Globalisation and privatisation

This presentation is about globalization and privatization. It give detailed insight into both the terms.

1. GLOBALIZATION AND PRIVATISATION Presented by : Jaisha K J & Gayathri Jayasankar

2. GLOBALIZATION IMF defines as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and wide spread diffusion of technology". Charles U. L. Hill defines as “ the shift towards a more integrated and interdependent world economy”

3. FOUR PARAMETERS OF GLOBALIZATION Reduction of trade barriers – so as to promote free flow of goods and services Creation of environment in which free flow of capital can take place Creation of environment permitting free flow of technology Creation of environment in which free movement of labour can take place

4. FEATURES OF GLOBALIZATION Business expands through out the world Goods/services are bought/sold to/from any country in the world Erasing the difference between domestic and international markets Products are planned and developed keeping in mind the markets of entire world Manufacturing and distribution can be done at any part of the world based on feasibility and viability Outsourcing of goods and services can be done

5. PROCESS OF GLOBALIZATION

6. ESSENTIAL CONDITIONS Liberalising the rules and regulation of control Removal of Quotas and Tariffs Providing freedom to the business and industry Providing infrastructural facilities Developing money and capital markets Providing administrative and governmental support Encouraging research and development Removal of bureaucratic hurdles

7. COMPONENTS OF GLOBALIZATION Globalization of Markets Globalization of Production Globalization of Technology Globalization of Investment

8. Globalization of Markets Integration and merger of the different markets of the world into a single market. The common norms, tastes and preferences are identified enabling the cultural shift towards use of a common product or service. REASONS

9. Globalization of Production Location of manufacturing facilities favourable more in foreign countries than in home country leads companies to shift manufacturing in foreign country to produce goods of high quality at low cost REASONS

10. Globalization of Technology Technological advancements paves way for a company to enter into a foreign market. METHODS

11. Globalization of Investment It may also be termed as FDI. Following GATT and WTO, many countries reduced or eliminated investment barriers. MNC’s study the feasibility study of projects overseas and invest capital. REASONS

12. ADVANTAGES OF GLOBALIZATION Helps in free flow of capital Helps in free flow of technology from developed to developing countries Improves standard of living of people Makes available high quality goods at low prices Helps in spreading production facilities Increases employment opportunities and decreases cultural differences

13. DISADVANTAGES OF GLOBALIZATION Intense competition Harder for small business to establish Causes decline in demand of domestic products Widens the gap between rich and poor Developed countries exploit the resources of developing countries Exploitation of workers in developing countries

14. IMPACT OF GLOBALIZATION IN INDIA ECONOMIC IMPACT SOCIO-CULTURAL IMPACT PSYCHOLOGICAL IMPACT

15. ECONOMIC IMPACT

16. SOCIO-CULTURAL IMPACT

17. ECONOMIC IMPACT

18. Meaning Privatization can refer to the act of transferring ownership of specified property or business operations from a government organization to a privately owned entity. It also means the withdrawal of the state from an industry or sector partially or fully. Privatization is opening up of an industry that has been reserved for public sector to the private sector.

19. Why privatisation Ineffective and widespread inefficiency on management; With a view to provide opportunities for more and more unemployed youths, more number of people, than required, were recruited and therefore, many PSUs are over-staffed resulting in lower labour productivity, bad industrial relations, etc Entry of private sector industries into the areas exclusive reserved for the state sector or which are considered exclusive monopolies of state. Limiting the scope of the public sector or no more diversification of existing public sector understandings.

20. To increase efficiency and competitive power of the enterprise Objectives of privatisation To strengthen industrial management Distributing ownership more widely in the population at large To achieve rapid industrial development of the country To make optimum use of resources To reduce the administrative burden on the state

21. Forms of privatisation Complete privatization is the outright sale of government assets to the private sector. This type of privatization not only confers assets but also related responsibilities of ownership to the private sector. Government run industries and assets have generally been completely privatized through one of three main ways. share issue privatization- The government sells shares of the government run company which can then be traded on various stock markets. asset sale privatization- In this method, the whole firm or asset is sold to an investor. This is usually done by auction. voucher privatization- in which shares of ownership are distributed to all citizens for free or for a very low price Complete Privatization

22. The privatization of operations is the turning over of managerial and operational responsibilities of publicly owned facilities to private sector firms. This kind of privatization is often seen with the running of sports and concert venues. Franchising is the awarding of exclusive rights to perform services within a specific geographic area to a private firm by a governmental unit. Contracting out The private sector firm is paid directly by the government for their services. The government finances these services through the taxes of the collection of user fees. This type of arrangement is commonly used for the collection and disposal of solid waste. Privatization of Operations Franchising Contracting out

23. Advantages of privatisation Privatization is most of the time associated with improved efficiency due to the profit incentive. Private companies will ensure they improve their operational efficiency in order to reduce their costs and improve on profits. Privatization reduces the government’s political interference. The government sometimes seems incapable of making hard decisions especially when they impact their political footing such as layoffs and pay cuts which are bound to attract negative publicity. Privatization urges improvements in the company through competition. When a state owned entity is privatized it loses its government protection and is forced to adapt to the market by providing better services or products in order to survive and thrive .

24. Privatization of certain state entities such as water and electricity authorities may just create single monopolies. These may eventually seek to increase prices at the detriment of the consumer with no controls. The government loses dividends after privatization as seen with most successful companies that are developed through privatization. These dividends are instead channelled to wealthy individuals. Disadvantages of privatisation

25. Impact of privatisation Positive impact It frees the resources for a more productive utilisation . State owned enterprises generally are outdone by the private enterprises competitively. When compared the latter, it shows better results in terms of profits and efficiency and productivity. Therefore, privatization can provide the necessary push to the underperforming PSUs. Privatization brings about fundamental structural changes in the competitive sectors. Privatization leads to implementation of the global best practices along with management and motivation of the best human talent to foster sustainable competitive advantage and improvised management of resources .

26. Privatization has a positive impact on the financial growth of the sector which was previously state dominated by way of decreasing the deficits and debts. Private concerns tend to be profit oriented and transparent in their functioning as private owners are always oriented towards making profits. Since the system becomes more transparent all fundamental corruption are minimised and owners have a free reign and incentive for profit maximisation so they tend to get rid of all free loaders and vices that are inherent in government functions.

27. Negative impact Ignorance of the actual mission lack of clearness in private sector and stakeholders do not get the complete information about the functionality of the enterprise Less importance to social matters

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