International Business Environment MBA Second Year (International Business) School of Distance Education Bharathiar University, Coimbatore - 641 046 Authors: B Murali Krishna and V V Vara Prasad Copyright © 2008, Bharathiar University All Rights Reserved Produced and Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delhi-110028 for SCHOOL OF DISTANCE EDUCATION Bharathiar University Coimbatore-641046 CONTENTS Page No UNIT I Lesson International Business Lesson Macro Environment and Micro Environment 21 UNIT II Lesson Social and Cultural Environment 35 Lesson Comparison of Various Business Cultures 45 UNIT III Lesson World Financial Environment 57 Lesson Convertibility, Exchange Restrictions and International Monetary System 66 UNIT IV Lesson Legal Environment International Law in International Marketing 83 Lesson International Standards Organisations 99 UNIT V Lesson Environment Protection Law 121 Lesson 10 International Policy on Environment 137 Model Question Paper 149 INTERNATIONAL BUSINESS ENVIRONMENT SYLLABUS UNIT I Introduction - Modes of international Business - External Influence - Internationalization Process - Macro environment and Micro environment - Trade and Investments UNIT II Social and cultural environment: Culture-Language-Aesthestics-Colour, Design, Music, brand names, education, religion-attitude and values Comparison of various business cultures- Western, Eastern, Middle East countries culture Business mannerism UNIT III World Financial Environment - Working of Foreign Exchange Markets - Convertibility Exchange Restrictions- international Monetary System UNIT IV Legal environmental International law in international marketing, IMF & GATT International trade agreements Trade preference UNCIAD EEC, Customs union International Standards Organization (ISO), Regional grouping and International law, SAARC, EEC - European Free Trade Associations, (EFTA) Latin American Free Trade Association (LAFTA) etc UNIT V Law of environment-Environmental protection - International policy on natures-land, forest, water International Business UNIT UNIT I International Business Environment LESSON INTERNATIONAL BUSINESS CONTENTS 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Aims and Objectives Introduction Modes of International Business 1.2.1 Exporting 1.2.2 Licensing 1.2.3 Franchising 1.2.4 Special Modes 1.2.5 Foreign Direct Investment without Alliances 1.2.6 Foreign Direct Investment with Strategic Alliance External Influence in International Trade 1.3.1 Technology 1.3.2 Economy 1.3.3 Social Environment 1.3.4 Physical Factors 1.3.5 Legal Environment 1.3.6 Political Environment 1.3.7 Government 1.3.8 International Trade Internationalization Process Let us Sum up Lesson End Activity Keywords Questions for Discussion Suggested Readings 1.0 AIMS AND OBJECTIVES After studying this lesson, you should be able to: z Know the concept of international business z Study the process of international trade z Know the factors influence to international trade 1.1 INTRODUCTION We have studied the introduction to international business in the first lesson Now, we shift our focus from macro aspects to micro aspects of international business Global company has to formulate strategies based on its missions, objectives and goals Strategy formulation is a must for a global company to make decisions regarding the markets to enter, product/service range to introduce in the foreign countries and the like Further, the severe and intensified competition in the global market makes the strategy formulation a challenging task International Business International Business Environment The fundamental basis for strategy formulation is the environmental analysis Environment provides the opportunities to the business to produce and sell a particular product For example, the present day business environment provides wide opportunity for internet Similarly, environment in India provides opportunity for production and selling of fuel saving motor bicycles European climatic condition provides the opportunity for woolen and leather garments Environment, sometimes poses threats and challenges to the business Business should enhance its strengths in order to face the challenges posed by the environment For example, china dumped steel at cheap prices in the Indian market and posed a threat to the Indian steel industry particularly to SAIL and TISCO Consequently, Indian steel industry improved its technology in order to meet the challenges Study of environment helps the business to formulate strategies and run the business efficiently in the competitive global market We understand the environment has significant and crucial impact on the business Thus, business depends on environmental dynamics Now, we study the meaning of business environment 1.2 MODES OF INTERNATIONAL BUSINESS 1.2.1 Exporting Exporting is the simplest and widely used mode of entering foreign markets The advantages of exporting include: Need for Limited Finance: If the company selects a company in the host country to distribute, the company can enter international market with no or less financial resources, alternatively, if the company chooses to distribute on its own, it needs to invest financial resources, but this amount would be quite less compared to that would be necessary under other modes Less Risk: Exporting involves less risk as the company understands the culture, customer and the market of the host country gradually The company can enter the host country on a full scale, if the product is accepted by the host country’s market British company selected this mode to export jams to Japan Motivation for Exporting: Motivations for exporting are proactive and reactive Proactive motivations are opportunities available in the host country San Antonio’s pace, Inc., producing Tex-Mex food products exported its products to Mexico as Mexicans relished the taste of its products Reactive motivations are those efforts taken by the company to export the product to a foreign due to the decline in demand for its product in the home country Toto Ltd., of Japan started exporting its products, i.e., Porcelain bathroom fixtures to China when the Japanese economy started slowing down in 1990s Forms of Exporting Forms of exporting include: indirect exporting, direct exporting and intra corporate transfers Indirect Exporting: Indirect exporting is exporting the products either in their original form or in the modified form to a foreign country through another domestic company Various publishers in India including Himalaya Publishing House sell their products, i.e., books to UBS publishers of India, which in turn exports these books to various foreign countries Direct Exporting: Direct exporting is selling the products in a foreign country directly through its distribution arrangements or through a host country’s company Baskin Robbins initially exported its ice-cream to Russia in 190 and later opened 74 outlets with Russian partners Finally in 1995 it established its ice ream plant in Moscow Intra corporate Transfers: Inter corporate transfers are selling of products by a company to its affiliated company in host country (another country) Selling of products by Hindustan Lever in India to Unilever in USA This transaction is treated as exports in India and imports in USA Factors to be considered: The company, while exporting, should consider the following factors: z Government policies like export policies, import policies, export financing, foreign exchange etc z Marketing factors like image, distribution net works, responsiveness to the customer, customer awareness and customer preferences z Logistical consideration: These factors include physical distribution costs, warehousing cost, packaging, transporting, inventory carrying costs etc z Distribution Issue: These include own distribution networks, networks of host country’s companies Japanese’s companies like Sony, Minolta and Hitachi rely on the distribution networks of their subsidiaries in the host country Export Intermediaries: Export intermediaries perform a variety of functions and enable the small companies to export their goods to foreign countries Their functions include: handling transportation, documentation, taking ownership of foreign-bound goods, assuming total responsibility for exporting and financing Types of export intermediaries include: z Export management companies act as export department of the exporting firm (its client) These companies act as commission agents for exports or they take title to the goods z Co-operative society: The domestic companies desire to export the goods form a cooperative society, which undertakes the exporting operations of its members z International Trading Company: This company is engaged in directly exporting and importing It buys the goods from the domestic companies and exports Therefore, the companies can export their goods by selling them to the international trading company z Manufacture’s Agents: They work on a commission basis They solicit domestic orders for foreign manufacturers z Manufacture’s Export Agents: These agents also work on a commission basis They sell the domestic manufacturers’ products in the foreign markets and act as their foreign sales department z Export and Import Brokers: The brokers bridge the gap between exporters and importers and bring these two parties together z Freight Forwarders: Freight forwarders help the domestic manufactures in exporting their goods by performing various functions like physical transportation of goods, arranging customs documents and arranging transportation services 1.2.2 Licensing International Licensing In this mode of entry, the domestic manufacturer leases the right to use its intellectual property, i.e., technology, work methods, patents, copyright, brand names, trade market etc, to a manufacturer in a foreign country for a fee Here the manufacturer in International Business 10 International Business Environment the domestic country is called ‘licensor’ and the manufacturer in the foreign country is called ‘licensee.’ The process of the licensing is as shown in the figure 1.1 Licensing is popular method of entering foreign markets The cost of entering foreign markets through this mode is less costly The domestic company need not invest any capital as it has already developed intellectual property As such, the domestic company earns revenue without additional investment Hence, most of the companies prefer this mode of foreign entry Licensor Licensor Leases the Right to use the Intellectual Receives Royalty Money Property Uses the Intellectual Pays Royalty Property to Produce To the Licensor for Products for Sales in his Country Using Intellectual Property Licensee Licensee Figure 1.1 The domestic company can choose any international location and enjoy the advantages without incurring any obligations and responsibilities of ownership, managerial, investment etc Kirin Brewery – Japan’s largest beer producer entered Canada by granting license to Molson and British market by granting license to Charles Wells Brewery Basic Issues in International Licensing Companies should consider various factors in deciding negotiations Each international licensing is unique and has to be decided separately However, there are certain common factors, which affect most of the international licenses They are: specifying the agreement’s boundaries, determining the royalty, determining right, privileges and constraints, defining dispute resolution methods, specifying the duration of the contract Now, we shall discuss these factors in detail z Boundaries of the Agreements: The companies should clearly define the boundaries of agreements They determine which rights and privileges are being onvey4d in the agreement Pepsi-Cola granted license to Heineken of Netherlands with exclusive rights of producing and selling Pepsi-Cola in Netherlands Under this agreement the boundaries are (i) Heineken should not export Pepsi-Cola to any other country, (ii) Pepsi supplies concentrated cola syrup and Heineken adds carbonated water to produce beverage, and (iii) Pepsi can grant license to other companies in Netherlands to produce other products of Pepsi like Potato chips z Determination of Royalty: The most important factor in deciding the license is the amount of royalty It is needless to mention that the licensor expects high rate of royalty while the licensee would be unwilling to pay much royalty However, both the parties negotiate for a fair royalty for both the sides in order to implement the contract more successfully z Determining Rights, Privileges and Constraints: Another important factor, in granting license is determining clearly and specifically the right, privilege and constraints For example, if the Indian licensee of Aiwa TV uses interior inputs in order to reduce price, boost up sales and profits, the image of the Japanese licensor would be damaged 134 International Business Environment 9.9.1 PIN Budget A total of NLG 861.5 million (EUR 390 million) was available between 1996 and 2000 The PIN (International Nature Management Programme) included the following budgets: (1) PIN-MATRA (Ministry of Foreign Affairs) for activities in Central and Eastern Europe, (2) PIN-OS (Ministry of Foreign Affairs) for nature management activities in developing countries, (3) PIN-LNV (Ministry of Agriculture, Nature Management and Fisheries), used mainly to support international nature conservation organisations and activities carried out under international agreements, and (4) "Transport & Public Works International" (Verkeer & Waterstaat International) for international cooperation in the area of water Activities focusing mainly on nature management came under this budget and were grouped together in the WETWISE programme Most of this budget was spent in Central and Eastern Europe In addition, (5) a budget was set aside to implement the Dutch government's Tropical Rainforest policy 9.9.2 Favoured Regions A number of tropical countries have benefited greatly from the International government's Tropical Rainforest policy Those countries are: Brazil, Cape Verde, China, Colombia, Ghana, Guatemala, Mozambique, Nepal, Peru, the Philippines, Senegal, Sri Lanka and Vietnam Other favoured regions are Central and Eastern Europe, in particular Nature management projects carried out within the context cooperation have mainly benefited Brazil, Cameroon, Cuba, Indonesia, Mali and Panama The remaining funding was spent conferences, on encouraging nature research abroad and on international governmental organizations of development Gabon, Ghana, on international contributions to 9.9.3 Policy Objectives The objective of the PIN was: "to ensure active protection and sustainable use of natural and semi-natural ecosystems of international significance with a priority for the conservation of relatively unspoilt ecosystems and the creation of ecological cohesion" The PIN was a joint international nature management programme set by the Ministry of Foreign Affairs, the Ministry of Transport, Public Works and Water Management, the Ministry of Agriculture, Nature and Food Quality, the Ministry of Economic Affairs, and the Ministry of Housing, Spatial Planning and the Environment Besides supporting nature management activities, the programme also investigated ways of making nature conservation objectives an integral part of economic cooperation and development co-operation policy The funds set aside for this purpose were referred to in the programme as "indirect funds" No clear-cut description was given of how such integration was to be tested and how much this would cost The impact of projects undertaken within the context of the PIN is difficult to ascertain There are no in-depth evaluations of the projects that received financing 9.10 LET US SUM UP In order to raise the effectiveness of state management and the responsibilities of the administration at all levels, of state agencies, economic and social organisations, units of the People's Armed Forces and all individuals with respect to environmental protection with a view to protecting the health of the people, ensuring the right of everyone to live in a healthy environment and serving the cause of sustainable development of the country, thus contributing to the protection of regional and global environment 9.11 LESSON END ACTIVITY Prepare a study note on the law of environment protection 9.12 KEYWORDS PIN: The objective of the PIN was to ensure active protection and sustainable use of natural and semi-natural ecosystems of international significance with a priority for the conservation of relatively unspoilt ecosystems and the creation of ecological cohesion Environmental Impact Assessment (E.I.A): It means the process of analyzing, evaluating and forecasting the effects on the environment by socio-economic development projects and plans, by production and business establishments, and economic, scientific, technical, medical, cultural, social, security, defense or other facilities, and proposing appropriate solutions to protect the environment 9.13 QUESTIONS FOR DISCUSSION What are the remedies available for preventing and combat against pollution and environment? Explain about the state management of environment protection What is the role of international countries with respect of environment? Check Your Progress: Model Answers CYP 1 Ecosystem Environmental standards mean norms and permissible limits set forth to serve as a basis for the management of the environment Clean technology means a technological process or technical solution either causing no environmental pollution or generating pollutants at the lowest level CYP Remedy of an Environment Incident: The remedy of an environmental incident includes: eliminating the cause of the incident; rescuing people and property; assisting, stabilizing the life of the people; repairing damaged facilities; restoring production; sanitizing the environment, preventing and combating epidemics; investigating, collecting statistics on damages, monitoring changes to the environment; rehabilitating the environment of the affected area CYP the management of the environment Clean Biodiversity 135 Environment Protection Law 136 International Business Environment 9.14 SUGGESTED READINGS Daniels, D and Radebangh H., “International Business”, Pearson Education Asia, New Delhi, 2002 Griffin and Pustay, “International Business”, Pearson Education Asia, New Delhi, 2002 Subba Rao, “International Business”, Himalaya, Mumbai, 2001 Schaffer, “International Business Law and its Environment”, Thomson, 2002 Onkwist and Shaw, “International Marketing” Philip R Careora, “International Marketing” 137 International Policy on Environment LESSON 10 INTERNATIONAL POLICY ON ENVIRONMENT CONTENTS 10.0 Aims and Objectives 10.1 Introduction 10.2 Land Policies for Growth and Poverty Reduction 10.3 International Policy on Forests 10.3.1 10.4 Essentials of Forest Management 10.4.1 10.5 Basic Objectives Strategy Policy on Water 10.5.1 Watershed Planning and Management 10.5.2 Priority Setting 10.5.3 Improving Water Quality through Sound Science 10.5.4 Research 10.5.5 Financing to Meet Water Quality Needs 10.5.6 Effective Management and Infrastructure Sustainability 10.6 Let us Sum up 10.7 Lesson End Activity 10.8 Keywords 10.9 Questions for Discussion 10.10 Suggested Readings 10.0 AIMS AND OBJECTIVES After studying this lesson, you should be able to: • Know about the various policies of nature • Study the forest management • Know the management of water and lands 10.1 INTRODUCTION Development is fundamentally a process of change Central to this is the increasing productivity and intensity of agriculture, of people shifting from farms to industry and services, and from the countryside to towns and cities Secure land tenure, especially for poor people and for women, whose land rights are very often ignored, are a key recondition for this, as is the ability to exchange land rights at low-cost —Nicholas Stern, Former Senior Vice President and Chief Economist, The World Bank 138 International Business Environment 10.2 LAND POLICIES FOR GROWTH AND POVERTY REDUCTION Strengthening poor people's land rights and easing barriers to land transactions can set in motion a wide range of social and economic benefits including improved governance, empowerment of women and other marginalized people, increased private investment, and more rapid economic growth and poverty reduction, according to a new World Bank report Land policies are at the root of social conflicts in countries as diverse as Cambodia and Colombia, Zimbabwe and Cote d'Ivoire Political controversies, the complexity of land issues, and the fact that benefits of policy improvements accrue to people who are politically weak all hinder reform As a result, festering land issues slow poverty reduction in many developing countries and sometimes lead to bloodshed, the report says Yet a growing number of countries are successfully addressing land policy issues The report, Land Policies for Growth and Poverty Reduction1, shows that countries as diverse as China, Mexico, Thailand, Uganda, and some transition countries in Eastern Europe, have begun to address land policy issues in ways that benefit everybody Although approaches vary, providing poor people secure tenure and facilitating land transactions are key 10.3 INTERNATIONAL POLICY ON FORESTS The Government of India in the erstwhile Ministry of Food and Agriculture enunciated a Forest Policy to be followed in the management of State Forests in the country However, over the years, forests in the country have suffered serious depletion This is attributable to relentless pressures arising from ever-increasing demand for fuel-wood, fodder and timber; inadequacy of protection measures; diversion of forest lands to non-forest uses without ensuring compensatory afforestation and essential environmental safeguards; and the tendency to look upon forests as revenue earning resource The need to review the situation and to evolve, for the future, a new strategy of forest conservation has become imperative Conservation includes preservation, maintenance, sustainable utilization, restoration, and enhancement of the natural environment It has thus become necessary to review and revise the National Forest 10.3.1 Basic Objectives The basic objectives that should govern the National Forest Policy - are the following: a) Maintenance of environmental stability through preservation and, where necessary, restoration of the ecological balance that has been adversely disturbed by serious depletion of the forests of the country b) Conserving the natural heritage of the country by preserving the remaining natural forests with the vast variety of flora and fauna, which represent the remarkable biological diversity and genetic resources of the country c) Checking soil erosion and denudation in the catchment areas of rivers, lakes, reservoirs in the "interest of soil and water conservation, for mitigating floods and droughts and for the retardation of siltation of reservoirs d) Checking the extension of sand-dunes in the desert areas of Rajasthan and along the coastal tracts e) Increasing substantially the forest/tree cover in the country through massive afforestation and social forestry programmes, especially on all denuded, degraded and unproductive lands f) Meeting the requirements of fuel-wood, fodder, minor forest produce and small timber of the rural and tribal populations g) Increasing the productivity of forests to meet essential national needs h) Encouraging efficient utilisation of forest produce and maximising substitution of wood i) Creating a massive people's movement with the involvement of women, for achieving these objectives and to minimise pressure on existing forests The principal aim of Forest Policy must be to ensure environmental stability and maintenance of ecological balance including atmospheric equilibrium, which are vital for sustenance of all life forms, human, animal and plant The derivation of direct economic benefit must be subordinated to this principal aim 10.4 ESSENTIALS OF FOREST MANAGEMENT Existing forests and forestlands should be fully protected and -their productivity improved Forest and vegetal cover should be increased rapidly on hill slopes, in catchments areas of rivers, lakes and reservoirs and ocean shores and, on semiarid, and desert tracts Diversion of good and productive agricultural lands to forestry should be discouraged in view of the need for increased food production For the conservation of total biological diversity, the network of national parks, sanctuaries, biosphere reserves and other protected areas should be strengthened and extended adequately Provision of sufficient fodder, fuel and pasture, especially in areas adjoining forest, is necessary in order to prevent depletion of forests beyond the sustainable limit Since fuelwood continues to be the predominant source of energy in rural areas, the programme of afforestation should be intensified with special emphasis on augmenting fuelwood production to meet the requirement of the rural people Minor forest produce provides sustenance to tribal population and to other communities residing in and around the forests Such produce should be protected, improved and their production enhanced with due regard to generation of employment and income 10.4.1 Strategy Area under Forests The national goal should be to have a minimum of one-third of the total land area of the country under forest or tree cover In the hills and in mountainous regions, the aim should be to maintain two-third of the area under such cover in order to prevent erosion and land degradation and to ensure the stability of the fragile eco-system Afforestation, Social Forestry and Farm Forestry A massive need-based and time bound programme of afforestation and tree planting, with particular emphasis on fuelwood and fodder development, on all degraded and denuded lands in the country, whether forest or non-forest land, is a national imperative It is necessary to encourage the planting of trees alongside of roads, railway lines, rivers and streams and canals, an d on other unutilized lands under 139 International Policy on Environment 140 International Business Environment State/corporate, institutional_ or private ownership Green belts should be raised in urban/industrial areas as well as in arid tracts Such a programme will help to check erosion and desertification as well as improve the microclimate Village and community lands, including those on foreshores and environs of tanks, not required for other productive uses, should be taken up for the development of tree crops and fodder resources The Government should provide technical assistance and other inputs necessary for initiating such programmes The revenues generated through such programmes should belong to the panchayats where the lands are vested in them; in all other cases, such revenues should be shared with the local communities in order to provide an incentive to them The vesting, in individuals, particularly from the weaker sections (such as landless labour, small and marginal farmers, scheduled castes, tribals, women) of certain ownership rights over trees, could be considered, subject to appropriate regulations; beneficiaries would be entitled to usufruct and would in turn be responsible for their security and maintenance Land laws should be so modified wherever necessary so as to facilitate and motivate individuals and institutions to undertake tree-farming and grow fodder plants, grasses and legumes on their own land Wherever degraded lands should be made available for this purpose either on lease or on the basis of a tree-patta scheme Such leasing of the land should be subject to the land grant rules and land ceiling laws Steps necessary to encourage them to so must be taken Appropriate regulations should govern the felling of trees on private holding Management of State Forests Schemes and projects, which interfere with forests that clothe steep slopes, catchments of rivers, lakes, and reservoirs, geologically unstable terrain and such other ecologically sensitive areas should be severely restricted Tropical rain/moist forests, particularly in areas like Arunachal Pradesh, Kerala, Andaman & Nicobar Islands, should be totally safeguarded No forest should be permitted to be worked without - the Government having approved the management plan, which should be in a prescribed format and in keeping with the National Forest Policy The Central Government should issue necessary guidelines to the State Governments in this regard and monitor compliance In order to meet the growing needs for essential goods and services, which the forests provide, it is necessary to enhance forest cover and productivity of the forests through the application of scientific and technical inputs Production forestry programmes, while aiming at enhancing the forest cover in the country, and meeting national needs, should also be oriented to narrowing, by the turn of the century, the increasing gap between demand and supply of fuel wood No such programme, however, should entail clear felling of adequately stocked natural forests Nor should exotic species be introduced, through public or private sources, unless long-term scientific trials undertaken by specialists in ecology, forestry and agriculture have established that they are suitable and have no adverse impact on native vegetation and environment Rights and Concessions The rights and concessions, including grazing, should always remain related to the carrying capacity of forests The capacity itself should be optimized by increased investment, silvicultural research and development of the area Stall-feeding of cattle should be encouraged' The requirements of the community, which cannot be met by the rights and concessions so determined, should be met by development of social forestry outside the reserved forests The holders of customary rights and concessions in forest areas should be motivated to identify themselves with the protection and development of forests from which they derive benefits The rights and concessions from forests should primarily be for the bonafide use of the communities living within and around forest areas, specially the tribals The life of tribals and other poor living within and near forests revolves around forests The rights and concessions enjoyed by them should be fully protected Their domestic requirements of fuel wood, fodder, and minor forest produce and construction timber should be the first charge on forest produce These and substitute materials should be made available through conveniently located depots at reasonable prices Similar consideration should be given to scheduled castes and other poor living near forests However, the area, which such consideration should cover, would be determined by the carrying capacity of the forests Wood is in short supply The long-term solution for meeting the existing gap lies in increasing the productivity of forests, but to relieve the existing pressure on forests for the demands of railway sleepers, construction industry (particularly in the public- sector), furniture and paneling, mine-pit props, paper and paper board etc substitution of wood needs to be taken recourse to Similarly, on the front of domestic energy, fuel wood needs to be substituted as far as practicable with alternate sources like biogas, LPG and solar energy Fuel-efficient "Chulhas" as a measure of conservation of fuel wood need to be popularized in rural areas Diversion of Forest Lands for Non-forest purposes Forest land or land with tree cover should not be -treated merely as a resource readily available to be utilised for various projects and programmes, but as a national asset which requires to be properly safeguarded for providing sustained benefits to the entire community Diversion of forestland for any non-forest purpose should be subject to the most careful examinations by specialists from the standpoint of social and envir6nmental costs and benefits Construction of dams and reservoirs, mining and industrial development and expansion of agriculture should be consistent with the needs for conservation of trees and forests Projects, which involve such diversion, should at least provide in their investment budget, funds for regeneration/compensatory afforestation Beneficiaries who are allowed mining and quarrying in forest land and in land covered by trees should' be required to repair and re-vegetate the area in accordance with established forestry practices No mining lease should be granted to any party, private or public, without a proper mine management plan appraised from the environmental angle and enforced by adequate machinery Wildlife Conservation Forest Management should take special care of the needs of wildlife conservation, and forest management plans should include prescriptions for this purpose It is especially essential to provide for "corridors" linking the protected areas in order to maintain genetic continuity between artificially separated sub-sections of migrant wildlife Tribal People and Forests Having regard to the symbiotic relationship between the tribal people and forests, a primary task of all agencies responsible for forest management, including the forest development corporations should be to associate the tribal people closely in the protection, regeneration and development of forests as well as to provide gainful employment to people living in and around the forest While safeguarding the 141 International Policy on Environment 142 International Business Environment customary rights and interests of such people, forestry programmes should pay special attention to the following: z One of the major causes for degradation of forest is illegal cutting and removal by contractors and their labour In order to put, an end to this practice,  contractors should be replaced by institutions such as tribal cooperatives, labour cooperatives, government corporations, etc as early as possible; z Protection, regeneration and optimum collection of minor forest produce along with institutional arrangements for the marketing of such produce; z Development of forest villages on par with revenue villages; z Family oriented schemes for improving the status of the tribal beneficiaries; and Undertaking integrated are a development programmes to meet the needs of the tribal, economy in and around the forest areas, including the provision of alternative sources of domestic energy on a subsidized basis, to reduce pressure on the existing forest areas Shifting Cultivation Shifting cultivation is affecting the environment and productivity of land adversely Alternative avenues of income, suitably harmonised with the right land use practices, should be devised to discourage shifting cultivation Efforts should be made to contain such cultivation within the area already affected, by propagating improved agricultural practices Area already damaged by such cultivation should be rehabilitated through social forestry and energy plantations Damage to Forests from Encroachments, Fires and Grazing Encroachment on forestlands has been on the increase This trend has to be arrested and effective action taken to prevent its continuance There, should be no regularisation of existing encroachments Incidence of forest fires in the country is high Standing trees and fodder are destroyed on a large scale and natural regeneration annihilated by such fires Special precautions should be taken during the fire season Improved and modern management practices should be adopted to deal with forest fires Razing in forest areas should be regulated with the involvement of the community Special conservation areas; young plantations and regeneration areas should be fully protected Grazing and browsing in forest areas need to be controlled Adequate grazing fees should be levied to discourage people in forest areas from maintaining large herds of non-essential livestock Forest-based Industries The main considerations governing the establishment of forest-based industries and supply of raw material to them should be as follows: z As far as possible, a forest-based industry should raise the raw material needed for meeting its own requirements, preferably by establishment of a direct relationship between the factory and the individuals who can grow the raw material by supporting the individuals with inputs including credit, constant technical advice and finally harvesting and transport services z No forest-based enterprise, except that at the village or cottage level, should be permitted in the future unless it has been first cleared after a careful scrutiny with regard to assured availability of raw material In any case, the fuel, fodder and timber requirements of the local population should not be sacrificed for this purpose z Forest-based industries must not only provide employment to local people on priority but also involve them fully in raising trees and raw-material z Natural forests serve as a gene pool resource and help to maintain ecological balance Such forests will not, therefore, be made available to industries for ' undertaking plantation and for any other activities z Farmers, particularly small and marginal farmers, would be encouraged to grow, on marginal/degraded lands available with them, wood species required for industries These may also be grown along with fuel and fodder species on community lands not required for pasture purposes, and by Forest department/corporations on degraded forests, not earmarked for natural generation z The practice of supply of forest produces to industry at concessional Prices should cease Industry should be encouraged to use alternative raw materials z Import of wood and wood products should be liberalised z The above considerations will, however, be subject to the current policy relating to land ceiling and land-laws Forest Extension Forest conservation programme cannot succeed without the willing support and cooperation of the people It is essential, therefore, to inculcate in the people, a direct interest in forests, their development and conservation, and to make them conscious of the value of trees, wildlife and nature in general This can be achieved through the involvement of educational institutions, right from the primary stage Farmers and interested people should be provided opportunities through institutions like Krishi Vigyan Kendras, Trainers' Training Centres to learn agricultural and silvi cultural techniques to ensure optimum use of their land and water resources Short-term extension courses and lectures should be organised in order to educate farmers For this purpose, it is essential that suitable programmes be propagated through mass media, audio-visual aids and the extension machinery Forestry Education Forestry should be reorgarnised both as a scientific discipline as well as a profession Agriculture universities and institutions, dedicated to the development of forestry education should formulate curricula and courses for imparting academic education and promoting postgraduate research and professional excellence, keeping in view the manpower needs of the country Academic and professional qualifications - in forestry should be kept in view for recruitment to the Indian Forest Service and the State Forest Service Specialised and orientation courses for developing better management skills by training need to be encouraged, taking into account the latest development in forestry and related disciplines Forestry Research With the increasing recognition of the importance of forests for environmental health, energy and employment, emphasis must be laid on scientific forestry research, necessitating adequate strengthening of the research base as well as new priorities for action Some broad priority areas of research and development needing special attention are: z Increasing the productivity of wood and other forest produce per unit of area per unit time by the application of modern scientific and technological methods z Renegotiation of barren/marginal/waste/mined lands and watershed areas 143 International Policy on Environment 144 International Business Environment z Effective conservation and management of existing forest resources (mainly natural forest eco-systems) z Research related to social forestry for rural/ tribal development z Development of substitutes to replace wood and wood products z Research related to wildlife and management of national parks and sanctuaries Personnel Management Government policies in personnel management for professional foresters and forest scientists should aim at enhancing their professional competence and status and attracting and retaining qualified - and motivated personnel, keeping in view particularly -the arduous nature of duties they have to perform, often in remote and inhospitable places Forest Survey and Data Base Inadequacy of data regarding forest resources is a matter of concern because this creates a false sense of complacency Priority needs to be accorded to completing the survey of forest resources in the country on scientific lines and to updating information For this purpose, periodical collection, collation and publication of reliable data on relevant aspects of forest management needs to be improved with recourse to modern technology and equipment Legal Support and Infrastructure Development Appropriate legislation should be undertaken, supported by adequate infrastructure, at the Centre and State levels in order to implement the Policy effectively Financial Support for Forestry The objectives of this revised Policy cannot be achieved without the investment of financial and other resources on a substantial scale Such investment is indeed fully justified considering the contribution of forests in maintaining essential ecological processes and life support systems and in preserving genetic diversity Forests should not be looked upon as a source of revenue Forests are a renewable natural resource They are a national asset to be protected and enhanced for the well being of the people and the Nation Check Your Progress Mention some broad priority areas of forest research and development …………………………………………………………………………….…… …………………………………………………………………………….…… 10.5 POLICY ON WATER Protecting the world's surface water and ground water is essential for public health, wide diversity of biological communities, and quality of life Water use must meet our present needs while ensuring the ability of future generations to meet their own needs Such sustainable usage of water, which is fundamental to prosperity and progress, requires protection of all natural resources from activities perilous to water quality As water quality protection programs succeed in many parts of the world, global water quality is challenged by population growth, urbanization, industrial and commercial activities, agricultural practices, and other aspects of modern life The Water Environment Federation is committed to providing leadership and guidance in efforts to enhance and preserve the world water environment The Water Environment Federation commitment to improving water quality based on sound principles of science, technology, and policy is summarized in the following points 10.5.1 Watershed Planning and Management The Water Environment Federation supports the watershed approach of protecting and restoring water quality The watershed approach stems from the knowledge that all ecosystems are linked together Watershed management is a method of decision making to protect and sustain all natural resources - uplands, wetlands, surface water, and ground water - affecting water quality within common, hydrologically defined geographic areas The approach includes all citizens of a watershed in establishing priorities and developing plans for water protection in that region Local government agencies, businesses, and residents in a watershed should participate in setting regional environmental priorities, aiming for the highest practicable degree of water quality improvement Inclusion of concerned parties in a successful watershed program demands comprehensive public education on protecting and enhancing watersheds 10.5.2 Priority Setting The Water Environment Federation supports a priority setting process allowing governments and watershed managers enhanced flexibility in scheduling and standard-setting within the context of economic, technical, and social capabilities A priority setting framework must support water quality managers in using appropriate data and tools, promoting inclusive resource protection, conducting economic and risk analyses, considering cross-media impacts, and accounting for regional growth Water quality priorities and solutions must be established regionally to best address water quality impairment from local and outside sources The general public should collaborate in priority setting with engineers, scientists, and other experts to ensure long-term support for and implementation of water quality programs Priorities should be set to expand water recycling and to protect natural resources 10.5.3 Improving Water Quality through Sound Science The Water Environment Federation supports the use of sound scientific information in all programs dedicated to solving complex water quality issues The benefits of water quality protection are maximized when all components of such initiatives have a sound scientific basis and a clear rationale New water resource efforts and restructured water quality initiatives should be supported by the most comprehensive and current scientific information and assessments Goals, standards, and strategies should be evaluated regularly to incorporate the most recent scientific information and analyses Scientific knowledge should be used to protect the environment and to develop a sustainable balance of natural resources Water quality protection efforts must promote problem resolution and enhance pollution prevention 10.5.4 Research The Water Environment Federation supports development and dissemination of both basic and applied research on water issues through financial assistance, program aid, practical field demonstrations, and publication of peer-reviewed research Research is the foundation of scientific and technical knowledge on water quality and the global environment New and expanded research efforts are essential to our understanding of water resources and of human stresses on them, to technological innovation, and to development of new cost-effective approaches to enhance water quality Reliable data is necessary to meet the global demand for high-quality water The results of research should be employed by all parties involved in water quality protection 10.5.5 Financing to Meet Water Quality Needs The Water Environment Federation supports equitable distribution of clean water costs among all parties benefiting from the resource, financial assistance for clean water programs, partnerships between government and the private sector, and 145 International Policy on Environment 146 International Business Environment government funding of water quality programs as a duty to all citizens Financing methods should be innovative and free of burdensome regulation or onerous administrative requirements Adequate funding for both watershed management and infrastructure rehabilitation and replacement is vital for sustained water quality All elements of clean water efforts receiving funding must be sustainable and responsive to citizens and to the environment Check Your Progress Fill in the blanks: …………………… cultivation is affecting the environment and productivity of land adversely The principal aim of …………………… Policy must be to ensure environmental stability and maintenance of ecological balance including atmospheric equilibrium, which are vital for sustenance of all life forms, human, animal and plant Watershed management is a method of decision making to protect and sustain all natural resources - uplands, wetlands, surface water, and ground water - affecting water quality within common, hydrologically defined …………………… areas 10.5.6 Effective Management and Infrastructure Sustainability The Water Environment Federation supports effective management of facilities protecting water quality The keys to good management and sustainable infrastructure include programs to further improve the skills of water quality professionals; funding for infrastructure improvements and for regulatory compliance and enforcement; pollution prevention; responsible management of residuals; public participation in decision making; and proper planning, construction and maintenance of water quality facilities to maximize long term efficiency and ensure water quality protection Community and industrial water quality facilities also should consider adopting voluntary management standards to protect all water resources The mission of the world water quality professionals is to provide the highest quality water while acting as a partner with and good neighbor to the public 10.6 LET US SUM UP The Government of India in the erstwhile Ministry of Food and Agriculture enunciated a Forest Policy to be followed in the management of State Forests in the country However, over the years, forests in the country have suffered serious depletion This is attributable to relentless pressures arising from ever-increasing demand for fuel-wood, fodder and timber; inadequacy of protection measures; diversion of forest lands to non-forest uses without ensuring compensatory afforestation and essential environmental safeguards; and the tendency to look upon forests as revenue earning resource The need to review the situation and to evolve, for the future, a new strategy of forest conservation has become imperative Conservation includes preservation, maintenance, sustainable utilization, restoration, and enhancement of the natural environment It has thus become necessary to review and revise the National Forest 10.7 LESSON END ACTIVITY Prepare a study note on the international policy on nature- land, forest and water 10.8 KEYWORDS Water Environment Federation: The Water Environment Federation supports effective management of facilities protecting water quality Forestry Education: Specialised and orientation courses for developing better management in forestry 10.9 QUESTIONS FOR DISCUSSION What are the essentials of forest management? Explain about the following policies: a) Land Policy b) Water Policy c) Forest Policy Check Your Progress: Model Answers CYP Priority Research Areas: Some broad priority areas of research and development needing special attention are: z Increasing the productivity of wood and other forest produce per unit of area per unit time by the application of modern scientific and technological methods z Renegotiation of barren/marginal/waste/mined lands and watershed areas z Effective conservation and management of existing forest resources (mainly natural forest eco-systems) z Research related to social forestry for rural/ tribal development z Development of substitutes to replace wood and wood products Research related to wildlife and management of national parks and sanctuaries CYP Shifting Forest Geographic 10.10 SUGGESTED READINGS Daniels, D and Radebangh H., “International Business”, Pearson Education Asia, New Delhi, 2002 Griffin and Pustay, “International Business”, Pearson Education Asia, New Delhi, 2002 Subba Rao, “International Business”, Himalaya, Mumbai, 2001 Schaffer, “International Business Law and its Environment”, Thomson, 2002 Onkwist and, Shaw, “International Marketing” Philip R Careora, “International Marketing” 147 International Policy on Environment 151 Model Question Paper MODEL QUESTION PAPER MBA Second Year Sub: International Business Environment Time: hours Total Marks: 100 Direction: There are total eight questions, each carrying 20 marks You have to attempt any five questions What are the essentials of forest management? Explain about the following policies: a) Land Policy b) Water Policy c) Forest Policy What are the different modes of international trade? What are the factors influence the trade? Explain about the internationalization process What are the different modes of globalization of investment? Explain the working of foreign exchange markets What are the functions of foreign exchange markets? 151 [...]... Radebangh H., International Business , Pearson Education Asia, New Delhi, 2002 Griffin and Pustay, International Business , Pearson Education Asia, New Delhi, 2002 Subba Rao, International Business , Himalaya, Mumbai, 2001 Schaffer, International Business Law and its Environment , Thomson, 2002 Onkwist and Shaw, International Marketing” Philip R Careora, International Marketing” 21 Macro Environment. .. Radebangh H., International Business , Pearson Education Asia, New Delhi, 2002 Griffin and Pustay, International Business , Pearson Education Asia, New Delhi, 2002 Subba Rao, International Business , Himalaya, Mumbai, 2001 Schaffer, International Business Law and its Environment , Thomson, 2002 Onkwist and Shaw, International Marketing” Philip R Careora, International Marketing” 31 Macro Environment. .. to Japanese industries, the economic environment in emerging countries of Southeast Asia must be reviewed 2.2 MICRO ECONOMIC ENVIRONMENT Microeconomic environment refer to the environment surrounding a product and or market of interest to accompany An examination of microenvironment indicates 23 Macro Environment and Micro Environment 24 International Business Environment whether the company can successfully... labour Businesses cannot control this variable but only adjust to changes in this environment 1.3.2 Economy Forces such as levels of employment, interest rates, the economic growth rate and exchange rates cannot be controlled by a business The business can however have some influence on this environment by creating jobs and help with the increase in the economic growth rate 1.3.3 Social Environment Businesses... of goods, arranging customs documents and arranging transportation services 1.4 INTERNATIONALIZATION PROCESS "Internationalization is a process that prepares the community for successful participation in an increasingly interdependent world The process should infuse all 17 International Business 18 International Business Environment facets of the post-secondary system, fostering global understanding... U.S auto market Let us assume Ford Motor Company decides to retaliate by exploring the possibility of entering the Japanese 25 Macro Environment and Micro Environment 26 International Business Environment market Despite all its strengths and experience in international business, how ever, Ford may find itself greatly constrained in its endeavors by one weakness—cost structure Studies show that because... Administrators Increasing international experience/expertise of faculty, staff, and administrators; enhancing their ability to function and communicate in an international setting; providing support and incentives for faculty to internationalize courses, programs, participate in international exchange, teach overseas, engage in international development projects, or international research International Development... Onkwist and Shaw, International Marketing” Philip R Careora, International Marketing” 31 Macro Environment and Micro Environment 33 Social and Cultural Environment UNIT 1 UNIT II 34 International Business Environment 35 Social and Cultural Environment LESSON 3 SOCIAL AND CULTURAL ENVIRONMENT CONTENTS 3.0 Aims and Objectives 3.1 Introduction 3.2 Culture 3.2.1 Prescriptive 3.2.2 Socially Shared 3.2.3... internationalizing wider community via home stay and host family programs Exchange Programs Providing opportunities for study/work abroad for domestic students, scholars, faculty and staff; promoting access to international practicums and co-op placements; can lead to development of international diplomas, joint degrees and other forms of international collaboration and exchange 19 International Business. .. managers need to do is to think about which factors are most likely to change and which ones will have the greatest impact on them i.e 27 Macro Environment and Micro Environment 28 International Business Environment each firm must identify the key factors in their own environment For some such as pharmaceutical companies government regulation may be critical; for others, perhaps firms that have borrowed