Category: Commerce Notes PPT

At today’s juncture, technology is a dire need of the moment. Introducing technology and making it an important aspect of the trade economy for our country became an utmost requisite. From filing the documents to making any simple transaction we need lucid technology.

Imagine the condition of Indian trade without adequate technology? It will be similar to a stagnant economy without this modernization. Thus, we see the importance and dependence of the Indian trade on information technology so an Act was required which would bring uniformity in its usage. In this section, we are going to study the same and know about the Act’s objectives and mission.

Introduction of Information Technology Act, Objectives and Features

The Information Technology Act, 2000 was notified on Oct 17, 2000. It was the law that deals with law-breaking and electronic commerce in India and during this article, we are going to verify the objectives and options of the knowledge Technology act 2000. In 1996, the international organization Commission on International Trade Law (UNCITRAL) adopted the model law on electronic commerce (e-commerce) to bring uniformity within the law in several countries. Further, the overall Assembly of the international organization counselled that each one country should think about this model law before creating changes to its laws. India became the 12th country to alter cyber law once it passed the knowledge Technology Act, 2000. While the primary draft was created by the Ministry of Commerce, Government of India because of the E-Commerce Act, 1998, it was redrafted because of the ‘Information Technology Bill, 1999’, and passed in could 2000.

Objectives of the Act

Let us know about the objectives of the Act. 

1. The Information Technology Act, 2000 provides legal recognition to the group action done via electronic exchange of information and alternative electronic suggests that of communication or electronic commerce transactions. This also involves the utilization of alternatives to a paper-based technique of communication and knowledge storage to facilitate the electronic filing of documents with government agencies. Further, this act amended the Indian legal code 1860, the Indian proof Act 1872, the Bankers’ Books proof Act 1891, and also the bank of India Act 1934. The objectives of the Act are as follows:

2. Grant legal recognition to any or all transactions are done via electronic exchange of information or alternative electronic suggests that of communication or e-commerce, intact of the sooner paper-based technique of communication.

3. Offer legal recognition to digital signatures for the authentication of any data or matters requiring legal authentication

4. Facilitate the electronic filing of documents with Government agencies and conjointly departments.

5. Facilitate the electronic storage of information.

6. Offer legal sanction and conjointly facilitate the electronic transfer of funds between banks and money establishments.

7. Grant legal recognition to bankers underneath the proof Act, 1891, and also the bank of India Act, 1934, for keeping the books of accounts in electronic kind.

Features of the Information Technology Act, 2000

Here we will check out the features of the Information Technology Act. They are as follows:

• All electronic contracts created through secure electronic channels were legally valid.

• Legal recognition for digital signatures.

• Security measures for electronic records and conjointly digital signatures are in place. A procedure for the appointment of adjudicating officers for holding inquiries underneath the Act is finalized.

• Provision for establishing a Cyber restrictive Appellant judicature underneath the Act. Further, this judicature can handle all appeals created against the order of the Controller or Adjudicating Officer.

• It charms against the order of the Cyber Appellant judicature is feasible solely within the court.

• Digital Signatures uses an uneven cryptosystem and conjointly a hash operate.

• Provision for the appointment of the Controller of Certifying Authorities (CCA) to license and regulate the operating of Certifying Authorities. The Controller acts as a repository of all digital signatures.

• The Act applies to offences or contraventions committed outside India.

• Senior law enforcement officials and alternative officers will enter any public place and search and arrest while not warrant.

• Provisions for the constitution of a Cyber laws committee to advise the Central.

Applicability and Non-Applicability of the Act- Government and Controller

Applicability

According to Section 1 (2), the Act extends to the whole country that conjointly includes Jammu and the geographic region as the Act uses Article 253 of the constitution. Further, it doesn’t consider citizenship and provides extra-territorial jurisdiction.

Section 1 (2) at the side of Section 75 specifies that the Act applies to any offence or dispute committed outside India yet. If the conduct of personnel constituting the offence involves a laptop or a processed system or network settled in India, then no matter his/her position, the person is punishable underneath the Act.

Lack of international cooperation is the sole limitation of this provision.

Non-Applicability

According to Section 1 (4) of the knowledge Technology Act, 2000, the Act doesn’t apply to the subsequent documents:

• Execution of instrument underneath Negotiable Instruments Act, 1881, except cheques.

• Execution of influence of professional underneath the Powers of professional Act, 1882.

• Creation of Trust underneath the Indian Trust Act, 1882.

• Execution of a can underneath the Indian Succession Act, 1925 as well as the other legal document disposition by no matter name known as.

• Stepping into a contract for the sale or conveyance of immovable property or any interest in such property.

• Any such category of documents or transactions as is also notified by the Central Government within the Gazette.

What are the New Changes in the Act? – Amendments in the Act

A major modification was created in 2008. It has introduced Section 66A under this act which has penalized the causation of “offensive messages”. It conjointly introduced Section 69, which permitted the facility of interception or watching. The modification was passed on 22 Dec 2008 with no discussion in Lok Sabha (Lower House). The further days it went to the Rajya Sabha. It was signed into law by President Pratibha Patil, on 5 February 2009.

Summary

The original Act contained 94 sections, divided into 13 chapters and 4 schedules. If against the law involves any laptop or network settled in India, persons of alternative nationalities also can be indicted underneath the law. The Act provides a legal framework for electronic governance by giving recognition to electronic records and digital signatures. It conjointly defines cybercrimes and prescribes penalties for them. It conjointly established a Cyber proceeding judicature to resolve disputes arising from this new law.

Why is International Financing Required?

International finance plays a very crucial role in terms of international trade and inter-economy relation in the sector of exchange of goods and services. International Financing is important for various reasons, one being the important tool to estimate the exchange rates prevailing, these rates further helps the investors in deciding about their investment in foreign companies. 

Also, International Financing helps in utilizing the financial statements made by the countries who have adopted the style of IFRS. This helps the countries to follow the similar reporting systems.

 

International Finance

International finance also known as international macroeconomics here one will come across monetary interactions that are studied between two or more countries. The study is focused on areas such as foreign direct investment and currency exchange rates.

The understanding of the International Finance can be illustrated in the following points below: 

• International finance is the study of monetary interactions which happens between two or more countries. 

• International finance talks about foreign direct investment and currency exchange rates.

• Increase in globalization has intensified the importance of international finance.

• The concept of International Finance crosses the barriers of the nations and deals about the international funding rather than restricting itself to particular national boundaries.

The International Finance Research is conducted by the large institutes like the International Finance Corporation, National Bureau of Economic Research. All these research institutions are dedicated to the research and development of the global market.

Sources of International Finance

The sources of International finance can be excavated deep in the international economy and international market. The various sources for International Finance are as follows:

1. Commercial Banks 

Global Commercial Banks all over the international market provide loans in the foreign currency to the companies. These banks are very crucial in financing the non-trade international operations. They facilitate international trading to occur smoothly. 

2. International Agencies and Development Banks 

The developmental banks and other international agencies have come forth over the years for the purpose of financing in the international sector. The agencies are set up by the government of the developed countries of the world. The highly industrious agencies among this sector are – International Finance Corporation, EXIM Bank and Asian Development Bank.  

3. International Capital Markets 

The budding organizations which include the multinational companies depend upon the fairly large amount of loans known as the foreign currency. The financial instruments which are used by these organizations include – American Depository Receipts, Global Depository Receipts, and Foreign Currency Convertible Bonds.

International Finance Examples

We have understood the meaning and the sources of International Financing. Detailing our knowledge by citing a few examples will allow in-depth knowledge about International Finance.

The examples of International Finance are as follows:

One’s personal banking matters can cross the borders of their nation, their scope of banking increases with personal banking systems. The students studying abroad can set up their foreign accounts, they can move their money from the United States to other overseas accounts. 

A company may need to move the financial assets from the U.S. to any other country. This is international finance that happens in the form of re-allocation of the assets. The companies doing these transactions must be well versed with the prevailing law which is laid down by the government agencies who keep a vigilant alert in this type of cross-border activity.  

The buying, selling, and trading of the foreign commodities is a way for the world’s financial systems to operate. Foreign cars, branded foreign clothes, foreign home goods, and even international pet products consist of the world’s populations, all these require a lot of international finance transactions, in the form of buying, selling, and trading with the familiarity of the prevailing laws.

Indian trade economy met and adopted a new hemisphere where LPG was introduced. LPG is the acronym for Liberalization, Privatization, and Globalization. The Government of India was aware of the world trade economy, which was free of any obstacles and ran smoothly. To install the same in our country, the Indian Government loosened its control on international trade and capital, took steps to hand over the sick public sector units to the private entities, and boosted the growth of interdependence on the world trade economy. In short, the Indian Government took an advent to introduce LPG in our economy, which opened our economy to the world trade centre that helped in harnessing abundant wealth, talent, fame, and honour to our country.

LPG is the subject matter to be dealt with in this section. We will understand what agitated the reform of LPG and how it is progressing in the present Indian era.    

Liberalization, Privatisation, and Globalisation

India’s economy in the early nineties faced a major crisis, followed by a foreign exchange crunch that pushed the economy down. The country exhausted its foreign exchange reserves.  To face the crisis, the government came up with new adjustments in the economy by bringing new reforms. 

These reforms were known as ‘structural adjustments’. The government announced a New Economic Policy on July 24, 1991. This new model of economic reforms is commonly known as the LPG or Liberalisation, Privatisation, and Globalisation model. 

The main objective was to put the Indian economy into the arena of “Globalization” and to give it a new thrust on market orientation. The policy was intended to move towards a higher economic growth rate and to build sufficient foreign exchange reserves.

Liberalization

Liberalization removes state control over economic activities. It provides better autonomy to the businesses in decision-making without government interference. It was assumed that the market forces of demand and supply would operate automatically to derive a better efficiency and economic health will recover. Internally, this was enacted by bringing reforms in the real and financial sectors and externally by releasing foreign exchange and trade from state governments grip. 

Privatization

It means withdrawing the ownership or management of a government enterprise. Government companies are converted into private companies in two ways 

Privatization is the transfer of the control and ownership of businesses from the public sector to the private sector. It means a decline in the role of the government as the property rights shaft from public to private. 

The public sector enterprises had been experiencing challenges, since planning, such as low efficiency, low profitability, growing losses, political interference, lack of autonomy, labour issues, etc. Therefore, to address this situation government introduced privatisation in the economy. 

Conditions to be met before Privatisation

• Liberalization and deregulation of the economy are major prerequisites for privatization to set foot. 

• Capital markets should be developed to bear the brunt of disinvested public sector shares.

Globalization

Globalization can be defined as the integration of the national economy with the world economy. It enables a free flow of information, technology, goods and services, capital investments, and even people across different countries. It brings the trade, investments, and markets from various countries under one umbrella. It promotes a more lucid economy. Globalization is also divided into three types.

The Main Elements of Globalisation are

• To open the domestic markets for the steady flow of foreign manufactured goods, India reduced customs duties on imports. 

• The amount of foreign capital in a country is a good indicator of the growth and globalization of an economy. 

• Foreign Exchange Regulation Act (FERA) was liberalized in 1993 and later the Foreign Exchange Management Act (FEMA) 1999 was passed to start transactions in foreign currency.

Positive Impact of LPG in Our Economy

1. Increase in GDP Growth- 

The Indian economy has surely become vibrant after the LPG reforms. The overall growth of the economy has trended up as indicated by GDP growth. Post LPG policies, the growth of GDP shot up to as high as 8 percent per annum.

2. Stimulant to Industrial Production-

LPG policies have worked as a great stimulant to industrial production in the Indian economy. IT industries in India have reached the global level because of these LPG reforms.

3. Curb on Fiscal Deficit

 The ever-increasing fiscal deficit has been a danger to the process of investment in the Indian economy. It was 8.5 percent of GOP before 1991. Thanks to the LPG policies, government revenue has increased. As a result, the Fiscal deficit was deduced to 4% of the GOP (gross operating profit).

4. Check on Inflation

LPG reforms made the flow of demand and supply smooth and it in return checked the inflation. There was a fall in inflation rates as reforms increased the production of goods and services resulting in either falling of price or constant price. The competition also helped to keep inflation in check.

5. The Decline in Poverty

The reform led to the smooth running of businesses without any hindrance, which led to more employment and hence the decline in Poverty. 

Negative Impact of LPG Reforms

• The reforms were mainly for the formal sector of the economy, the agricultural sector, the urban informal sector, and forest depending communities were untouched by the reform. This resulted in Uneven economic growth and unequal distribution of wealth. 

• Economic liberalization in the organized manufacturing industries (subjected to strict labour laws) has led to very little employment.

• Market-based reforms led to the economic disparity between the rich class and the poor class.

• Social Sectors like Health, education were ignored in this reform which has led to poor health sector development and lousy educational growth.

• Economic reforms have pushed up the growth of the economy but have miserably failed to generate adequate employment. 

The JVs (Joint ventures) are generally characterized by shared ownership, returns, and risks, and also shared governance. 

Next, a Wholly owned subsidiary is a company whose entire stock is held by another parent company. The subsidiary generally operates independently of its parent company, the subsidiary has its own senior management structure, organization layout, and clients, this is not an integrated division or unit of the parent company.

The parent company on acquiring all the shares of a wholly-owned subsidiary, there are no minority shareholders. The subsidiary with the permission of the parent company operates in their own division, this act makes them an unconsolidated subsidiary.

 

Wholly Owned Subsidiary 

A company whose 100% of the common stock is owned by the parent company is called a wholly-owned subsidiary. A company is liable to be a wholly-owned subsidiary through an acquisition by a parent company, apart from this a regular subsidiary company is only 51-99% owned by the parent company.

Wholly owned subsidiaries is a method of international business which is incorporated by the entities for keeping full control over their Ventures. The organization which makes a hundred percent investment in its capital takes full control over another entity. In the international market, there are two ways for setting up wholly-owned subsidiaries. Those are – 

• Greenfield venture is setting up another organization to begin the activities abroad.

• Acquiring an organization that is already established in the foreign nation and making by utilization of that organization for delivering services in the host nation.

 

Wholly Owned Subsidiary Example 

A wholly-owned subsidiary may be in a different country than the parent company. The subsidiary has its own management structure and clients. Owning a wholly-owned subsidiary might help the parent company maintain its operations in wide geographic areas and markets or a different separate industry.

Volkswagen AG owns other distinguished brands that are Audi, Bentley, Bugatti, Lamborghini that are wholly owned by Volkswagen AG. 

Another example is Marvel Entertainment Company is the wholly-owned subsidiary of Walt Disney.

 

Joint Venture Subsidiary

A joint venture (JV) is a type of business arrangement where two or more parties come to an agreement and pool their resources for the purpose of achieving a specific task. This task can be a new project or for any other business activity.

In a joint venture (JV), the participants together are responsible for their own profits, losses and the costs incurred and are associated with them.  

In a JV business, there is a partnership in common sense but even in legal structure, they are business partners. JVs are used as a common purpose to partner up with a local business and then to enter a foreign market.

Joint Ventures – When an organization establishes and is mutually owned by two or more independent firms, it is known as a joint venture. It is about shared ownership and risk. It can bring into reality in these ways – 

• When a foreign investor creates interest in a local company. 

• When a local firm is interested in a local company. 

• When local and foreign entrepreneurs both jointly form a new enterprise. 

 

Wholly Owned Subsidiary Advantages & Disadvantages 

Advantages

The advantages of a wholly-owned subsidiary are hereunder:

1. Companies that will take control over the suppliers will benefit from the wholly owned subsidiaries.

2. They can form a vertical integration where the companies are under the same owner.

3. Wholly own subsidiary companies give space for the parent company to breathe and diversify, meaning they can fully grow and manage risk.

4. A company can avoid competition while entering a new market by combining with its subsidiary. 

5. For doing business abroad, the wholly-owned subsidiary can be utilized for this purpose as well.

6. It is affordable for international organizations to expand their business outside the boundaries of their nation. 

7. Joint ventures make it easy and beneficial for supporting huge ventures which require huge capital and labor and which eventually is shared in joint ventures. 

8. It helps in sharing the risks and expenses which helps the entity to enter the global market.

9. The parent organization can take full control of the operations in the organization in the foreign nation.

10. The parent organization is not needed for revealing its secret technology and techniques to others as they are the ones who look after everything of the company alone. 

Disadvantages

The disadvantages of a wholly-owned subsidiary are as follows: 

1. The parent company faces more taxes that are levied on these subsidiaries.

2. Doing diversification with the wholly-owned business may hamper focus on itself.

3. There may be a conflict between the parent and the subsidiary company that will affect the management of both companies.

4. Cost structure will shoot up, various other formalities need to be done with the wholly-owned subsidiary.

5. If the wholly-owned subsidiary proves inadequate to function, then it will disturb the flow of business of the parent company as well.

6. It has the risk of sharing secret techniques and the risk of revealing secrets of businesses which is a disadvantage of it. In a foreign nation, the sharing of technologies with the domestic organization may lead to the risk of the revelation of important things. 

7. Joint ventures might lead to a clash which can happen between the firms in regards to controlling and operating the venture and can lead to a lot of problems.

8. The parent organization needed for making a full investment in its subsidiary which is not reasonable for small and medium-sized organizations who have limited assets and resources for putting into the foreign nation. 

9. The parent organization has to bear the risk, losses, and misfortunes because they own 100% equity. 

10. Also, few Nations hesitate for setting up entirely owned subsidiaries by outsiders in their own nation. 

Leadership- Definition of Leadership, Concept of Leadership

Definition

Leadership is defined as the action or an act of guidance of leading a group of people or an organisation. For example,- what a pastor does in his state, a commander does in the play area, the supervisor needs to do the same in his association. Leaders in varying backgrounds possess certain essential characteristics. Leaders ought to have the option to set up contact with their equivalents, manage their subordinates and guide them, intervene in clashes, resolve issues by weighing different other options, apportion scant assets appropriately and face challenges and activities.

Concept

Leadership is a powerful social cycle that includes collaborations among pioneers, individuals and outside electorates. Great pioneers are made, not conceived. Leadership is a practical skill and a research area that helps individuals to influence or lead teams, organisations, or individuals. Great leaders are created through an endless cycle of self-study, training, preparing and experience. 

 

Great leaders are persistently working and concentrating on improving their administration aptitudes; they are not settling for the status quo. Authority is a cycle by which an individual impacts others to achieve a target and coordinates the association such that it makes it more durable and cognizant. Leaders complete this cycle by applying their administration ascribes, for example, – convictions, values, morals, character, information and abilities.

 

Styles of Leadership

Autocratic Style

The expression generally illustrative of an imperious authority style is “Do as I state.” Typically, a dictatorial pioneer accepts that the individual is the most astute individual at the table and knows more than others. They settle on all the choices with little contribution from colleagues. This order and control approach is regular with initiative styles of the past, yet it doesn’t hold a lot of importance with the present ability. Saying this doesn’t imply that that the technique may not be fitting in specific circumstances. For instance, you can plunge into a totalitarian authority style when choices of priority are undertaken on the spot, and you have the most information about the circumstance, or when you’re managing unpracticed and new colleagues. There’s no ideal opportunity to sit tight for colleagues to pick up experience with their job.

 

Affiliative Style

An expression frequently used to portray this sort of administration is “People first.” Of all the leadership styles, the affiliative initiative methodology is one where the leader gets very close with individuals. A pioneer rehearsing this style focuses on and upholds the feelings of colleagues. The leaders endeavour to open up a pipeline that associates the person in question to the group. In the affiliative leadership style, the leader pays attention to the employees and supports the emotional needs of the team members. It’s especially helpful, for instance, in smoothing clashes among colleagues or consoling individuals during seasons of pressure.

Laissez-Faire Style

The laissez-faire leadership style is the exact opposite of the Autocratic style of leadership. This leadership style involves the least amount of oversight, where the leader lets the people swim with the current of their issues. On the surface, the laissez-faire leader may appear to trust individuals but taken to the extreme situation; an uninvolved leader is aloof. While it’s beneficial for a leader to give people opportunities to spread their wings, but with the lack of direction, individuals may unwittingly drift away in the wrong direction, away from the monthly or crucial yearly goals of the organisation.

The Laissez-Faire Style is best suitable for highly skilled and experienced employees who happen to be motivated and self-starters. To be most effective with the laissez-faire style, leaders should monitor team performance and provide them with regular feedback.

Importance of Leadership

Leaders Provide Task Support:

Leaders uphold the supporters by gathering the authoritative assets and helping them achieve their undertakings as per principles of execution.

Building the Team Spirit: 

No individual can work alone. Leaders create cooperation among supporters to work, aggregate and arrange their exercises with authoritative exercises and objectives a leader functions as chief of the group.

Motivation:

Leaders spur the workers to take up occupations that they, in any case, may not be eager to work out.

Provides Feedback:

At the point when individuals run after very much characterised targets, they need a steady input of their presentation, which helps in accomplishing their objectives adequately. Leaders give them this criticism.

Introducing Change:

Successful leaders can persuade individuals about the need and advantages of authoritative change. The change cycle can, consequently, be easily completed.

Maintain Discipline:

Leadership is an incredible impact that upholds discipline in the association beyond what formal principles and guidelines can. Individuals will be submitted and faithful to rules and guidelines if their chiefs believe in them.