WHAT HAPPENS IN A BOOM?
- Businesses produce more goods
- Businesses invest in more machinery
- Consumers spend more money. There is a
FEELGOOD FACTOR

 WHAT HAPPENS IN A RECESSION?

- Businesses cut back on production
- Some businesses may go bankrupt
- Consumers spend less money. Fall in
FEELGOOD FACTOR
- Individuals may lose their jobs
 Business Environment is continuous changing
 Scanning means to look carefully into or to
examine.
 It means carefully analyse the various factors
influencing the business like economic factors,
technological factors, political factors, global
factors.
 It is a continuous process
 Acc to Glueck, “ Environmental analysis is the
process by which strategists monitor the
environmental factors to determine opportunities
and threats to their firm”
 Understand current and probable changes in
environment
 To foresee the impact of various components of
business environment
 To identify threat and opportunities of environment
 To identify strengths and weaknesses of the
organisation
 To formulate appropriate strategy
 To provide inputs for analysing various alternatives
 To ensure optimum utlization of resources
 To diversify the business in new area
 To promote future oriented thinking and a proactive
attitude amongst management and staff
 SWOT analysis
 Internal environment- Factors within the organisation
(strengths and weaknesses)
 External Environment- Factors outside the organisation
(opportunity and threat).
 Strengths
Good reputation
Resources
People
Experience
Knowledge
Capabilities
 Weakness
Gaps in capabilities
Financial deadlines
Low morale
Overdependence
 Opportunity
Economic boom
Favorable demographics shifts
Arrival of new technologies
Favorable global influences
Unfulfilled customer needs
 Threat
Economic downturn
Demanding new regulations
Unfavourable political
New technology
 SWOT Analysis evolved during 1960s at Stanford
Research Institute
 SWOT analysis process

1.Setting the objectives of the organisation or its unit

2.Identifying its strength, weaknesses, opportunity and
threats
3.ASKING FOUR QUESTIONS
Q1 HOW DO WE MAXIMISE OUR STRENGTH
Q2 HOW DO WE MINIMISE OUR WEAKNESSES
Q3 HOW DO WE CAPITALISE ON THE OPPORTUNITIES IN
OUR EXTERNAL ENVIRONMENT
Q4 HOW DO WE PROTECT OURSELVES FROM THREATS
IN OUR EXTERNAL ENVIRONMENT
4. Recommending strategies
1. The preparation of ETOP involves dividing the
environment into different sectors and then
analysing the impact of each sector on the
organisation.
2. A comprehensive ETOP requires subdividing each
environmental sector into subfactors and then the
impact of each subfactor on the organisation is
described in the form of a statement.
3. The preparation of ETOP provides clear picture to the
strategists about which sectors and the different
factors in each sector have a favourable impact on
the organisation.
4. By the means of ETOP, the organisation knows where
it stands with respect to its environment.
 Environmental Sectors Impact of each sector

Social ( ) Customer preference for motorbike, which are
fashionable, easy to ride…
 Political ( ) No significant factor
 Economic( ) Growing affluence among urban consumers
 Regulatory( ) Two wheeler industry a thrust area for export
 Market ( ) Industry growth rate is up…..
 Supplier ( ) Mostly associated companies supply parts and
components, Licenses for imported raw material is
also available
 Technological( ) Technological up gradation of industry is in
progress.

(UP ARROW INDICATE FAVORABLE IMPACT, DOWN ARROWS INDICATE UNFAVORABLE

IMPCT, HORIZONTAL ARROWS INDICATE A NEUTRAL IMPACT)
 Here one variable is related to another
 This technique is largely used by business

houses for the purpose of environment

scanning
 Variables move in same or opposite

direction?????
 To study the relationship between two
variables
 Here one variable is taken as dependent

variable and other as independent variable.

 For the given value of independent variable,

the value of dependent variable is calculated.

 Search
 Spy
 India is the second most populous country in
the world after China with a population of
over 1 billion.
 The government is led by a Prime Minister,

but the President has executive power

 The country has two chambers of parliament

namely the Rajya Sabha and the Lok Sabha.

 There is a central government and state

governments.
 Multi-party system
 Political environment refers to those factors
and conditions at the domestic, foreign and
international political arena that can affect
the business decisions at both domestic and
international level.
 Political environment refers to the factors in
the government and the regulatory system
that affect the way in which an organisation
operates.
 Political system should be stable, honest,
efficient and dynamic
 Political ideology of the government
 Political stability in the country
 Relation of government with other countries
 Defence and military policy
 Welfare activities of the government
 Center state relationship
 Ideology of different parties towards business

and industry
 Executive
 Legislature
 Judiciary
 Executive is responsible for implementing
laws and running the government
 It regulate the rules and regulations framed

by legislature
 Business person interact more with executive
 Power and functions of the central and state

government are described in the constitution

 President is the nominal head of the state and

the power is vested in the union council of

ministers
 Must obey the laws of central, state and local
government
 Business leaders must look upon government

as a big brother who is wiser, more matured.

 Tax payment
 Voluntary programmers
 Providing information
 Government contracts
 Money and credit
 Orderly growth
 Infrastructure
 Establishment and enforcement of Law
 Maintenance of order
 Assistance to small industries
 Information
 Government competition
 Inspections and licenses
 Tariffs
 It is the most powerful institution vested with
powers like policy making, law making,
budget approving, executive control and
acting as a mirror of public opinion
 Legislature has powers to rectify existing law.
 It decide the type of business activities the

country should have….

 The constitution is protected by legal body in
each country
 Supreme court, High courts
 Judiciary sees that the exercise of authority

by executive is according to the general rules

laid down by the legislature.
 It is the power of judiciary to settle legal

disputes that affect business considerably.

 Disputes between employer and employer,

employer and employees, employee and

employee, employer and public, employer
and government are often referred to courts.
 The Constitution of India is the Supreme Law of
India.
 It lays down the framework defining fundamental
political principles, establishes the structure,
procedures, powers, and duties of government
institutions, and sets out fundamental rights,
directive principles, and the duties of citizens.
 The Constitution declares India to be a sovereign,
socialist(1976), secular(1976), democratic republic,
assuring its citizens of justice, equality, and liberty,
and endeavours to promote fraternity among them.
 Constitution also affects the nature and form of
economic system of nation i.e. whether the
nation will follow capitalism, socialism or mixed
economy.
 Indian constitution defines fundamental rights

for the citizens and directive principles of state

policy.
 Our constitution plays a important role in

regulating, controlling the economic, political

and social life of people.
 These rights are given from Article 12 to 35 in
Chapter III of the Constitution
 Right to Equality

Equality before Law

Prohibition of discrimination on grounds of
religion, race, caste, place of birth
Equality of opportunity in matters of public
employment
Abolition of untouchability
Abolition of titles
 Right to freedom
Freedom of speech and expression
Freedom to form associations and unions
Freedom to move freely throughout the territory
of India
Freedom to reside in any part of the country
Freedom to assemble peacefully and without arms
 Right against exploitation

Prohibition of traffic in human being and forced

labour
Prohibition of employment of children in factories
 Right to freedom of Religion
Freedom of practice and propagation of religion
Freedom to manage religious affairs

 Right to culture and education

Protection of interests of minorities
Right of minorities to establish and administer
education institutions.
 Right to constitutional remedies
 Right to Information
 Right to life
 Right to Education
 The directive principles ensure that the State [1] shall strive to promote the welfare of the people by promoting a social order in which 
social, economic and political justice is informed in all institutions of life.
 Also, the State shall work towards reducing economic inequality as well as inequalities in status and opportunities, not only among
individuals, but also among groups of people residing in different areas or engaged in different vocations. [12] 
 The State shall aim for securing right to an adequate means of livelihood for all citizens, both men and women as well as 
equal pay for equal work for both men and women.
 The State should work to prevent concentration of wealth and means of production in a few hands, and try to ensure that ownership
and control of the material resources is distributed to best serve the common good. 
 Child abuse and exploitation of workers should be prevented. Children should be allowed to develop in a healthy manner and should be
protected against exploitation and against moral and material abandonment. [13] 
 The State shall provide free legal aid to ensure that equal opportunities for securing justice is ensured to all, and is not denied by
reason of economic or other disabilities. [14] 
 The State shall also work for organisation of village panchayats and help enable them to function as units of self-government. [15] 
 The State shall endeavour to provide the right to work,to education and to public assistance in cases of unemployment, old age,
sickness and disablement, within the limits of economic capacity, [16] as well as provide for just and humane conditions of work and
maternity relief.[17]
 The State should also ensure living wage and proper working conditions for workers, with full enjoyment of leisure and social and
cultural activities. Also, the promotion of cottage industries in rural areas is one of the obligations of the State. [18] The State shall take
steps to promote their participation in management of industrial undertakings. [19]
 Also, the State shall endeavour to secure a uniform civil code for all citizens,[20] and provide free and compulsory education to all
children till they attain the age of 14 years. [21] This directive regarding education of children was added by the 
86th Amendment Act, 2002.[22] It should and work for the economic and educational upliftment of scheduled castes, scheduled tribes
 and other weaker sections of the society.[23]
 The directive principles commit the State to raise the level of nutrition and the standard of living and to improve public health,
particularly by prohibiting intoxicating drinks and drugs injurious to health except for medicinal purposes. [24] 
 It should also organise agriculture and animal husbandry on modern and scientific lines by improving breeds and prohibiting slaughter
of cows, calves, other milch and draught cattle[25][26] 
 It should protect and improve the environment and safeguard the forests and wild life of the country. [27] This directive, regarding
protection of forests and wildlife was added by the 42nd Amendment Act, 1976.[28]
 Protection of monuments, places and objects of historic and artistic interest and national importance against destruction and damage,
[29] and separation of judiciary from executive in public services [30] are also the obligations of the State as laid down in the directive

principles. Finally, the directive principles, in Article 51 ensure that the State shall strive for the promotion and maintenance of
international peace and security, just and honourable relations between nations, respect for international law and treaty obligations, as
well as settlement of international disputes by arbitration. [31]
 Directive principles are directions to the
legislature and the government in the making
and implementing of laws.
 Directive principles are complimentary to the

fundamental rights.
 Directive principles are given under Article 36

to 51 of chapter IV of Indian Constitution.

 Provisions dealing with welfare
 Provision dealing with social justice
 Provisions promoting democracy
 Miscellaneous provisions
 Adequate means of livelihood
 Equal pay for equal work
 Fair distribution of material resources of the country
 Protection of child and adult labour
 Living wage for workers
 Right to work
 Free and compulsory education for children upto the
age of 14
 Conditions of work ensuring a decent standard of
living
 Public assistance in cases of unemployment
 Humane condition of work
 Promotion of educational and economic interests of
SC and other weaker sections of society.
 Raising the levels of nutrition and improvement of
public health
 Organisation of village panchayats
 Prohibition of intoxicating drinks and drugs
 Organisation of agriculture and animal
husbandry
 Prohibtion of slaughter of useful cattle
 Participation of labour in management of

industry
 Separation of judiciary from executive
 Protection of environment, forests and wild life
 Equal justice and free legal aid
 Promotion of international peace and security
 One of the modern business is the increasing
involvement of the government in business
activities.
Reasons for state intervention
 Delayed growth has to be sponsored growth

and the government has to be sponsor.

 Modern economy should be planned economy.

Govt is the only agency which can plan and

execute. In the absence of planning, the scare
resources will be wasted….
 Ours being a socialist society, the government

is compelled to enter directly into industrial and

commercial activities.
 The considerations which apply in deciding what
undertaking is to be established, how it should be run,
where it should be established, how its products will
be priced and distributed, are influenced by the policy
to which Govt is committed.
 Govt has assumed the responsibility of social and
economic well being of the people.
 State participation is necessary to lay a strong base for
the future development of industry and commerce.
 Failure of market invites government intervention in an
economy. Protection of consumers against trade
practices harmful to public interest is the main
objective of the Comnpetition Act 2002…
 Socially desirable goods and services
 Formal Control- In the form of Legislation for e.g.
Companies Act 1956, Competition Act 2002..
 Informal control refer to the controls which various
groups impose upon themselves out of need.
Business firms accepts way of doing the things that
have important regulative implications…
 Coercive (Powerful) Control- Paying Tax in order to
avoid penality
 Inducive Control- It holds out promise of reward
for compliance with the desired line of action.
 Direct control- When Govt fixes prices of
products or services…Govt may reserve certain
products for small enterprises….
 Indirect control- Indirect controls are applicable

to all types of business units and are excercised

through various fiscal and monetary incentives
and disincentives….
 Promotional control- These are positive in

nature…..
 Regulatory measures….
 Controls have resulted in wastage of our
natural resources
 Wastage of time
 Controls have bred corruption at various

levels.
 An economy can be explained in terms of the system
of production, consumption, selling and exchange
transaction.
 Business fortunes and strategies are influenced by the
economic characteristics.
 Economic environment includes the structure and
nature of the economy, the stage of development of
economy, economic resources, level of income,
distribution of income, economic policies etc.
 Business enterprise are dependent upon the economic
environment for acquiring the factors of production
and for selling of finished goods and services.
 Economic system
 Economic planning
 Industry
 Agriculture
 Infrastructure
 Financial sectors
 Price controls
 Economic reforms
 Human resource
 Per capita income and national income
 Capitalism

 Socialism

 Mixed economy
 Capitalism is a system of economic
organisation featured by the private
ownership.
 Free enterprise, competition and private

ownership of property play an important role

in capitalist system
 Laissez fair economic policy is followed in

capitalist economy
 Freedom of enterprise
 Private ownership
 Profit motive
 Freedom of entering into contract
 Limited role of government
 Freedom of consumer choice
 Competiton
 The Market system- Price Mechanism
 Means of production are either owned or
managed by the state.
 Investment structure, consumption, allocation

of resources are regulated and directed by

state.
 In socialism, there is public ownership
 Socialism seeks to provide employment to all.
 Equitable distribution of income
 Government ownership
 Economic Laws operate, which have special

features to strengthen the socio-economic

structure of society.
 Encourages employment
 Better allocation and utilization of resources
 Mix of capitalism and socialism
 Existence of public and private sectors
 Industrial Policy was announced on July 24, 1991.
 Economic Reforms
 Opening up of Private Sector
 Dismantling the entry and growth restrictions.
 Many amendments have taken place after that.

Objectives:-
 Unshackle Indian Economy from bureaucratic

control
 To build on the gains already experienced and to

correct the weaknesses involved in the system.

 Indian grow as a part of world economy and not

in isolation.
 Abolishing restrictions on FDI
 To maintain a sustained growth in productivity
and employment
 To achieve international competitiveness
 Reducing the load of public sector enterprises

showing either low rate of return or incurring

losses over the years.
 To utilise indigenous capabilities of

entrepreneurs
 To foster R&D efforts for development of

indigenous technologies.
 To assign the right area for the public sector

undertakings.
 Ensure welfare of workers and updating them.
 The Industries Act 1951 empowers the central
Government to regulate the establishment and
certain activities of industrial undertaking by
means of licensing
 A Licence is a written premission from Govt to
industrial undertaking manufacture specified
articles.
 If a new company has to be formed, the
industrial licence is issued in the name of
applicant and later on the endorsement is done.
 The new industrial policy announced in July 1991
has abolished industrial licensing.
 Now all industrial undertaking are exempt from

obtaining an industrial licence to manufacture

except
Industries reserved for public sector
Industries retained under compulsory licensing
Items of manufacture reserved for the small scale
sector
Only 5 industries have been retained under compulsory
licensing under the Industries Act, 1951 viz.
(i) Distillation and brewing of alcoholic drinks;
(ii) Cigars and cigarettes of tobacco and manufactured

tobacco substitutes;
(iii) Electronic aerospace (The industry and technology
concerned with aviation, missiles, satellites and
spacecraft) and Defence equipment: all types;
(iv) Industrial explosives including detonating fuses,
gun powder etc
(v) Hazardous chemicals
 Public sector had shown low rate of return
 Public enterprises becoming burden on Govt
 Contraction of public sector
 Under this policy sick units will be referred to

Board of Industrial Finance and

reconstruction (BIFR)
 Private sector will be invited to raise

competition
 Removal of MRTP Act
 The Monopolies and Restrictive Trade Practices Act, 1969,
aims to prevent concentration of economic power to the
common detriment, provide for control of monopolies and
probation of monopolistic, restrictive and unfair trade
practice, and protect consumer interest. 
 The Ministry of Corporate Affairs, Government of India has
issued aNotification dated 28th August 2009, whereby the
most controversial theMonopolies and Restrictive Trade
Practices Act, 1969 (“the MRTP Act”) stands repealed and is
replaced by theCompetition Act, 2002, with effect from
September 1, 2009.
 Approval of FDI
 In defence, the government has allowed foreign investment up to 49
per cent under the automatic route, earlier under the government
approval route.
 Investments over 49 per cent will now be cleared by the FIPB instead
of the Cabinet Committee on Security.
 For attracting Foreign Investors to invest in India, Govt has set up
Foreign Investment Promotion Board
 foreign investment upper limit from 26% to 49% in insurance sector.
 During 2014–15, India received most of its FDI from Mauritius, 
Singapore, Netherlands, Japan and the US.
 100% FDI is allowed under automatic route in most of areas of railway
like High speed train, railway electrification, passenger terminal
New FDI Limits 2015 of various sectors
Agriculture -  100%
Asset Reconstruction Companies - 100%
Civil aviation - 49%
Courier service - 100%
Credit rating / Information - 74%
FDI Limits in Defence - 49%
Education - 100%
FM radio - 26%
FDI Limit in Insurance & Sub-activities - 49%
Medical Devices - 100%
Multi brand - 51%
Pension - 49%
Pharma - 100%
Power - 49%
Print media - 26%
Public Sector Banks - 20%
Private bank - 74%
Railway infrastructure - 100%
Single brand Retail - 100%
Stock exchange - 49%
Telecom Sector  - 100%
Tourism - 100%
 New Economic policy refers to various policy measures undertaken
since July 1991
 Pulling the country out of economic crisis.

Need
 India’s foreign exchange reserves have grown significantly since

1991. The reserves stood at US$ 5.8 billion at end-March 1991. The
reserves stood at US$ 304.8 billion as on March 31, 2011.
  Increased borrowings resulting in increased debt

 Avg annual rate of inflation was 10.3%

 Gulf crisis
 Replacing controlled economy by liberal
economy
 Encouraging private sector
 Promoting FDI
 Change in trade policy, monetary policy and

fiscal policy, New Industrial Policy

 Modernization of agriculture
 Liberalisation
Reducing unnecessary restrictions
Relaxing trade
Abolishing of Industrial licensing
MRTP replaced by Competition Act
No prior official approval
Freedom to Indian Industry to import goods
Liberalisation of Import/export transaction
 Privatisation
Allowing private sector to set up units
Reducing of number of industries reserved for public
sector
Credit support to private sector enterprises from the
national and financial institutions
MOU gives autonomy to public sector enterprises
 Globalisation

Opening up out economy to world.

Preparation of list of sectors that require high
investment and automatic permission will be given.
No permission is required for hiring foreign technicians.
Rupee convertibility was allowed
Reduction in tariffs imposed on imports and exports
 Abundant liquidity at low rate of interest
 Exchange rate is stable
 Huge Forex reserves
 Stable and proactive Government
 Exports and imports together account for 23%

of GDP as against just 15% in 1990-1991

 Growing integration of the economy with the

world economy.
 Indian is the fourth largest economy in terms

of Purchasing power parity.

 The current e-commerce market in India is
around $10 billion and it is expected to grow
between $125 billion- $260 billion by 2024-25.
 Emerging markets or emerging economies are
nations with social or business activity in the
process of rapid growth.
 The economies of China and India are

considered to be the largest.

 The largest emerging and developing economies

by either nominal GDP or GDP

(PPP)areChina, Brazil, Russia, India,  Indonesia,
and Turkey.
 Developing countries, also known as the

emerging markets, are fast becoming the driver

of global growth. 
 Emerging and growth-leading economies
(EAGLEs) are a grouping of key emerging
markets developed by BBVAResearch.
 The EAGLE economies are expected to lead

global growth in the next 10 years,

 CIVETS-

Colombia,Indonesia, Vietnam, Egypt, Turkey a
nd South Africa
A RECESSION is a decline in a country's
gross domestic product (GDP) growth
for two or more consecutive quarters of
a year.
 A RECESSION is also preceded by

several quarters of slowing down.

 RECESSION is the result of reduction in

the demand of products in the global

market.
 National Bureau of Economic Research (NBER)
is the official agency in charge of declaring
that the economy is in a state of recession.
 They define recession as : “significant decline

in economic activity lasting more than a few

months, which is normally visible in real GDP,
real income, employment, industrial
production, and wholesale-retail sales”
 In economics, a recession is a business cycle contraction, a general
slowdown in economic activity.

 Macroeconomic indicators such as GDP, employment, investment

spending, capacity utilization, household income, business profits
fall, while bankruptcies and theunemployment rate rise.

 The recent falls in the US stock markets are largely due to 

expectations of a future downturn in the economy. Lower growth
leads to lower profits, therefore dividends decline and shares
become less attractive. 

 If the US enters into recession, firms will experience a decline in

profitability. This is because:
Tendency for price wars to develop in a recession. Low sales
encourage firms to cut prices
Falling sales will lead to lower revenues.
 Currency crisis
 Energy crisis
 War
 Under consumption
 Overproduction
 Financial crisis
 Price of Fuels
 Bankruptcies
 Credit crunches
 Foreclosures
 Unemployment
Recession Recession Time Taken Cause & Impact
Name Year

Great 1929-1939 10 years Stock markets crashed

Depression worldwide, and a banking
collapse took place in the
United states. This sparked a
global downturn.

1937 Oil 1973-1975 2 years A quadrupling of oil prices

Recession by OPEC coupled with high
Government spending due
to the Vietnam war lead to
stagflation in the United
States.

Early 1980’s 1980-1982 2 Years The Indian Revolution

Recession sharply increased the price
of oil around the world in
1979, causing the 1979
energy crisis.
Recession Recession Time Taken Cause & Impact
Name Year

Early 1990’s 1990-1991 1 year Industrial production and

Recession Manufacturing trade sales
decreased in early 1991.

Early 2000’s 2001-2003 2 years September 11 attacks

Recession

Early 2008’s 2008-so on continuing The collapse of US economy

Recession and other related countries.
 The sectors least affected (directly) by the
slowdown are Pharmaceuticals, Oil & Gas,
FMCG, Media & Entertainment
 Those which will feel a moderate impact of

the global crises are Power, Automobiles,

Retail, Hospitality and Tourism
 The sectors most severely affected are Banks,

Financial Services, Real Estate, Infrastructure

and Information Technology
 Indian Stock Market
 IT and BPO
 Banking
 Real State
 Aviation
 Textile
 Automobile
 Hospitality
 'cottage industry' to the ‘state of supremacy’
 second largest employer in India, next to agriculture
 generates employment opportunities for
approximately 33.17 million workers directly, and
54.85 million workers indirectly
 60% of the total garments manufactured in India are
exported to foreign markets like EU, US, and Japan,
generating revenue of upto US$ 52 billion
 Economic slowdown in the US and EU has affected
the textile business in India, resulting in a drastic
decline in the country's garment exports
 almost 8, 00,000 garment and textile employees
had lost their jobs
 October 2008:Othe total output of the textile
sector came down by 10%
 Punjab generating employment for 4,00,000 jobs

has suffered a 50% loss in sales

 Majority of the layoffs target the daily-wagers
 Dr P R Roy, President, The Textile Association of
India (TAI), while discussing the reasons for
slump in Industrial production, told
Fibre2fashion, “Slowdown in global economy is
definitely affecting our textile industry. But, there
is a lot of pessimism in the market regarding
global recession, which instigates negative
thinking among people. So without plotting their
own position, the manufacturers have started
cost cutting. This can be one of the many
reasons for plunging industrial production.”
 Banks are like backbone for industries
 They provide loans and capital to the

business, industry, agriculture etc.

 Loss of profit and Capital of these banks

bring serious threat to the economic

development of that country
 Reserve Bank had taken a number of

measures which contributed to strengthening

the resilience in the Indian banking system
 Banks have suffered losses, including some
public sector banks like Punjab National
Bank, Bank of India, State Bank of India and
Bank of Baroda as they had an exposure to
the instruments issued by Lehman and Merrill
Lynch.
 Traditional working of Indian Banks
 Strong base of nationalized bank
 Effective control of RBI
 Role of Finance Ministry
 The First Phase – the Pioneering Years
 The Second Phase – Public Sector Era
 The third Phase – the Liberalization Era
 The Fourth Phase – The Era of Growth and . .
 Recession (Fare Setting, Fare War and their

Consequences)
 India aviation industry was expanding
 There were new budget airlines and private

players
 The number of job opportunities in the

industry was going up

 Students started signing up for courses like

airline pilot's, flight attendant's, ground crew

etc.
 High Aviation Turbine Fuel (ATF) prices
 Rising labor costs
 Shortage of skilled labor
 Excess capacity
 Huge debt burden
 Intense price competition
 Job losses
 India is the world's largest two wheeler
manufacturer.
 India is the world's second largest tractor

manufacturer.
 India has the fourth largest car market in

Asia.
 India has the world's largest three wheeler

market.
 India is fourth largest Automobile exporter in

the world.
 TATA MOTORS

 MARUTI SUZUKI

 MAHINDRA & MAHINDRA

 Uncertain exchange rate and a sudden increase in dollar value
against Indian Rupee

 Delayed Payments from the OEMs (Original

Equipment Manufacturer)

 Steel prices have also not shown any reduction in

their prices
 The Indian automobile industry is expected to grow to US$ 40
billion by 2015 from the current level of US$ 7 billion in
2008.

 Challenge of Chinese Automobile Industry.

 Market Strength of Indian Automobile Industry.

 New Innovation
Real Estate
 Contribution to GDP of about 7%
 Second largest employment generator in the

country
 Real estate growth gives boost to steel and

cement sectors
 Real estate is a growth engine for

development of over 269 allied industries

 Uniformity of land laws, slowdown and
approval delays, the developers missed to
complete their projects within the boom
period.
 Withdrawing of money from Real Estate

sector.
 Many companies has given pink slips to their

employees
 DLF

 UNITECH GROUP

 ANSALS

 PARSAVNATH DEVLOPERS
 Increase in prices of inputs due to inflation
effecting all areas of economy like cement, steel,
etc.
 Increase in home loan interest rates resulting into
additional EMI burden on the borrowers.
 Reduction in salaries and layoffs resulting into
reduced demand for Real estate
 Demand-supply imbalance
 Reduction in Commercial Rentals
 Slow down in infrastructure projects
 Difficulties to raise fund (Failure of Emaar IPO)
 Loss of Jobs
 Shortage of skill workers
 DLF – 79 % decline in profits & 57 % slide in
sales
 Unitech 63 % decline in profits & 50 % slide

in sales.
 Parsavanath, India bulls, HDIL, Akruti,

Shobha, Purvankara have reported decline in

profits upto 95 %.
 Overall 76 % dip in profits & 57 % fall in sales

in First Quarter of FY 09-10 over First

Quarter of FY 08-09.
 Fewer Customers
 Lower Income
 Unemployment