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Question

Nandrachal Networks and Technologies Ltd. is a leader in technology innovation in U.SA. creating Products and Solutions for a connected world.
It has a large Research and Development team which invented the first smart watch W-I, which besides showing the time would also monitor few health parameters like heart beat, blood pressure, etc. While in search of markets abroad, the company found that in India, the reform process was underway with the aim of accelerating the pace of economic growth. The company decided to take advantage of the fact that licensing requirements had been abolished. The company was also aware that there had been increased level of interaction and interdependence among the various nations of the world and India could be made a base for its international trade. It set up its office in Gujarat with a view to capture the Indian market. In a short span of time, the company emerged as a market leader. Success of the company attracted many other players to enter the market. Competition resulted in reduction in prices, thereby benefiting the customers.
(a) In the above paragraph, two major concepts related to government policy have been discussed. Identify and explain those concepts.
(b) Also, explain briefly any three impacts of those concepts on Indian business and industry.

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Solution

a) The two major concept related to government policy discussed in the question are:
  • Liberalisation: It refers to removal of controls and restrictions imposed by the government.
  • Globalisation: It refers to integration of economies to the world.
(b) Impact of change in policy of the government on business and industry:
  • Increment in competition : As a results of changes in the rules of industrial licensing, entry of foreign firms have increased especially in service industries like telecommunications, airlines, banking, insurance, etc. which were reserved for PUS earlier sector.
  • More demanding customers: Customers today have become more demanding because they are well informed. Increasing competition in the market gives the customers wider choice in purchasing better quality of goods and services at cheaper rater.
  • Rapidly changing technological environment: Increasing competition forced the firm to develop new ways to survive and grow in the market. The rapidly changing technological environment creates tough challenges before smaller firms.
  • Necessity for change: In a regulated environment of pre-1991 era, firm could have relatively stable policies and practice. After 1991, the market forces have become turbulent as a result of which, the enterprise have to continuously modify their operations.
Need for development of Human resource: Indian enterprises lacked availability of trained technical personal always inadequately trained personnel. New market conditions require people with higher competence and greater commitment.
  • Market Orientation: Earlier firms used to decide production not the demand of products. In a fast changing world, there is a shift of market orientation as the much as the firms have to study and analyze the market first and then produce goods accordingly.
  • Loss of Budgetary support to the Public Sector: The central government's budgetary supports for financing the public sector outlays has declined over the years. The public sector undertakings have realised that, in order to survive and grow, they will have to be more efficient and generate their own resources for survival.

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