Effect of State Control and High Taxes on Economic Growth

Effect of State Control and High Taxes on Economic Growth Theories pertaining to economic development, with particular regard to those suitable for developing countries, have changed significantly during the post Second World War era. These changes have affected the progress of developing economies, which, in this period, have grown with varying degrees of success; marked with notable successes and enormous failures. The formulation of economic policy for a country necessarily needs to deal with numerous issues, including, very importantly, a determination of the extent of state control in the economy. The last few decades have seen sharp differences in elements of economic policy and fluctuations in levels of state control between different countries, as well as in varying degrees of economic performance. State control in the formulation of economic policy characterised economic thinking from the early forties until the late seventies. Classical economists, influenced by thinkers like Rosenstein Rodan and Leibenstein, thought of economic development as a growth process that entailed the â€Å"systematic reallocation of factors of production from a low productivity, traditional technology, decreasing returns, mostly primary sector to a high productivity, modern, increasing returns, mostly industrial sector.† (Adelman, 1999) They also recognised that economic growth, in the long term, does not come about in a linear fashion and is distinguished by a number of stable equilibriums, one of which, the low income level trap, retards progress in underdeveloped economies. Low income and low growth equilibriums, which originally occurred because of low levels of infrastructural and productive capital, are perpetuated by low levels of economic growth, and compounded further by Malthusian population growth. In such situations, uncoordinated and unplanned investments do not, in the first instance, allow for achievements of scale, and along with low incomes, savings, and demand, result in trapping economies in low income level snares. (Adelman, 1999) Classical theorists argued that governmental action, investment in the public sector, and strong state control, were essential to take economies out of the unplanned and uncoordinated, low income, low growth and static equilibriums, to ones that were coordinated, dynamic, and capable of high growth and income. State ownership also had the support of socialist ideology, common planks adopted by the newly independent developing nations, partly on ideological considerations, and partly in reaction to the capitalist doctrines followed by their former colonial masters. Many governments felt strong state control to be the best route to safeguard economic independence and substitute the private sector’s deficiencies in skills, management knowledge, disinclination to take risks, and lack of resolve to take up long gestation projects. State owned enterprises were thought suitable for stabilising agricultural prices, providing employment, taking care of workers, controlling customer pri ces, and generating money that could be used for other public work. (Osterfeld, 1992) Much of the investment and economic policy followed by countries, mostly in the newly independent countries of Asia and Africa, arose out of this thinking, and resulted in huge investments in state run enterprises, as well as in the domination of the state in the making of economic policy. â€Å"During the 1960s and 1970s, the public sector grew rapidly in developing countries, with state-owned enterprises often accounting for most of the growth. This was especially true in developing countries that had recently gained independence.† (Miller, 1997) State ownership did not succeed for various reasons. Even though there was little to dispute in the logic behind its theory, or deny the significant infrastructure created in state run economies, these countries fared miserably in terms of GDP growth, inflation control, agricultural and industrial productivity, literacy improvement, elimination of income disparities, or poverty control. Prone to corruption, influenced by partisan elements, and notoriously inefficient and slow in their interventionist actions, governments came to be thought of to be particularly unsuitable for regulating economic policy or managing commercial companies. The widespread disillusionment with state control led to a neo classical reaction, characterised by a movement towards privatisation, like the one in the UK, during the Thatcher years. Supporters of neo classical economics stress that governmental control and intervention creates problems, rather than solutions, for underdeveloped countries, and furthermore, that liberalisation of trade is sufficient for inducing and motivating development, providing for economies of scale, and making the economy and industry internationally competitive. The optimal course of action for government is to minimise its role in economic policymaking, and improve the spread of market economies and efficiencies. A number of developing countries, racked with inflation, unemployment, sluggish growth, and burgeoning external debt, had to necessarily switch to neo classical economic policies, in the 1980s, many of them under the compulsion of the World Bank, and similar other international lending institutions . Government leaders also embraced privatisation because of their desire to (a) improve efficiency and productivity through private, as well as shared ownership, (b) enable managers to focus on economic and not social objectives, (c) eliminate political influence, (d) promote competition, (e) improve quality of goods and services and (f) reduce prices. Reducing state control, economists felt, would also lead to expansion of capital markets, augmentation of foreign inflows and investments, creation of additional sources of tax revenues, as well as reduction of subsidies and national debt. (Adelman, 1999) While privatisation in developing economies is into its second decade, progress has been uneven, and in some cases, even abysmal. In fact, countries like China and India, where governments play strong roles, have been able to achieve significantly high growth rates. Their governments decisively shifted emphasis to export promotion, pushed through institutional reforms, invested significantly in infrastructure, and engaged in selective industrial policy. Experts are now realising that uniform one-shoe-fits-all policies never work and economic policies have to take account of a number of variables to be relevant, and furthermore successful. The uneven success of many developing countries, even after embracing privatisation, has also led to a consensus that governments need to be strong, capable, and committed to carry through any sort of reforms, even those that deal with opening and liberalisation of economies. Furthermore, reduced state control appears to work better in economies wit h high rates of literacy, stable political environments, established legal systems, developed capital markets, and strong banking structures. Governments need to consider unique country specific attributes, be malleable, and play dynamic and changing roles in education, human capital formation, infrastructure, technology acquisition, setting up of institutions, and in the development of an honest and capable bureaucracy. The scope and ambit of governmental policy can be reduced sharply only after the domestic environment provides adequate savings and skills, entrepreneurs develop in skills, technology and capital formation, and institutions achieve maturity. While education, literacy and formation of human capital have to remain priorities, governments in developing economies need to initially work towards social development, and creation of institutions, as well as infrastructure. (Kiggundu, 2002) Economic policies, institutions, and governmental functions should allow structural change to occur on a continuous basis, and be ready to change with development; the role of government needs to be effective, not minimal. The tax policy of a country is a major component of its total economic policy, and serves the purpose of a tool to collect revenues for governmental spending and guide the growth path of the national economy, as well as sustain and increase its international competitiveness. While the primary role of taxation is to provide money for financing governmental work it also needs to perform other functions like attracting capital, stimulating growth, enable acquisition of technology, stimulate demand and galvanise the economy. While there is universal agreement on the necessity of taxes, there are differences on the levels of taxation regarded as optimal, as well as the point beyond which they cease to be economic drivers, and become dead burdens. In the traditional neo classical models of economic growth, taxation is thought to affect long term output, but not the rate of growth. (Leach, 2003) This theory, however, is being questioned by recent models, which iterate that taxation can affect incentives for investment in human or physical capital, and thereby, adversely influence the long term economic growth rate. Higher taxation takes away the incentive to save (a) by reducing the rate of return on savings, and (b) by reducing the income that generates savings. Lower savings in turn lead to lesser consumption, lowered demand for goods and services, and lesser capital investment, both at personal and corporate levels, and thus to under nourishment of the economy. While research studies have not been able to relate high rates of personal taxation induce individuals to work less, experience has shown that they motivate people to under declare income, manipulate expenses and indulge in falsehood. The same behavioural response holds good for business corporations and other taxpayers. Economies with very high tax rates like India have witnessed large scale evasion of taxes, hoarding of unaccounted wealth in an unproductive manner, and the emergence of a parallel, illegal, underground economy. Transfer of money from the private sector to the public sector through taxation results in making its use more inefficient. Streams of assured money to the public sector and the government pave the way for creation of further inefficiencies and misuse of funds. The reduced rate of growth also leads to a deadweight loss, a term used to explain the loss of output that would have taken place in the absence of tax. Deadweight costs (losses) go unnoticed, even by those who pay them, because instead of taking from people what they already have, they take from people what they would have had, but will never get. No one sees the extra output that would have been created by economic decisions made in the absence of higher taxes. (Leach, 2003) The incidence of deadweight loss, even if it is just half a percent of GDP, can work out to a phenomenal amount, especially if compounded over a period of several years. Several empirical studies have also revealed that economies with lower tax rates perform much better than those that have higher shares of tax. Thus, while developing economies undoubtedly need significant funds for infrastructural build-up it would be reasonable to assume that excessively high tax structures have the potential to retard economic growth and cause significant harm to growth of human capital and infrastructure, the very objectives they aim to achieve. 2. Public Sector Deficits Most economists agree that the role of the government, especially in the context of developing countries, is to form human capital and create infrastructure across educational, technological, financial, physical, environmental and social sectors. The obvious reason for this lies in the inability of private enterprise to do so. In addition to infrastructural development, public sector spending serves to create demand, stimulate growth, and help kick start economies. Funding for these expenses is primarily through collection of taxes, the shortfall being met either through national or international debt, consumption of foreign exchange reserves or printing of bills. Development that occurs because of funds obtained through deficit financing provides a solution to moving out of economic and low income stagnation. While the role of the public sector and its use of deficit financing is one of the tenets of Keynesian economics, many neo liberal economists argue that the theory is impractic al, has many fallacies, and needs to be avoided by developing economies. (Rangachari, 2001) Neo-liberals argue that excessive deficit financing of the public sector can lead to burgeoning of national or international debt, inflation, or foreign exchange crises, depending upon the method adopted. Increased local borrowing can also disincentivise private sector borrowing by sucking out money available with banks, and causing increases in interest rates. Furthermore, the money arranged through deficit financing is very likely to be inappropriately spent because of numerous demands upon public sector funds, political considerations, bureaucratic delays, and corrupt delivery systems. Government expenditure is complex, multifaceted and driven by opposing forces. The task of ensuring proper allocation of money, as well as its efficient usage, is often beyond the ability of career bureaucrats, and results in gross budgetary distortions, increasing deficits, persistently high inflation, high external debt, increasing incidence of tax, and retardation of economic growth. The main arguments advanced by the neo liberals is not against the theory of public spending but its implementation and management, particularly in large and federal systems with multi-tiered distribution mechanisms. While there is truth in their assertions, neo-liberals need to recognise that smaller East Asian economies like Singapore, Malaysia and South Korea have, at some point of time, resorted to deficit financing, but have still been able to achieve high growth rates through efficient fiscal discipline. The crux of the objections of the opposers of deficit financing lies not in the raising of money but in its inefficient and improper use. The success of deficit financing lies in the commitment of the concerned governmental agencies, and in ensuring that deficit financing is resorted to only to the extent necessary. Money raised through deficit financing should not be diverted to meet burgeoning administration expenditure, or to channels that do not aid development. It would be unjust to think of economists who object to the use of deficit financing, as dyed in the wool cynics who prefer markets to work as freely as they can, and furthermore, believe that governments should not favour any sector of the economy over the other. Their arguments are, for the most part, dependent upon the experiences of the last fifty years, wherein numerous governments resorted to unbridled state control, excessive taxation, and heavy deficit financing, with severe repercussions upon growth and development. It needs understanding that most of these countries were coming out of centuries of colonial suppression, had very little of physical and human capital; very often their leaders took decisions without adequate knowledge of the consequences of their decisions or of their ability to control the consequences of such decisions. â€Å"In practice, a state’s capabilities are often as important determinants of its actions as the theoretical rationale.† (Expenditure Policy, 2007) The situation is vastly different now and leaderships of developing countries are both knowledgeable and competent. There is no such thing as a universal doctrine in economics, and governments recognise that the application of one-shoe-fits-all theories, without taking account of individual considerations, has led to grievous and costly errors. The same rationale holds good of deficit financing and the solution is to be circumspect and prudent while using it; a blanket ban could do more harm than good and impede sincere growth efforts. As such, while deficit financing will often be necessary in framing the economic policies of developing nations, decision makers need to be doubly careful about its use and focus on imperatives, namely (a) the formation of human and physical capital, (b) the creation of public and business infrastructure, (c) the build up of banking systems, capital and commodity markets, and economic institutions, (d) the elimination of unnecessary non developmental a nd administrative expenditure, and (e) the creation of a competent, honest and accountable bureaucracy. Such precautions will go a long way towards eliminating the risks associated with high deficits and enable growing nations to make optimum use of the money made available. Bibliography Adelman, A, 1999, The role of government in economic development, University of California at Berkeley, Retrieved May, 3, 2007 from are.berkeley.edu/~adelman/Finn.pdf Beard, A., 1997, World Bank Reconsiders Role of Government: Report Displays Respect for Regulation. The Washington Times, Choudhury, S. R., 1999, Is Privatisation Really the Answer?. African Business 26+. Das, D. K., 2004, Financial Globalization and the Emerging Market Economies. New York: Routledge. Eltis, W., 2000, The Classical Theory of Economic Growth. New York: Palgrave. Expenditure Policy, 2007, The World Bank, Retrieved May 3, 2007 from web.worldbank.org//EXTPEAM/0,,contentMDK:20233612~pagePK:210058~piPK:210062~theSitePK:384393,00.html Ferleger, L. A., Mandle, J. R., 1993, No Pain, No Gain: Taxes, Productivity, and Economic Growth. Challenge, 36(3), 11+. Growth and Trade in Africa Are Lifting People out of Poverty Faster Than Gleneagles Debt Cancellation., 2006, Western Mail (Cardiff, Wales), Kiggundu, M. N., 2002, Managing Globalization in Developing Countries and Transition Economies: Building Capacities for a Changing World. Westport, CT: Praeger. Leach, G, 2003, The negative impact of taxation on economic growth, IOD, Retrieved May 3, 2007 from www.reform.co.uk/filestore/pdf/negativeimpact.pdf Medium-Term Prospects and Policy Issues in Developing Countries., 1990, 61+. Miller, A. N., 1997, Ideological Motivations of Privatization in Great Britain versus Developing Countries. Journal of International Affairs, 50(2), 391+. Osterfeld, D., 1992, Prosperity Versus Planning: How Government Stifles Economic Growth. New York: Oxford University Press. Pietrobelli, C. Sverrisson, à . (Eds.)., 2003, Linking Local and Global Economies: The Ties That Bind. New York: Routledge. Rangachari, A, 2001, Spur economy through deficit financing, the Hindu, Retrieved May 3, 2007 from www.hinduonnet.com/2001/09/20/stories/0620013h.htm Timmer, C. P. (Ed.)., 1991, Agriculture and the State: Growth, Employment, and Poverty in Developing Countries. Ithaca, NY: Cornell University Press. World Economy Doing Good; Developing Africa, Asia Show Growth., 2006, The Washington Times, p. A17.

Brand Development

Question: Analyze ESPN according to the brand development strategies from the text. What have they done in the past? What would you recommend to ESPN for future brand development? Discussion: Brand development in the past has consisted of creating new and exciting ways to bring the latest sporting events. A company has four choices when it comes to developing brands. It can introduce line extensions, brand extensions, multi brands, or new brands.Line extensions occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category. A company might introduce line extensions as a low-cost, low-risk way to introduce new products. Or it might want to meet consumer desires for variety, use excess capacity, or simply command more shelf space from resellers. However, line extensions involve some risks. An overextended brand name might lose some of its specific meaning.Or heavily extended brands can cause consumer confusion or f rustration. A brand extension extends a current brand name to new or modified products in a new category. A brand extension gives a new product instant recognition and faster acceptance. It also saves the high advertising costs usually required to build a new brand name. At the same time, a brand extension strategy involves some risk. Now for ESPN. ESPN loves its name. It puts it name on everything. ESPN The Magazine. ESPN2. ESPN News. The ESPN Zone.To a degree it is fine, as long as it stays within the bounds of extending ESPN's core value: getting sports into every ounce of your life. ESPN The Magazine is the only one that isn't worhty of the ESPN headliner. They should have named it something else. It's not up to the minute, so it isn't consistent with everything else ESPN promotes. Anyways, ESPN Mobile fits the bill. Every sports fan has been stranded to some degree without being able to access sports info they needed to have. And die hard sports fans NEED their info.The concept of the insane amount of sports data being pumped over that network is mind blowing. What is also mind blowing is that for what it is, its restrictive. Today, I don't see the ESPN phone in a family plan or the Mobile ESPN service being offered through standard phone outlets. If Dad or Junior could get a Samsung on Verizon's network featuring Mobile ESPN? Done and done. And with the move to converged handsets, I see the market for Mobile ESPN as single guys with 40 hour-per-week blue collar jobs who like to watch football at the bar.If that's the segment they are targeting, good for them. Love the concept, just wish it fit my profile a little better. The middle class loves the family plans because they don't have to spend twice as much to get the core function of a phone: the phone. For the small service business: stay focused on what makes your name valuable. If you absolutely need to get into a new business opportunity. Sleep on it. If you still must get in, you need a new name for that new business!!!! Nothing dilutes a brand like the jack of all trades.

“How Should Posco-Ippc Increase Its Footprint in the Automobile Segment?

| Business Management IA| â€Å"How should POSCO-IPPC increase its footprint in the Automobile segment? | Candidate Name: Amrit Shah Session no. 002798011 School: Symbiosis International School Research Proposal: Executive Summary: 199 words Word Count: 1977| | Acknowledgements: I would like to acknowledge and thank: * Mrs. Vaishali Phatak for her support and assistance in helping me with this report * Mr. Bharat Indu Bhattacharya- Electric Steel Dept. Manager of POSCO-IPPC, Pvt. Limited, Pune – for his contribution to the report and his time for the interview. * Mr. Joseph Joe- Automobile Steel Dept. Manager of POSCO-IPPC, Pvt. Limited, Pune- for his contribution to the report and his time for the interview. * Mr. Jacy Kim- General Manager of POSCO-IPPC, Pvt. Limited, Pune- for allowing me to do this report on the company and for providing guidance and help throughout. Executive Summary POSCO-IPPC, a steel distributor for the Korean company POSCO have plans about establishing themselves firmly in the Indian Steel Industry given that they are facing consumer problems from their customers in the Automobile sector. As such this paper analyzes the question, â€Å"â€Å"How should POSCO-IPPC increase its footprint in the Automobile segment? † Primarily, a research question highlights the rationale, theoretical framework, action plan and methodology applied and possible constraints in answering the question. An Introduction enlightens us about the background and basic history related to the company itself and of relevance to the question. Findings and analysis is written on the basis of primary research inclusive of multiple interviews conducted with different managers and secondary research inclusive of mails concerning their expenses over the future prospects by the automobile sector manager that acted as a catalyst in evaluating using both financial (capacity utilization and decision tree) and non-financial methods(SWOT & PEST). The report mainly focuses on the problem of raw material which POSCO-IPPC is currently facing due to which they are not able to meet the increasing demand. Based on the research conducted, it is found that POSCO-IPPC has two options to overcome this problem. One that it could ask POSCO, Korea to supply them with greater raw material and the other that it could ask POSCO, Orissa, a manufacturing unit to supply them with raw material. These options have been evaluated keeping in mind the conditions to find out the most feasible option to give a strong conclusion. Possible solutions are discussed and the conclusion suggests that POSCO-IPPC in order to sustain itself in the Indian Steel Market needs to increase its output and using the financial and non-financial techniques discussed and the best viab1e option would be to increase its raw material supply from POSCO, Korea. Contents Acknowledgements†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦2 Executive Summary†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 3 Research Proposal†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. Introduction†¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 8 Procedure/ Methodology†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 9 Main Results and Finding †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦ 10 Analysis/Evaluation†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 12 Conclusions and Recommendations†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 16 Bibliogr aphy†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 17 Appendix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 18 Research Proposal Research Question How to increase POSCO-IPPC footprint in the Automobile segment? Rationale POSCO-IPPC, a distribution centre of Korea’s POSCO Steel Company, is a newbie in the Indian Steel market; they have a monopoly in the Electric steel market and they are undergoing problems in the Automobile sector so they should work on capturing more consumers in the Automobile sector so that they are able to stabilize themselves. The research question focuses on the ways POSCO-IPPC should apply to set its footprint in the automobile segment. Theoretical Framework My plan is to utilize both financial and non-financial techniques to evaluate the problems incurred by the management so that they are able to firmly establish themselves in the automobile sector. The report will analyse the problems faced, thus it will try to solve it using the financial techniques of Capacity Utilisation and Decision Tree and non-financial techniques of SWOT and PEST which will analyse the other problems, opportunities and threats. Key Areas of Syllabus Unit 4 – Operations management Decisions * Introducing Operations Management Improving operational efficiency: Capacity, Scale of production Unit 6 – Numerate techniques for business studies * Information for decision making Primary Research: * Interview with Electronic Steel manager Mr. Sharad Indu Bhattacharya regarding the company history, company status, market and other general aspects about the company’s working. * Interview with Automobile Steel manager Mr. Joseph Joe regarding the market stats in Automobile sector, drawbacks, problems and possible implications so as to understand their market in the Automobile sector. Secondary Research: * Some Information and the list of customers of POSCO-IPPC, Pune, India received through mail from Mr. Joseph. * Other background history of POSCO, Korea used and other facts and figures were taken from the internet. Possible Problems:| Solutions:| Managers were not able to understand the true purpose of the interview resulting in very compact answers. | Managers were asked questions in a very narrow perspective which narrowed down to minute details. | Responses from the managers were related to only their departments, unable to give a general view. Requested them to get information from other managers as well. Small interview with a employee and the production manager. | Limited access to detailed information on the customers and the company as the locations are very far and detail information is confidential. | Acknowledged in the conclusion. | Financial Data was limited to a great extent as it was a new company and Data was yet not published. | Estimates have b een taken and where estimates could not be taken, it has been described in words. | | | Action Plan: Date| Task | 18th August, 2008. | Talked on phone with Mr. Jacy Kim who agreed to let me do my project on the company. | 20th August, 2008. | Will take an Interview with Mr. Bharat Indu BhattacharyaWill take an interview of Mr. Joseph Joe Research Question formulated. | 22nd August, 2008. | Planning will be done as to the way this essay needs to go about. Introduction and Research Proposal will be written. | 30th August, 2008. | Data Collection should be done. | 5th September, 2009. | Main results and findings will be written down based on the information gathered from Mr. Bharat Indu Bhattacharya and Mr. Joseph Joe over the days. 13th September, 2009. | Analysis of the data will be done. | 14th September, 2009. | Techniques of Capacity Utilization and Decision Tree will be applied. Will make a SWOT and PEST analysis. Analysis to be completed. | 15th January, 2009. | Recommendations written. Appendices made and attached. | 16th January, 2009. | Executive summary, content page, Action plan| Introduction: POSCO-India Pune Processing Centre Co. Ltd. , established in August 2006 but started its commercial distribution in 2006, and is a highly recognized by all the major companies of India for its great quality of its steel. Although being a newcomer in the Indian Steel Market, it has set its footprint as a Quality and principle based company. POSCO-IPPC is a coil centre for the Korean Steel giant POSCO Steel Limited which is a global producer of crude steel and finished steel goods. POSCO-IPPC involved an investment of 15 million dollars. It is an independent company of its own as it is a joint venture of POSCO (holding 65% of shares. ) and LG (holding 35% of shares. ) POSCO-IPPC is a processing unit which is locally managed. It is a processor-cum-distributor of steel in the electronic and automobile segment. It only plays a small role of slitting and shearing of the raw material as a processor. Its output is 10,000 metric tons per month with an annual turnover of 320 Crores in the previous financial year. It employs 120 people as its working staff out of which 60 are employed as payroll workers and other 60 are in contract. With the import prices and duties of steel and being a newbie in the Indian Steel market, it is facing competition from other distributors like ESSAR, TATA STEEL, JINDAL and other Chinese and Russian companies. In the Automobile sector, there are many problems created due to its high price and lack of output compared to that in the electronic steel sector for it holds monopoly in the sector for many of its products. As the management is highly equipped in its factors of production, it is researching on ways to exploit the Automobile market in order to firmly establish itself in the country. Therefore this report focuses on- â€Å"How should POSCO-IPPC increase its footprint in the Automobile segment? † Procedure/Methodology The Initial research included a detailed interview about the company and its standings with Mr. Bhattacharya-Electronic Steel manager. Another interview was with the Automobile Steel manager- Mr. Joseph Joe about the Automobile sector inclusive of the discussion over the problem mentioned in the research question. Underlining the major aspects in the interview, the questions focused on POSCO-IPPC’s strength, standings in the market, internal and external factors involved for and against production (which created the PEST, SWOT analysis and information for the analysis), and financial status and estimations advising financial techniques to be applied ( Capacity utilization and Decision Tree. The secondary research resulted in analyzing of POSCO Steel’s information and accessing other reports, industry statistics, market information and data via numerous internet sites. This helped in the results and findings, in strengthening the information available and recommendations and conclusions. It should be noted however, that financial data collected is based upon both à ¢â‚¬Ëœactual’ and ‘estimates’, which need further validation. In addition, the validity of this report may be influenced by the apparent subjectivity of some financial data given confidentially issues. Main results and Findings POSCO-IPPC Private Limited is a subsidiary of POSCO, the world's  fourth largest steel producer and one of the most competitive steel companies (World Steel Dynamics 2006) whose products are shipped to over 60 countries around the globe. Aside from this unit, POSCO has also invested 12 billion USD in Orissa which is proposed to produce an output of 12 million ton per annum by 2010. Since 1990, more than Rs 19,000 crores (US$ 4470. 58 million) has been invested in the steel industry of India and there is an increasing trend in its production. See Figure 1) The auto component sector has also posted significant growth of 20 per cent in 2003-04, to achieve a sales turnover of Rs. 30,640 crore (US$ 6. 7 billion)(See Figure 2). Such opportunities in the automobile sector and the Indian economy can help POSCO-IPPC to establish itself firmly. In terms of current market position, POSCO-IPPC brands itself as a leading provider of electric steel in some of the areas in India for not many of the companies have explored the electric steel market. Being a newcomer, it plans to inhabit the automobile steel market, where it still hasn’t managed to set its foot firmly. The company is based upon certain policies and factors which many of the customers are unable to comply with. POSCO is a global player and it supplies and manufactures steel all over the world. It exports steel from South Korea at an international price which is comparatively high in Indian currency so this difference between the prices, leads to a high price charged by the company. Due to the high price, POSCO decided to put a special price (Rs 49000-cold rolled steel) to fit in the market but in exchange for lower supply of steel so this reduces the supply power of POSCO-IPPC. POSCO-IPPC is only a distribution centre and does not manufacture. It is a market-oriented firm and follows the concept of mass customization for it creates the output maintaining to different customers need. It slits and shears steel depending upon the customer’s want. Its main customers are Crompton, LG and Suzlon in the electrics sector and Tata and Bajaj in the automobile sector. It uses batch production to produce an output of 10,000 metric tons per year where 1. 5% of the raw-material is wasted in slitting and shearing. The demand for their steel is a lot higher than their output and their capacity is also higher (35,000 metric tons/year) but the lack of raw-material limits them, due to the special price-low supply factor. Instead of creating more output, their machines are doing job work for other competitors like JINDAL, ESSAR, etc. of 5000 metric tons monthly. Highlighting the difficulty suffered in the case of TATA MOTORS Pvt. Limited Total Requirement of TATA | 30,000 (Demand going up by 7-10% annually) | TATA’s demand from POSCO (for high quality steel)| 5000-7000| POSCO-IPPC’s Supply to TATA| 2000-2500 (Rest to be supplied to other customers. )| POSCO-IPPC’s Cold Rolled Steel Price at the market | Rs. 53-55000| TATA’s pay price to POSCO | Rs. 48000| | | | | (All figures are in metric tons/month) Analysis/Evaluation: The evaluation of different problems which cause hindrances in trade with other companies will be done with the help of certain financial and non-financial techniques. Financial Analysis: I. Capacity Utilization With the purpose of utilizing its capital to the fullest, POSCO-IPPC has two pathways in order to supply more in the steel market and set its foot strongly: a) acquiring more raw-materials from POSCO, Korea. b) Purchasing of raw-material from POSCO manufacturing unit at Orissa, India. Thus, we will analyze the present scenario of capacity utilization in compared with the two options mentioned above. Present Capacity Utilization scenario: The capital utilization is calculated in percentage and the formulae used for it is given below: OutputMaximum capacity? 00 Current Output: 10000 metric tons/ month. Maximum Capacity: 11250 metric tons/ month. Capacity Utilization = 1000011250? 100 = 88. 89% Option a): acquiring more raw-materials from POSCO, Korea: Estimated output: 11250 metric tons/ month Maximum capacity: 11250 metric tons/ month Capacity Utilization = 1125011250? 100 = 100% Option b): Purchasing of raw-material from POSCO manufacturing branch at Orissa in India: Estimated Output: 11250 metric tons/ month Maximum Capacity: 11250 metric tons/ month Capacity Utilization = 1125011250? 100 = 100% II. Decision Tree: Utilizing this approach for both the options and other decisions to be made by the company are evaluated and financially viable decisions are suggested. (Figure 1) (All money values are in Indian Rupees) Key: Decision square Chance node Calculations: (611. 105mn ? 0. 6) + (466. 07mn ? 0. 4) – 500mn = 53. 091mn INR (572. 88 ? 0. 3) + (491. 04 ? 0. 7) – 500mn = 15. 592mn INR Non-financial analysis: India has gone through a considerable change in the production and consumption of Steel in the past 10 years. Driven a booming economy and concomitant demand levels, consumption of steel has grown by 12. 5 per cent during the last three years it has been forecast that the apparent steel use point in India will increase by 11. 8 per cent in 2008. POSCO-IPPC has great opportunities to set their foot firmly in the Automobile sector. The POSCO steel plant is India’s single largest foreign investment project ever. For its part, the Indian government is eager to boost its steel production and attract more foreign investment through such a lucrative partnership. But it also may lead to limiting of foreign ownership and application of protectionism to prevent foreign investment from exceeding its levels. Technology level in POSCO-IPPC is of high standards and helps them with maintaining the quality. The machines brought in are imported but India is a developing county and it has certain problems of electricity which results in regular power-cuts causing hindrances in processing of steel. These load-shedding periods are often covered by the use of generators but these generators prove to be expensive. The steel being imported is affected by any change in the foreign exchange policies and any government/fiscal policies which may affect them. POSCO-IPPC being a new-comer may feel threatened by the presence of multi-national companies as it leads to greater competition and more exploitation of resources. Conclusions and Recommendations: Available management’s perception on the opportunities to establish themselves in the Steel Industry, it does appear that the management should research this further by the help of a market research and research on all of the customer needs. Analysing the written report on the basis of the data supplied, it appears that POSCO-IPPC’s only hindrance is its limitation of supply which if solved will solve many of their other problems. Using Capacity Utilisation and Decision tree, it was understood that if maximum capacity utilisation takes place, it will reduce the price; increase the output; increasing the output will lead to long term relationships with the customers; it will involve maximum utilisation of resources. Maximum capacity utilisation is only possible with the increase in output which can be only done by increase in the supply of steel. There had been two options discussed with the help of decision tree to look for the best and cheapest way to increase the supply by deciding upon the source. The analysis showed that purchasing from POSCO, Korea at the special price is more profitable (53. 091mn INR) but this is only possible if POSCO, Korea agrees to supply them at the special price. The second possible option was from purchasing steel from the other branch of POSCO at Orissa, India but this would prove less profitable (15. 592mn INR) as they would sell it at the selling price in order to save their profits. Other factors which tend to support POSCO-IPPC to set its foot in the Automobile sector include in the non-financial analysis: growing Indian economy and its Steel Industry; Government support; Great Quality Steel; modern technology used with strict disciplinary issues which makes them a good supplier. Recommendations: As such, my recommendations would be: * Undertake further research in terms of specific of customer requirements and problems, by performing a market research and research on the clients, as many of my findings are generic to the company’s knowledge. More accurately determine the precise nature of the costs and profits upon purchasing steel from the sources analyzed in the written report. * Embark upon extensive research as to search other ways to increase the output and also request POSCO, Korea to supply more at the special price. However, my analysis is limited; it does not cover all the aspects of this topic due to the restraints of the data supplied. The re search was not more extensive because the unit was far away and many meetings were not possible with the officials as this would interrupt in their work . With only two personnel interviewed, a wider perspective from other departments must also be obtained . The report is a reference material, the research can be more extensive and proper results can be achieved if access to more data was possible. The Report is still in progress; there are many issues which need to be solved which can be done with the help of the recommendations and more access. Bibliography Books: AS Level and A level Business Studies, Peter Simpson, Cambridge University Press, Cambridge, 2002, Websites: http://www. stratfor. com/analysis/india_poscos_steel_investment_challenge Steel, India Brand Equity Fund, http://www. bef. org/industry/steel. aspx India Steel Industry, Economy Watch, http://www. economywatch. com/india-steel-industry/ India Automobile Industry, Economy Watch, http://www. economywatch. com/business-and-economy/automobile-industry. html Corporate overview, POSCO-INDIA, http://posco-india. com/website/company/corporate-overview. htm APPENDIX: * Appen dix 1: Interview Transcript with Mr. Bharat Indu BhattaCharya * Appendix 1: Interview Transcript with Mr. Joseph Joe * Appendix 3: SWOT Analysis * Appendix 4: PEST Analysis * Appendix 5: Graphs * Appendix 6: Mail from Mr. Joseph Joe Appendix 1: Interview Transcript with Mr. Bharat Indu Bhatta Charya, Electric Steel Dept. Manager of POSCO-IPPC, Pvt. Limited, Pune 1) Good Afternoon, Could you please enlighten us about your company? * Good Afternoon, POSCO-IPPC stands for POSCO – India Pune Processing Unit. We are situated in the Talegaon Horticulture and Industrial Park in the dist. Of Pune. POSCO-IPPC is a coil centre as known by its parent company POSCO, which is a steel manufacturer giant in South Korea. It is the fourth largest producer of steel in the world and its distributors and manufacturing units are spread all over the world. From the start of this company to the present date, POSCO has led to massive advancements in the socio-economic status of South Korea. Coming back to POSCO’s investment in India, this is POSCO’s third investment, the other two being in Delhi and Orissa. Although POSCO is POSCO-IPPC’s main investor but it is an independent company which is locally managed. POSCO entering in a new market planned to establish this processing unit as a joint venture with LG International, where POSCO has 65% of shares and LG international owns the rest 35%. A total 15 million $ was invested in this project and it commercial processing started in 2006. 2) Can you emphasize more on your commercial processing and the working of this unit? * POSCO-IPPC processes the raw material which comes from POSCO, South Korea and distributes it to the customers. By processing, we mean the steel which comes from POSCO is slatted and sheared according to the customers need. We receive our steel in the form of coils, this is one reason for our being known as coil centre, then the coil is put in a machine which slits and shears it based on the dimensions set. This is then packed and sent to the respective customers. Our major customers are Crompton, LG, Suzlon, TATA and Bajaj. Our company produces output for electric steel as well as automobile steel. Although in the electric steel market, we hold a monopoly but in automobile, we are yet to expand our approach. These are the different types of steel we produce: Electric Steel * CRGNO- Cold Rolled Grain Oriented Steel * CRNO- Cold Rolled Non-Grained Steel Automobile Steel * HR ; PO- Hot Rolled and Pickled ; Oiled Steel Cold Rolled Steel * Stainless Steel White Goods * Electro-Galvanised Steel We have 120 people as staff, out of which 60 are on payroll and 60 are on contract. We follow the batch production for our processing unit. Our output is 10,000 metric tons / month with an annual turnover of 320 Crores as of last year. The raw material which comes to us, we add a value addition of 10% and sell it in the market. Our capacity to produce is 135,000 metric tons per annum where as its outp ut is low because of the lack of raw material so the capacity utilization is not up to the mark. So to involve our other machinery, we do job work for other companies of 5000 metric tons. 3) Can you please tell me about the managers of this company? * The managers at all the leading posts in the company are all from South Korea and they have been assigned by POSCO for a fixed period of years for a perfect start in the Indian Steel market. These are very experienced and are strict followers of discipline and quality. The work at POSCO-IPPC is efficient and advancing due to these managers. These are: * Gil Ho Bang – Managing Director Jongyeol Her – General Manager * Jung Chule Kim – General Manager * Woon Tae Jung – General Manager 4) Can you please tell us about the difficulties you are facing as a new company in the Indian Steel market? * We have a monopoly many in the market for Electric steel so we don’t have any problems in that sector but in the automobile sector, our competitors are well established and they have a far greater market share than POSCO-IPPC in the market so it creates pressure on us to create our product better than theirs to stay in the market. Our competitors: TATA STEEL, JINDAL, ESSAR, ISPAT and other Chinese and Russian companies. The two main difficulties which our company is facing are: * There has been a Star Rating which the Indian Government has started on the electric appliances. This effect of BAE Star Rating on the consumption of Electric Steel. * The Automobile sector in India is booming and has a lot of scope so POSCO-IPPC is trying to increase its footprint in the Automobile steel segment. There is a lot of demand for POSCO’s quality steel in the Automobile sector. 5) What is your SWOT? SWOT Strength * Any downfalls can be supported by POSCO-Distribution of quality steel – Inherits a quality name in the market from POSCO- Maintains strict disciplinary levels- Market leader in Electric Steel- Demand for its quality steel in the Automobile sector-Machinery is very advanced and the labour employed are few but skilled. Weaknesses * Not enough raw materials-Is not yet able to firm its stand in the Ste el market-The high price of their product due to the currency of Korea being more powerful – Language/ Cultural gap between India and Korea. Opportunities To increase its output and meet the high demand – Lack of high quality steel in the Automobile market gives them a big opportunity – India encouraging foreign investments- Increasing International trade between the countries- Rate of high economic and the country's economy gradually increasing- Special Reduced Price for the steel. Threats * Price of the raw material is highly dependent on the foreign exchange – POSCO holding a small share in the market is comparatively smaller than its multi-national counterparts -Low output due to lack of raw materials which may result in the loss of customers and a long term relationship. Appendix 2: Interview Transcript with Mr. Joseph Joe, Automobile Steel Dept. Manager of POSCO-IPPC, Pvt. Limited, Pune 1) Good Afternoon, What can you tell me about POSCO-IPPC in relevance to the Automobile market? Good Afternoon, POSCO-IPPC is a subsidiary of POSCO which as you know is a global producer and distributor of high quality steel. So as its parent company, POSCO-IPPC is also known for its high quality in the Indian Steel market. Automobile Company requires high quality steel for the chassis parts of the automobile, usually such parts are imported or substitute quality steel is bought so due to the lack of high quality steel producers in India, there is a lot of demand for the emerging POSCO-IPPC’s Steel. Though POSCO-IPPC has so many opportunities to set itself firmly in the market, it has many hindrances preventing it from doing so. 2) Can you pleases talk about the hindrances in little more detail? * There are many factors which sum up to conclude as a hindrance for POSCO-IPPC. The major ones are: * High cost of POSCO-IPPC’s Steel leads to a discouragement to the Indian customers. * POSCO-IPPC is looking for big customers so they are able to establish themselves by directly targeting at the higher end. * POSCO-IPPC is strict in its payment dates which are not favoured by all its customers for they need a margin to settle their accounts. * Although the main problem is the lack of raw material from POSCO. Due to the Special price-low supply condition between POSCO and POSCO-IPPC, there is low supply of raw materials. The demand is high for POSCO-IPPC’s steel but due to low output, it cannot adhere to every customer’s needs. POSCO-IPPC is capable to produce more output than its current production but due to the lack of raw material, it has to restrain itself and do job production. * POSCO-IPPC’s customers expect a same price and supply surety for three months which is not possible for POSCO-IPPC as it imports its raw material and it is subject to foreign exchange policies and other government policies which affects its price. The supply surety cannot be given due to lack of supply of raw material. * Also the defaulting of POSCO-IPPC’s price and bargaining to pay less price by the customers is discouraging POSCO-IPPC to expand itself so quickly as they are losing on their profits. * But overall, the lack of raw material is a big issue and solving that issue can solve many other problems related and in the course of time, brisk movements of trade will solve other problems too. 3) What can you tell about the special price-low supply condition? POSCO is a global player and it distributes its steel at a common international price (Rs 59000) to the world but as that rate is very high in terms of Indian currency, it would not settle down in the Indian market so in order to satisfy its Indian customers, it reduced the price and this is known as special price (Rs 45000). But as POSCO reduced the rate for POSCO-IPPC, it only did this for a condition and this condition was that POSCO-IPPC will receive only a limited supply from POSCO, Korea. ) Since TATA is one of your major customers in the automobile segment, can you please put light on the company’s relationship with TATA? * Sure, TATA Motors is a major customer of ours and there is a considerable amount of dealings with TATA. Tata itself produces steel but is partly dependent on POSCO-IPPC for high quality steel for the chassis of their automobiles. They need good quality for the outer body of the car for it to be firm and more attractive for which they take the support of POSCO-IPPC. Tata requires 30,000 metric tons/month and the demand is going up by 7-10% / year. Tata demands 5000-7000 metric tons/month from POSCO-IPPC but it can only supply 2000-2500 metric tons/month to TATA for out of its total output, it also needs to supply to other customers in order to remain in the market and also to stabilize it. The customers in the market are also asking for POSCO-IPPC’s steel like General Motors, Volkswagen and Fiat. For which TATA has supported POSCO-IPPC in sending a petition to POSCO to supply more steel. POSCO-IPPC distributes cold rolled steel in the open market at Rs 53-55000; the price keeps on fluctuating, whereas TATA gets it at Rs 48,000 (maximum. ) Thus, such factors are creating hindrances in transaction between TATA and POSCO-IPPC. 5) What is your PEST? * PEST POLITICAL & LEGAL * Central Government encourages the foreign investment- Change in the central Government may result in change in different trade policies – Indian Economy has shown relatively high levels of development, stability and potential growth. -Korea having a high level of percentage of investment in the Indian market Economical * Indian Economy is booming-Growth in its GDP and economic growth-Fluctuations in the exchange rates -Social ties and contacts between India and China is increasing-Expansion of a basic industry is always favoured- Company also gives importance to maximum exploitation of resources. Social * Opened a school for the children of its workers- Helped to develop the village Talegaon -Increase in the capacity of the unit, there will be more employment in the area-Adapt the Indian Culture-It believes in job satisfaction and motivation of its staff Technical * POSCO-IPPC uses advance technology to process its raw material-High dependency on technology-India is a developing country where there is a great problem with electricity so load shedding takes place-Alternative method to use generators during the time of load shedding proves expensive-Supply of diesel in such large quality proves to be a negative factor. Appendix 3: POSCO-IPPC SWOT Analysis Appendix 5 – Graphs Figure 1: Figure 2: Appendix 6: Mail from Joseph Joe This was a mail from Mr. Joseph Joe giving out some information. Investment: 500 mn INR | | | | | | | | | | | | | Probability | | Difference| | Source Company | | Cost Price/ metric ton | | Selling Price/ metric ton| | Quantity Purchased and sold| | Total Revenue| | | | | | | | | | | | | | 0. 6| | Special Price| POSCO, Korea| | Rs 45000| | Rs 55000| | 11111| | 611. 105 mn INR| 0. 4| | No Special Price| POSCO, Korea| | Rs 59000| | Rs 55000| | 8474| | 466. 07 mn INR| 0. 3| | Wihtout O. H. E| POSCO, Orissa| | Rs 48,000| | Rs 55000| | 10416| | 572. 88 mn INR| 0. | | With O. H. E| | POSCO, Orissa| | Rs 56000| | Rs 55000| | 8928| | 491. 04 mn INR| ——————————————– [ 2 ]. Refer to Appendix 1 – Interview with Mr. Bhattacharya [ 3 ]. Refer to Appendix 1 – Interview with Mr. Bhattacharya [ 4 ]. Refer to Appendix 1 – Interview with Mr. Bhattacharya [ 5 ]. POSCO-INDIA, â€Å"corporate overviewâ⠂¬ , http://posco-india. com/website/company/corporate-overview. htm. (20th September, 2008. ) [ 6 ]. Refer to Appendix 5- Graphs [ 7 ]. Economy Watch, â€Å"India Steel Industry,† http://www. conomywatch. com/india-steel-industry/, (20th September, 2008. ) [ 8 ]. Economy Watch, â€Å"India Automobile Industry,† http://www. economywatch. com/business-and-economy/automobile-industry. html, (23rd September, 2008. ) [ 9 ]. Refer to Appendix 5- Graphs [ 10 ]. Refer to Appendix 2 – Interview with Mr. Joseph Joe [ 11 ]. Refer to Appendix 1 – Interview with Mr. Bharat Indu Bhattacharya [ 12 ]. Refer to Appendix 2 – Interview with Mr. Joseph Joe [ 13 ]. Refer to Appendix 1 – Interview with Mr. Bharat Indu Bhattacharya [ 14 ]. Refer to Appendix 6 – Mail received from Mr. Joseph Joe [ 15 ]. India Brand Equity Fund, â€Å"Steel,† http://www. ibef. org/industry/steel. aspx (3rd August, 2008. ) [ 16 ]. SWOT Analysis [ 17 ]. PEST Analysis [ 18 ]. http://www. stratfor. com/analysis/india_poscos_steel_investment_challenge [ 19 ]. PEST Analysis [ 20 ]. SWOT Analysis [ 21 ]. PEST Analysis [ 22 ]. SWOT Analysis [ 23 ]. PEST Analysis [ 24 ]. http://www. economywatch. com/business-and-economy/steel-industry. html [ 25 ]. http://www. economywatch. com/business-and-economy/automobile-industry. html

Consulting in the Human Resources Field 2019

Human resources consulting can refer to a number of professional functions. The first that comes to mind is the professional recruiting firms, or headhunters. These consultants work from one side of the field or the other: they are either paid by a business to fill a specific slot or they are paid by unemployed individuals to help with the resume, the interview skills, the job market targeting and with specific interview opportunities. Recruiters will tell you that the internet has made random forwarding of resumes and cover letters relatively meaningless. That is not always true, if your experience and skills closely match the job description AND if the business is not a monolith where every one hundredth resume is actually scanned. That is one form of human resource consulting. There are human resource consulting firms that provide some or all of a companys human resource functions on an outsourced basis. The most radical example of this is the full service consulting firm that will find the employees, actually hire them and handle all payroll, benefits, tax withholding responsibilities and other employee issues as an outsourced service. The business pays a negotiated fee for this service and for the employees who come with it, avoiding responsibilities for payroll, benefits, tax withholding, hiring and firing, and so forth. .u6c07d89cf871a71dc65dd0639dc2ce85 { padding:0px; margin: 0; padding-top:1em!important; padding-bottom:1em!important; width:100%; display: block; font-weight:bold; background-color:#eaeaea; border:0!important; border-left:4px solid #34495E!important; box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -moz-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -o-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -webkit-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); text-decoration:none; } .u6c07d89cf871a71dc65dd0639dc2ce85:active, .u6c07d89cf871a71dc65dd0639dc2ce85:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; text-decoration:none; } .u6c07d89cf871a71dc65dd0639dc2ce85 { transition: background-color 250ms; webkit-transition: background-color 250ms; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; } .u6c07d89cf871a71dc65dd0639dc2ce85 .ctaText { font-weight:bold; color:inherit; text-decoration:none; font-size: 16px; } .u6c07d89cf871a71dc65dd0639dc2ce85 .post Title { color:#000000; text-decoration: underline!important; font-size: 16px; } .u6c07d89cf871a71dc65dd0639dc2ce85:hover .postTitle { text-decoration: underline!important; } READ Maryland Colleges and Universities Pursuing Online and Campus-based Education in MarylandHuman resource consultants will also contract with a company to do an analysis of the companys business functions and personnel assets. They may develop a reorganization plan that is designed to maximize company efficiency and personnel use. As this may well involve layoffs, the consulting firm will also handle personnel separation, management briefing and change management. In this scenario, the human resources consulting firm is executing an entire functional realignment of the business. There are human resource consultants who are experts in collective bargaining. They will do an analysis of wage scale and benefits for the business and the industry in general. If possible, they may try to create a salary structure that provides classification and equity along the lines of civil service rankings. Part of this planning process would involve developing detailed job descriptions. Often, hiring practices in traditional companies can get out of hand when a department manager requests additional help and provides a vague job description with no salary level attached to it. As firms grow, it is important to try and standardize hiring practices. Human resource consultants can accomplish that in a single stroke through a company-wide analysis, report and reorganization. The reorganization may simply mean title changes and moving a few personnel and their assignments around between departments. But of necessity, as businesses grow they lose their personalized character that they perhaps began with when the doors first opened. .ubba098ae327bbc24c2799f13562f3b74 { padding:0px; margin: 0; padding-top:1em!important; padding-bottom:1em!important; width:100%; display: block; font-weight:bold; background-color:#eaeaea; border:0!important; border-left:4px solid #34495E!important; box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -moz-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -o-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -webkit-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); text-decoration:none; } .ubba098ae327bbc24c2799f13562f3b74:active, .ubba098ae327bbc24c2799f13562f3b74:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; text-decoration:none; } .ubba098ae327bbc24c2799f13562f3b74 { transition: background-color 250ms; webkit-transition: background-color 250ms; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; } .ubba098ae327bbc24c2799f13562f3b74 .ctaText { font-weight:bold; color:inherit; text-decoration:none; font-size: 16px; } .ubba098ae327bbc24c2799f13562f3b74 .post Title { color:#000000; text-decoration: underline!important; font-size: 16px; } .ubba098ae327bbc24c2799f13562f3b74:hover .postTitle { text-decoration: underline!important; } READ How to Dominate at the Job FairHuman resource consulting can be a fascinating field. Walking into a work environment with a license to make it better is a real challenge. It can also be a potentially explosive situation, requiring substantial personal skills to go with the organizational tools that the consultant was handed in school. Related ArticlesOutsourcing Your Human Resources DepartmentHuman Resource Management JobsYour People Skills and a Career in Human Resources ManagementThe Human Resources DepartmentHuman Resource Management TrainingSoftware for Human Resources Information Management

The Fight Against Buy Custom Essay Papers

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An Introduction to Managerial Accounting and Cost Concepts

1-1 Chapter 1 An Introduction to Managerial Accounting and Cost Concepts Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil Objectives 1. Comparison of Financial and Managerial 2. 3. 4. 5. 6. 7. 8. Accounting. General Cost Classifications. Product Cost versus Period Cost. Cost Classifications on Financial Statements. Cost Classifications for Predicting Cost Behavior. Cost Classification for Assigning Costs to Cost Objectives. Cost Classification for Decision Making. Review Problems MSc. Mohammad Hicham Khalil Introduction to Managerial Accounting 1-2 Learning Objective 1 Comparison of Financial and Managerial Accounting Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil†¦show more content†¦Product costs consist of: Direct materials. Direct labor. Manufacturing overhead. Product costs are sometimes called â€Å"Inventoriable cost†. Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil 1-11 Period Costs Are all the costs that are not included in p product costs. These costs are expensed on the income statement in the period in which they are incurred. All Selling, General and Administrative Costs a e considered are co s de ed to be pe od costs period costs. Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil Product Costs VS Period Costs Product costs include direct materials, direct , labor, and manufacturing overhead. Inventory Cost of Goods Sold Period costs are not included in product p costs. They are expensed on the income statement. Expense Sale Balance Sheet Income Statement Income Statement MSc. Mohammad Hicham Khalil Introduction to Managerial Accounting 1-12 Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil Quick Check Which of the following costs would be g considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions. Introduction to Managerial Accounting MSc. Mohammad Hicham Khalil 1-13 Quick Check Which ofShow MoreRelatedImportance of Managerial Accounting1005 Words   |  5 PagesIntroduction The purpose of management accounting in the organization is to support competitive decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategy. The interesting thing about management accounting is that it is rare to find an individual within a company with the title of â€Å"management accountant.† Often many individuals function as accountants within the organization, but these individualsRead MoreBUS 630 Final Paper1617 Words   |  7 PagesDecision Making with Managerial Accounting Managerial accounting is essential for decision making. 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The title managerial accounting has much to do with nurturing accountantsRead MoreCBU Syllabus 2015 MBAC 51031353 Words   |  6 Pagesï » ¿ Introduction to Accounting: MBAC 5103 Instructor Information Professor: Derrick Hayes Winter 2015 Office: SB217 Tues Thurs: 1:00 – 2:15 pm Email: derrick_hayes@cbu.ca Phone: 563-1312 Course Website (URL): Textbooks and Readings Required Text: Hayes, Derrick, Introduction to Accounting, Primus, McGraw Hill Prerequisites: NONE CourseRead MoreManagerial Accounting, Applied to Successful Project Accounting Practices1215 Words   |  5 Pages Managerial Accounting, Applied to Successful Project Management Accounting Practices 1.1 Introduction to Managerial Accounting in Project Work Environments This paper provides research and pertinent Managerial Accounting strategies that support the overall financial goals of project management professionals within the context of project management work environments. 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Evaluating the Socio Economic Impact of the Structural Adjustment Program free essay sample

These have left most SSA countries with acute balance of payments (BOP) disequilibria and an inability to service their debts to foreign bodies. In an effort to tackle the economic crises and to stimulate economic recovery, most African countries had to adjust and re-structure their economies. According to Dasgupta (1998), structural adjustment was seen as a fact of life. Thus in the 1980s, most African countries initiated economic policies which were sponsored by the World Bank and supplemented by the International Monetary Fund(IMF) in the form of stabilisation and structural adjustment programmes (SAP). Between June 1986 and July 1987 alone twenty one SSA countries went through World Bank/IMF SAP. Generally, SAPs entail policies designed by the world Bank/IMF aimed at improving the socioeconomic conditions of implementing nations by restoring economic stability and achieving long term growth through addressing structural weakness, and disequilibria in among others government budgets and external sector. More precisely, they involve the adoption and implementation of policies such as currency devaluation, trade liberalization, privatization, and removal of subsidies etc. We will write a custom essay sample on Evaluating the Socio Economic Impact of the Structural Adjustment Program or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page hich are perceived as means of reversing the pervasive social and economic problems of developing nations. There has been a considerable amount of literature on the effects of SAP measures on less developed countries (LDCs) with no apparent consensus. On the one hand, international financial institutions (IFIs) maintain that SAPs are vital tools for economic recovery and sustainable economic growth. On the other hand, many economists and social scientists argue that SAP measures have led to recessions and poor standards of living in developing countries (Jauch 1999). Thus, the impacts of SAPs remain highly controversial. Even though there are disparities as to the exact effects of SAPs, it is generally accepted that they have far reaching implications for not only the macroeconomic environment of the countries concerned but society at large (Mosley and Weeks, 1993, Riddle, 1992, Stein, 1992, El-Tom, 1994, World Bank, 1994). It is against this background that this dissertation attempts to study and analyse the effects of SAP on the Nigerian economy. The choice of Nigeria as a case study is due to the fact that it has implemented one of the most radical structural adjustment programmes in Africa. Thus the question which posed is, what impact if any has SAP had on the Nigerian economy. Before we proceed, it should be emphasised that this dissertation subsumes IMF stabilisation programmes under World Bank structural adjustment programmes. The reason for this is that the two programmes are intertwined and this is done also for simplicity. . 2 Aims and Objectives This paper aims to explore the role SAP has played in the Nigerian economy. The major objective of the project is to offer a better understanding as to why, what and how structural adjustment program in Nigeria evolved. The primary focal point is to inspect the basis for and causes of the reforms, formulation and implementation processes, and the reform outcomes. The precise objectives of the dissertation are as follows: First, to provide a better understanding of the backgr ound to the economic crises in Nigeria that led to SAP * Second, to outline the objectives of SAP and the reforms implemented by the Nigerian government * Third, to analyse the macroeconomic and social consequences of implementing SAP in Nigeria 1. 3 Methodology and data To evaluate the effects of SAP on the Nigerian economy, the dissertation applies so-called ‘before-after approach’ which in its essence compares the values of selected variables in the period before a program is implemented to those of post-implementation. This approach has been one of the most widely used when evaluating SAP. One of the main advantages of the approach is that it can give an insight into whether structural adjustment improved key economic indicators. The major shortcoming of the methodology employed in this paper is that it assumes that all outcomes are the result of the programme itself and thus does not take into account the impacts of others factors. Another limitation is that it does not reveal the causes of variable changes. However, in spite of the fact that the before-after approach may have some degree of bias as an estimation procedure, it nevertheless, has inherent objectivity and is relatively easy to employ. The dissertation relies on secondary data – mainly World Development Indicators. In addition, various government publications are utilised. In the case of Nigeria, the lack of data and the quality of data available had a major constraint on the study. The data were often found to be unavailable and there were discrepancies in the different data sources.