Question No. 3 - MMPC-003 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                           MMPC-003 -  Business Environment

Question No. 3                                        

Describe the structure and working of the money market and capital market. 

Capital markets commonly referred to as the stock markets have been in existence for centuries. The British East India Company was the first company to invite the public to buy shares in the company. Since then, over the years, markets have gone through tremendous changes. The way the market works, the asset classes, the framework of the exchanges, and everything has been evolving over time. The changes have been brought in gradually according to the convenience of the investors and market participants. Also in order to prevent market participants to take undue advantage of the information in order to gain monetary benefits, the Securities Regulatory bodies over the world have surveillance methods for mitigation of such acts.

Structure of Capital Market

The capital market in India consists of the following structure:

Capital Market Instruments

There are mainly two types of instruments that are traded in the capital market, which are:

Stocks:  Stocks are sold and bought over a stock exchange, They represnt ownership in the company and the buyer of the share is referred as the shareholder.

 Bonds: The debt securities which are traded in the capital market are known as the bonds. Companies issue bonds for in order to raise capital foe the expansion of the business and growth.

Features of Capital Market:

Here are the features of the Capital Market:

1. Serves as a link between Savers and Investment Opportunities:

The capital market serves as a crucial link between the saving and investment process as it transfers money from savers to entrepreneurial borrowers.

2. Long term Investment:

It helps the investors to invest their hard-earned money in long-term investments.

3. Helps in Capital formation:

The capital market offers opportunities for those investors who have a surplus amount of money and want to park their money in some type of investment and also take the benefit of the power of compounding.

4. Helps Intermediaries:

While transferring shares and money from one investor to another, it takes help from intermediaries like brokers, banks, etc. thus helping them in conducting their business.

5. Rules and Regulations:

The capital markets operate under the regulation and rules of the Government thus making it a safe place to trade.

Example of Capital Market:

Suppose a company says ABC requires capital for expanding its business, so it plans to raise the required fund from the public by issuing new securities in the primary market.

After issuing the new securities, the people who are interesting in buying those shares after doing research of the company, buy those shares through the Initial Public Offering (IPO) process.

After the initial buying, it sharts trading in the secondarily market, where the existing buyers and sellers start trading that security.

Capital Market Intermediaries

Financial Intermediaries are the organizations that help in the transfer or channeling of funds from those who have surplus funds to those who are in need of it. They act as a middleman in connecting the surplus parties to the deficit ones. A classic example can be a bank that accumulates bank deposits and uses them to provide bank loans.

The main Financial Intermediaries of India include:

Stock Exchanges: These include the NSE (National Stock Exchange), BSE (Bombay Stock Exchange), MCX (Multi Commodity Exchange), etc

Banks

Insurance Companies

Pension Funds

Mutual Funds

Money Markets

The money market is a sub-section of the financial market that trades in short term financial funds and financial assets. These instruments and assets usually have a maturity period of less than one year and are highly liquid. So the buying and selling of such instruments, like commercial papers and t-bills, occurs in the money market.

This market is not a physical location. Most of the trading happens over the phone and now over the internet. It is a virtual market for trading in low-risk, liquid, and unsecured instruments to meet short-term financial needs a company may have. Companies turn to monetary market mostly to meet their working capital requirements.

The major players and institutions of this market are the Reserve Bank of India, all the commercial banks of the country, NBFC’s, LIC, Mutual Funds, large corporates, and even the respective state governments. Let us look at some other features of this market.

- Unlike the stock exchange, the money market does not have geographical restrictions. Most transactions happen in the virtual world with institutions that can be spread out over the whole country, the whole world even.

- While the market is quite flexible and unrestricted, it only deals in short-term securities (maturity period between one day and 364 days)

- There is no need for brokers or other intermediaries. The transactions can happen without them.

- There are many securities in the money market like T-bills, commercial bills, call money etc.

Structure of Indian Money Markets

The Indian monetary market has two broad categories – the organized sector and the unorganized sector.

a. Organized Sector: This sector comprises of the governments, the RBI, the other commercial banks, rural banks, and even foreign banks. The RBI organizes and controls this sector. Other corporations like the LIC, UTI, etc also participate in this sector but not directly. Other large companies and corporates also participate in this sector through banks.

b. Unorganized Sector: These are the indigenous banks and the local money lenders and hundis etc. Their activities are not controlled by the RBI or any other body, so they are the unorganized sector.

Question No. 2 - MMPC-003 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                           MMPC-003 -  Business Environment

Question No. 2

What are the important elements of politico-legal environment? How does the government regulate business? Discuss in detail. 

The critical elements of the politico-legal environment of business are:

1. The Form and Structure of the Government: It is a very important and decisive factor for the business sector. Democracy states government of the people, by the people and for the people.

At the enterprise level also people’s participation is very important. We authorize the local Government to collect some business taxes and spend money on local activities, when we accept the principle of democratic decentralization. Thus, the system of government and the structure of administration affects business.

2. The Ideology of the Ruling Party: It influences ownership, management, structure and size of business. The philosophy of the ruling party may help or hurt the course of business activity.

3. The Strength of the Opposition: Opposition has a very important role in democracy.

The party which gets an absolute majority forms the government under the two party system whereas, the party which gets a relative majority forms the Government with the collaboration of some other political parties. The candidates who do not command majority forms the opposition.

The strength of the opposition depends on whether the opposition parties are united or divided. To protect, promote and regulate business in the best interests of society, opposition is as important as a dedicated government.

4. The Role and Responsibility of the Bureaucracy: The work done by the Government is through the bureaucracy Ministers change from time to time, but Government administration must run without any break. Here the bureaucracy comes in.

The bureaucracy is very powerful in enforcing Government rules and regulations, systems and procedures, licenses and restrictions.

The bureaucracy enjoys tremendous power in the context of a system environment based on a host of controls and regulations. When the Government proposes liberalization, relaxation of rules and regulations, streamlining of systems and procedures, control becomes redundant and meaningless.

5. Political Stability: Business grows in a Politically stable region. Whenever the nation becomes politically unstable, the flow of foreign capital and enterprise is adversely affected, and this in turn effect the business, both.national and multinational.

6. The Velocity of Government Policies, Plans and Programs: If policies and programs are stable then business can plan its activities. otherwise it faces a tremendous amount of “non-market” risk and uncertainties. Stable policies help corporate planning and build up business confidence.

Sometimes policies are formulated with a clear “direction” but at snail’s’ “speed” and sometimes “speed” is fast but “direction” is not clear, we suffer on account of lack of “velocity” of such policies and this affects business unfavorably.

When there are so many policies such as policy-thinkers, policy-planners, policy-makers, policy executors, policy-adjudicators and so on, the business sector views policies with suspicion. Policies once formulated have to be implemented.

7. Socio-economic Legislation’s: Laws are needed to protect consumers, workers, managers, owners, shareholders and society at large. MRTP, FERA, IORA and so on are some of the business legislation’s to maintain order in the industrial economy. Industrial order and harmony is a condition for survival and expansion of business.

8. Politico-legal Institutions: These are the parts of the non-economic environment of business’s. The functioning of the legislative, executive and judicial organs of the Government affects business environment directly and indirectly.

In traditional sense, the role of any government has been to maintain law and order, protect the nation from external aggression, provide social security exercise control over public activities, etc. These roles were in the context of providing basic infrastructure to business. But, in course of time, emphasis on planned economic development and various other circumstances prompted the Government to play an active role in promoting and regulating the business activities. 

In order to ensure that balanced economic development is planned within the constitutional framework, the public utilities and infrastructure facilities are duly built up, and the business is run on sound lines, the role of Government has assumed four dimensions as under : 

- Regulatory Role, 

- Promotional Role, 

- Entrepreneurial Role, and 

- Planning Role.

Their distinctive features notwithstanding, these roles are not exclusive to each other. There may be occasions when the Government becomes active in more than one way to serve national or sectoral objectives. For example, the planning and regulatory roles may be mutually complementary and so can be the entrepreneurial, planning and promotional roles. Let us now discuss the implications of each.

Regulatory Role 

Government regulation of business, industry and trade generally refers to all measures and instrumentalities which are aimed at defining and laying down the limits of private enterprise. More specifically, Government may regulate business activities using direct (discretionary) measures and/ or indirect (non-discretionary) measures. Direct regulation refers to measures which are applicable at the discretion of administrative authorities like, for example, - fixation of maximum and minimum prices of commodities, industrial licensing, allocation of foreign exchange for imports , quantitative restrictions on imports and exports, rationing supplies and distribution of particular goods, etc. In many developing countries, Government regulation by way of direct controls has been used after the second world war for various reasons. For instance, industrial licensing has been practiced on the ground that the market mechanism was incapable of allocating scarce resources optimally, and that the State could ensure resources to be allocated in accordance with national priorities. It was believed that the resulting resource allocation would be socially optimal and desirable. 

Promotional Role 

Promotional role of Government has been of great significance in the developed countries and so also in the developing countries. According to Dimock, Governmental function in USA to assist and help develop industrial, labour, agricultural and consumer interests is quite large considering the totality of government activities. This view m'ay be quite surprising. But as Dimock puts it, the surprise is a measure of the degree to which Americans "take for granted some of the most basic duties of the liberal government and fail to appreciate their value adequately". For a developing country the promotional role of government is obviously of greater significance. It may include :

(a) Initiating and promoting the develop~nent of infrastructure to facilitate industrial and comnzercial activities by assuming tlie responsibility to provide and strengthen power supply, transport network, availability of financial resources, training institutions, R&D, guidance for pro~notiolial activities, and so on. 

(b) Providing assistance for development of backward areas by way ofsubsidies, allocation of scarce resources, allotting land at concessional price, power and water supply at concessional rates, making available credit and finance at low interest, and marketing through specialized organisations. 

(c) Providing fiscal and monetary incentives, facilities for insurance of business risks as well as information inputs for the developlnent of priority sectors. 

Entrepreneurial Role 

The entrepreneurial role of Government means that the government itself becomes the entrepreneur which implies its participation in economic activities through public ownership and management of industrial and commercial undertakings. The justification for this role may be found in developed as well as developing countries. Defence production, public utilities, passenger road transport, multi-purpose river-valley projects, railways, airlines operations and strategic industries have been areas of government engagement even in developed countries. Besides these activities, the Government in developing countries assumes the entrepreneurial role even in other areas: 

(a) on account of the necessity of government to step in where private enterprise and private management are not conducive to public good, e.g., providing safe drinking water at affordable rates; 

(b) to secure balanced development of the economy; 

(c) to promote capital intensive industries involving large investments which may not be attractive to private entrepreneurs due to low return in the short run; and (d) to take over and manage private undertakings which become unprofitable but need to be revived and continued so as to prevent large-scale unemployment and waste of resources. 

Planning Role 

The planning role of the Government has been closely related with its regulatory role. In developing countries, the objective of planned economic development has been to secure optimum use of resources for rapid economic growth. Many states in Asia and Africa, free from colonial rule after the second world war, were inspired by the erstwhile Soviet model of centralised planning and control which evolved during the inter-war period. The ideological appeal of the welfare states of western countries also strengthened the idea of state planning. The basic argument in favour of Government's planning role was that exclusive dependence on the market mechanism and freedom of private enterprise has not been conducive to rapid economic development. 

Question No. 1 - MMPC-003 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                           MMPC-003 -  Business Environment

Question No. 1

Describe the nature and scope of Business Environment. What are the various types of Business Environment? Discuss giving examples. 

Nature of Business Environment

The nature of business environment is as follows:

1.   Complex: Business environment is compound in nature. Environment consists of a number of factors, events, conditions and influences arising from different sources which impact business thus making the business complex.

2. Interdependence: The environment of the business is made of social, economic, legal, cultural, technological, and political factors. These factors of the environment are inter-dependable. The economic status of a country affects the development of technology. A rich country can make sufficient expenditure on the research and development.

3.  Dynamic: Business environment is constantly changing process. Business environment is dynamic as it keeps on changing in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market. The various forces in the environment keep on changing from time to time thus making business dynamic and not static.

4. Inter-relatedness: The different factors of business environment are co-related. For example, let us suppose that there is a change in the import-export policy with the coming of a new government. In this case, the coming of new government to power and change in the import-export policy are political and economic changes respectively. Thus, a change in one factor affects the other factor.

5. Impact: Business environment has both long term and short term impact. Environment therefore has different effects on different firms in the same industry, for example, drugs.

6.    Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries.

7.  Relativity: It is a relative concept since it differs from country to country and region to region. Political conditions in the USA, for example differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France.

SCOPE OF BUSINESS ENVIRONMENT

Identifies Business Opportunities and Threats

Business environment helps business in identification of various opportunities and threats. When business is able to detect market opportunities timely, they can easily take advantages of such opportunity at earliest. They can earn maximum returns by availing such opportunity before the competitors. By proper interaction between business and its environment all threats can be easily detected. It will enable business in taking corrective measures timely.

Helps in Planning and Policy Formulation

Proper understanding of business environment helps in formulating better policies and strategies. It conveys all current information regarding market conditions to business. All opportunities and threats are scanned through the study of the business environment. Businessmen are properly aware of environment and thereby take all decisions according to it. Their entire plan can be changed effectively and efficiently through environmental awareness.

Provides Useful Resources

Business depends on the environment in which they operate for several resources. Business environment supplies several inputs like raw materials, capital and labour which are used by the business for its operations. These inputs are converted into goods and services for satisfying the needs of the market. Without proper supply of inputs, business cannot continue its operations. It is fully dependent upon environment for taking inputs and delivering the required goods or services.

Improves Performance

Business environment has an effective role in accelerating the overall performance of business organisations. Through continuous environmental awareness, managers update their knowledge and skills. Environmental study serves as the medium of educating management. Monitoring of environment provides qualitative information which helps in developing strategic thinking. It enables managers to adopt suitable management practices to control and improve the performance of business.

Helps in Coping with Rapid Changes

Factors which constitute business environment are dynamic in nature. They keep on changing continuously from time to time. These changes include changes in customer’s preferences, fashion, technology, economic conditions etc.

Proper understanding of the business environment helps business in detecting all these frequently occuring changes easily. It enables them in dealing with these changes efficiently by taking appropriate actions at right time. Managers through continuous monitoring of environment are sensitive to such changes and respond effectively.

Enhances Business Image

Business through proper understanding of its environment are able to improve its public image. They are more responsive and sensitive to the environmental needs through proper knowledge of business environment. Study of environment provides them information for making realistic plans and implementing them effectively. Businesses are able to provide better service and serve the interest of entire society. People are happy with the business and develop confidence towards it. This enables in developing a better image in market.

Assist in Facing Competition

Business environment communicates all details about competitors in market to business. Awareness regarding the actions and strategies of competitors is crucial for every business for meeting competition effectively. It helps business in formulating plans and policies in accordance with the competitor’s actions. Businesses are able to face challenges and competition in market through systematic planning in an efficient way.

TYPES OF BUSINESS ENVIRONMENT

Types of Business Environment

The Business Environment can be classified as follows:

I) Internal Environment

II) External Environment

Internal environment refers to those factors within an organisation e.g Policies and programmes, organisational structure, employees, financial and physical resources. These factors can be changed or altered and hence are known as controllable factors.

External environment  refers to those factors outside the business These factors by and large are beyond the control of a business and hence uncontrollable .e.g economic, political and socio-cultural factors.

1. Internal Environment

Internal Environment Factors

The major internal factors affecting business decisions are

i. Values system: The values of the founder/ owner of the business , percolates down to the entire organisation and has a profound effect on the organisation. The success of an organisation depends upon the sharing of value system by all members. External business associates like suppliers and distributors consider the value system practised by an organisation with strong culture of ethical standards and values.

ii. Vision and objectives: The vision and objectives of a business guides its operations and strategic decisions. Example ‘Amul the taste of India’ Gujarat Co-operative Milk Marketing Federation GCMMF

Two Indian companies TATA Steel and WIPRO have been named as the world’s most ethical companies by American Think tank Ethisphere Institute. Infosys, Murugappa group, TVS group

Vision: Liberate our farmers from economic oppression and lead them to prosperity.

iii. Management structure and ature: The structure of management/board and their style of functioning, the level of professionalism of management, the composition of the board are the various factors which affects the decision making. Since the board is the highest decision making authority, it’s composition, degree of professionalism and style of operations plays a very critical role in the growth and development in an organisation.

iv. Internal power relations: This refers to the internal power relations that exist in an organisation. The relations among board members , between board members and the CEO and the level of support enjoyed by the board from its’ stakeholders namely employees and shareholders are significant factors which affects decision making and its implementation in an organisation.

v. Human resources : The success of an enterprise is solely dependent on its manpower. Therefore the quality, skill competency, right attitude and commitment of its human resources is essential for the success of an organisation.

vi. Company image: The image of an organisation plays an important role in introducing new products, selecting agents and dealers for distribution, forging alliances with suppliers, expanding and entering new markets both domestic and international, raising finance etc.

vii. Other factors: The firm’s ability to innovate reflected by its research and development, the strength of its financial position and the capital structure, the efficiency in managing the marketing and distribution network ,and the physical resources like plant, building technology are the other major factors on which affects the success of a business.

 

2. External environment

All factors outside the business which have a bearing on the working of a business can be termed as the external environment. This is subdivided into micro or task environment and macro or general environment.

 

3. Micro Environment

Micro Environment Factors

This refers to those factors which are in the immediate environment of a business affecting its performance. These include the following:

i) Financiers: The financiers of a business which includes the debenture holders and financial institutions play a significant part in the running of a business. Their financial capability, policies strategies, attitude towards risk and ability to give non–financial assistance are all important to a business.

ii) Suppliers: In any organisation the suppliers of raw materials and other inputs play a very vital role. Timely procurement of materials from suppliers enables continuity in production and reduces the cost of maintaining stock/inventory. Organisations generally obtain supplies from a panel of suppliers instead of relying on a single source. Organisations have realised the importance of nurturing and maintaining good relationship with the suppliers.

iii) Marketing Channel members: The marketing inter-mediaries serve as a connecting link between the business and its customers .The middlemen like dealers, wholesalers and retailers ensure transfer of product to customers .physical distribution is facilitated by transporters, and warehouses help in storing goods. Market research agencies help the firm to understand the needs of the customers while advertising agencies help in promoting the products and services. Insurance firm is another marketing intermediary which provides coverage for risk in business.

iv) Public This refers to any group like media group, citizen action group and local public which has an impact on the business. The public group has the ability to make or mar a business. Many companies had to face closure due to actions by local public.

v) Customers: The aim of any business is to satisfy the needs of its customers. The customer is the king and the fulcrum around which the business revolves. Hence it is essential for any business to understand the needs of its varied customers like individuals, retailers, wholesalers, industries and government sector. Customer relationship management aims at creating and sustaining cordial relations with customers.

vi) Competitors: All organisations face competition at all levels local, national and global. Competitors may be for the same product or for similar products. It is important for a business to understand its competitors and modify their business strategies in the face of competition.

4. Macro Environment:

Macro Environment Factors

This is the general or overall environment in which the business operates. The success of a business is dependent on its ability to adapt to the macro environment, since these are uncontrollable factors. They offer enormous opportunities to business and also poses serious threats to business. The general or remote environment factors are as follows;

I. Economic environment: The business is an integral part of the economic system prevalent in a nation. The multiple variables in the macro environment system which has a bearing on a business include

1) The nature of economy based on the stage of development: The countries across the globe can be categorised on the basis of growth and per capita income as developed nations, developing nations and under developed nations. The USA, Japan, Germany, Canada and Australia developed economies generally have high degree of technological advancement, very strong and robust industrial base, and high standard of living. Many of these developed nations have successfully integrated the computer based technologies with their existing business. Developing nations like India, China, Brazil Mexico are middle income economies are characterised by low to moderate industrial growth, the inequality in the distribution of income, high population, a low standard of living and slow absorption of technology. Under developed nations are low income economies with a very low degree of technology adoption and a very poor standard of living.

2) The nature of economic system: The economic systems can be classified as Capitalistic, Socialistic and Mixed economy. Capitalistic economy is a free enterprise market where individual ownership of wealth is predominant. Socialistic economy is a state controlled with a lot of restrictions on private sector. Mixed economy is a combination of both state owned and private sector ownership.

3) The economic policies of a nation: Monetary policy, fiscal policy, Export-import policy, Industrial policy Trade policy, Foreign exchange policy etc are part of the economic environment.

4) Economic indices: The Economic indices like GDP, GNP national income, per-capita income, balance of payments, rate of savings and investments etc. form an important part of economic environment.

5) Development of financial market: The organisation and development of money market, capital market securities market and, the banking system has a greater impact.

6) Economic structure: The Economic structure includes capital formation, investment pattern, composition of trade balance, occupational distribution of workforce, and the structure of national output.

II. Socio-Cultural environment - Business is a part of the society .Social environment refers to the sum total of factors of the society in which the business is located. Social and cultural environment of society affects the business. It is dynamic and includes the behaviour of individuals, the role and importance of family, customs, traditions, beliefs and values, religion and languages, the ethical values. The literacy level, and the social attitudes of the people of the society. The socio-cultural environment also includes the following;

1) The social institutions and groups

2) Family structure prevalent in the society

3) Role of marriage as an institution

4) Caste system in the society

5) Customs , beliefs and values

6) Demographic factors which includes the size, composition, literacy level, distribution and mobility of the population

7) The lifestyle of people and their tastes, likes and preferences.

III. Political and Legal environment – The framework for running a business is given by the political and legal environment. The success of a business lies in its ability to adapt and sustain to political and legal changes. The legislative, executive and judiciary are the three political institutions which directs and influences a business.The major elements of the legal and political environment are

1) Political stability is reflected by the following parameters like the election system, the law and order situation, the role and structure of Military and Police force, the declaration of President’s rule, civil war etc

2) Political organisation refers to the ideology and philosophy of the political parties, the government, the role and degree of authority of bureaucracy, the level of political consciousness among citizens and the funding of political parties by business houses and the clout wielded by them.

3) The image of the leader and the country in the inter-national arena.

4) Legal framework of business and their degree of flexibility.

5) The constitution of the nation.

6) The Foreign policy of the country with special reference to tariffs and free trade.

IV. Geo-physical environment – The natural, geographical and ecological factors have a bearing on the business. These are as follows;

1) the availability of natural resources like minerals oil .etc, since setting up of industries requires availability of raw materials

2) the weather and climatic conditions and availability of water and other natural resources is essential for the agricultural sector .

3) topographical factors like the terrain impacts type of business since the demand and consumption pattern may vary in these regions. E.g in the the hilly region mode of transport will have to be modified to tackle the terrain.

4) ecological factors are now gaining momentum, since the governments across the globe are framing stringent policies for ecological conservation and prevention of pollution. The ban on use of plastic bags imposed by the Ooty corporation is an example.

5) location of certain industries is influenced by the geographical conditions For e.g In Tamilnadu the concentration of cotton textile industry in Coimbatore is due to conducive weather conditions. .

6) availability of natural harbours and port facilities for transporting goods .

V. Technological environment

The development in the IT and telecommunications has created a global market. Technology is widely used in conducting market research for understanding the special needs of the customer. Digital and social media are used as a platform for advertising and promoting the products/services. Data-mining and data analytics are used to know the customer better. Technology is used in managing inventory, storing goods in warehouses, in distributing goods and in receiving payment. This dynamic environment also includes the following ;

1) the level of technology available within the country

2) rate of change in technology

3) technology adopted by competitors

4) technological obsolescence

VI. Global environment

With the rapid growth of technology the physical boundaries are fast disappearing and the new global market is emerging. The international environmental factors which affects a business are as follows;

1) Differences in language and culture

2) Differences in currencies

3) Differences in norms and practices

4) Differences in tastes and preferences of people

5) The tax structure relating to import and export.

6) Differences in the degree of adoption of technology.

MMPC-003 - Business Environment - MBA and MBA (Banking & Finance)

Solutions to Assignments

                           MMPC-003 -  Business Environment

Question No. 1                                        CLICK HERE

Describe the nature and scope of Business Environment. What are the various types of Business Environment? Discuss giving examples.  

Question No. 2                                        CLICK HERE

What are the important elements of politico-legal environment? How does the government regulate business? Discuss in detail. 

Question No. 3                                        CLICK HERE

Describe the structure and working of the money market and capital market. 

Question No. 4                                         CLICK HERE

How does technological advancement impact international business environment. Discuss. 

Question No. 5                                         CLICK HERE

Write short notes on the following: 

 a) Balance of Payments (BoP) 

 b) Corporate Social Responsibility (CSR) 

 c) Tax Reforms 

 d) Farm Reforms 2020

Question No. 5 - MMPC -002 - Human Resource Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

                MMPC -002 - Human Resource Management

Question No. 5 

Discuss the relevance of the understanding of job design for developing organisational effectiveness.

One of the most frequent questions people often ask one another when they first meet is “What are you doing?” Instead of saying, “I teach in a college” or “I treat patients”, a person often says, “I am a teacher” or “I am a doctor” like this. This exhibits the occupation of a person. Occupation provides a person his identity. It talks a great deal about ones social position. of occupation also implies a set of social relationships (Hughes, 1945). For instance, the occupation as a professor implies that students , other professors, and publishers’ representatives are part of the set of their social relationships. Finally, occupations are by and large linked to the work of adults (Roe, 1956). The work carried out by teenagers is not often considered as an occupation, because it does not frame a major part of their identities as individuals. Taking into account all of these considerations, occupation is defined as “the social role performed by adult members of society that directly and/or indirectly yields social and financial consequences and that constitutes a major focus in the life of an adult” (Hall, 1975). A job is a person’s occupation at one point in time. A career is the unfolding sequences of jobs that a person has over the life course. 

The term ‘job design’ refers to the way the tasks are combined to form a complete job. It can be defined as building the specifications of the position, contents, method and relationships of the job so as to meet with various technological and organizational requirements as well as meet the personal needs job holders. According to Bowditch and Buono, job design refers to “ any set of activities that involve the alteration of specific jobs or interdependent systems of jobs with the intent of improving the quality of employee job experience and their on- the-job productivity.” 

While designing a job, the following points are to be borne in mind: 

Job redesign is an essential allegiance to quality improvement of the individual, and the organization. It should be performed from either the bottom up, or top down, depending upon the hierarchy and responsibility of the position and its relationships within the organization. 

Job design is a process which integrates work content (tasks, functions, relationships), the reward (extrinsic and intrinsic), and the qualifications required (skills, knowledge, abilities) for each job in a way that meet the needs of employees and the organization. 

Some jobs are routine because the tasks are consistent and repetitive; other are non-routine. Some require a large number of varied and diverse skills; other are narrow in scope. Some jobs constrict employees by requiring them to follow very clear-cut procedures; others allow employees considerable autonomy in how they do their work. 

Some jobs are most effectively accomplished by groups of employees working as a team; whereas other jobs are best done by individuals acting essentially independently. Thus jobs differ in the way their tasks are combined, and different combinations produce a variety of job designs in the organization.

There are three objectives of jobs design which are as follows: 

- to meet the organizational requirements such as higher productivity, operational efficiency, quality of product/service, etc.;

- to satisfy the needs of the individual employees like interest, challenge, achievement or accomplishment, etc.; and

- to integrate the needs of the individual with the organizational requirements.

While designing a job, the following factors are taken into consideration. 

i. The volume of work - it will determine by and large the number of jobs. 

ii. The complexity of the work - to be carried out, both in terms of its variety or breadth and its technical difficulty or depth. 

iii. The work processes involved -It might be desirable for one person to be involved in an entire process, or the work flows may be such that the work process has to be divide between several different people. 

iv. The nature of the people currently employed in the organization- The extent to which jobs can be redesigned depend largely on the kind of people employed 

v. The sequence of flows in the process- the succession of events and their timings affect how the work can be organized. Where activities are carried out over a longer period, this is likely to be the cause of greater complexity. 

vi. The timescales - where immediate responses are required, specific jobs may have to be earmarked to provide such responses. Work requiring longer planning horizons is likely to be more complex and needs therefore to be done at a higher level. 

vii. The geographical scattering of the organization’s activities . 

viii. The involvement of other parts of the organization in the overall process- there may be a need for extensive communication and coordination and the design of jobs should take account of the way this is to be achieved. 

ix. The effect of information technology (Cushway and Lodge, 2001).

In recent years, as computers and high technology become more and more ingrained in the modern workplace, the basic problem arises how to successfully fit technological advancements into job designs. 

Automation 

Highly simplified jobs often cause problems because they offer little intrinsic motivation for the worker. The tasks have been defined so narrowly that they lack challenge and cause boredom when someone repeats them over and over again. Given the high technology available today, one way to deal with this problem is by complete automation-allowing a machine to do the work previously accomplished through human effort. This approach increasingly involves the use of robots, which are becoming more and more useful and reliable. 

Flexible Manufacturing 

Flexible manufacturing cells, teams of workers using special technology, exploit adaptive and integrated job designs to shift work among alternative products. This approach is gradually more widespread. Under this system, a cellular manufacturing system hold a number of automated production machines that cut, shape, drill, and fasten together various metal components. Each machine is attached to the others by convertible conveyor grids that allow quick change from manufacturing one product to another-such as from air-conditioner compressors to engine crankshafts. Workers in the cells perform very few routine assembly-line tasks. As an alternative, they dedicate most time to make certain that operations are carried out correctly and to handling changeovers from one product configuration to another. Above and beyond, to keep production flowing slickly, each worker needs to improve expertise across a wide range of tasks. In this way flexible manufacturing cells comprise jobs that are often enriched on the core characteristics.

Electronic Offices 

Electronic office technology was the key when U.S. Healthcare, a large, private-practice based health maintenance organisation (HMO), became interested in improving the quality of its health-care services. The company installed large electronic bulletin boards that monitored progress toward a range of performance goals. It also installed an electronic main (e-main) system, used robots to dispense paper mail, and installed a computerized telephone answering machine. Fundamentally, the company tried to automate as many tasks as possible to free employees for more challenging work. Continuing development in these electronic offices present many new job opportunities for those with the necessary abilities and interests, but they can be stressful and difficult for those who lack the necessary education or skills. Clearly, today’s high technologies must be carefully integrated with the human factor, and continuing education and training are still needed to equip people to deal with emerging workplace technologies.

Work-Flow and Process Reengineering 

One of the most recent approaches for upgrading job designs and organisational performance is based on the concept of process reengineering. Process engineering means the analysis, reshuffling, and reconfiguration of actions and tasks required to reach a work goal. This approach methodically breaks work processes down into their specific components and subtasks, analyses each for relevance and simplicity, and then does everything possible to reconfigure the process to eliminate wasted time, effort, and resources. Job redesign through process reengineering focus on every step in the process, from the seeking out for items and vendors, to the obtaining of bids, to the completion of necessary forms, to the securing of required signatures and approvals, to the actual placing of the order, and so on to the point at which the new computer actually arrives, is checked in, is placed into an equipment inventory, and is finally delivered to the workplace.