this module describes aout the hr role and Excess of consumption and expenditure over revenue resulting in heavy govt. borrowings. Growing inefficiency on the use of resources. Over protection to industries. Mismanagement of the firm and the economy. Increase in losses for public sector enterprises. Various distortion like poor technological development, shortage of foreign exchange and borrowing from abroad. Low foreign exchange reserves. Inflation

1. MODULE 1
ENVIRONMENTAL
CONTEXT

3. July 1991,India has taken a series of measures to structure the
economy and improve the BOP position. The new economic policy
introduced changes in several areas.
The policy have salient feature which are: -
1.Liberlisation (internal and external)
2.Extending Privatization
3.Globalisation of the economy
Which are known as “LPG”. (liberalization privatization
globalization)
Introduction

4. Reasons for implementing LPG
 Excess of consumption and expenditure over revenue
resulting in heavy govt. borrowings.
 Growing inefficiency on the use of resources.
 Over protection to industries.
 Mismanagement of the firm and the economy.
 Increase in losses for public sector enterprises.
 Various distortion like poor technological
development, shortage of foreign exchange and
borrowing from abroad.
 Low foreign exchange reserves.
 Inflation

5. The Path of liberalization
• Relief for foreign investors
• Devaluation of Indian rupees
• New industrial Policy
• New trade policy
• Removal of import Restrictions
• Liberalization of NRI remittances
• Freedom to import technology
• Encouraging foreign tie-ups
• MRTP relaxation
• Privatization of public sector

6. Advantages of liberalization
• Industrial licensing
• Increase the foreign investment.
• Increase the foreign exchange reserve.
• Increase in consumption and Control over price.
• Check on corruption.
• Reduction in dependence on external commercial
borrowings

7. Disadvantages of Liberalization
• Increase in unemployment.
• Loss to domestic units.
• Increased dependence on foreign nations
• Unbalanced development

8. Privatization
Privatization means transfer of ownership and/or management
of an enterprise from the public sector to the private sector
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.
Privatization means replacing government monopolies with
the competitive pressures of the marketplace to encourage
efficiency, quality and innovation in the delivery of goods
and services.

9. Advantages of Privatization
• Privatization helps to reduce the burden on Govt.
• It will help profit making public sector unit to modernize and
diversify their business.
• It will help in making public sector unit more competitive.
• It will help to improving the quality of decision making, because
the decisions are free from any political interference.
• Privatization may help in reviving sick units which are the liability
of the public sector.
• It Encourage the new innovations without any restrictions.
• Industrial growth.
• Increase the foreign investment.
• Increase in efficiency.

10. Disadvantages of Privatization
• Industrial sickness.
• Lack of welfare.
• Class struggle.
• Increase in inequality
• Opposition by employees.
• Problem of financing.
• Increase in unemployment.
• Ignores the weaker sections.
• Ignores the national importance

11. Globalization
Globalization implies integration of the economy of the country
with the rest of the world economy and opening up of the
economy for foreign direct investment by liberalizing the rules
and regulations and by creating favorable socio-economic and
political climate for global business.
According to IMF: -”The growing economic interdependence of
countries worldwide through increasing volume and variety of
cross border transaction in goods and services and of
international capital cash flows, and through the more rapid
and widespread diffusion of technology.”

12. Pros and Cons of Globalization
Globalization have several benefits ,these are: -
 Free flow of capital and increase in the total capital employed.
 Free flow of technology.
 Increase in industrialization.
 Spread of production facilities throughout the globe.
 Balanced development of world economies.
 Increase in production and consumption.
 Commodities at lower price with high quality.
 Increase in jobs and income.
 Higher Standard of living.
 Balanced human development

13. Negative effects of Globalization
• Loss of domestic industries
• Exploits Human resource
• Decline in income
• Unemployment
• Transfer of natural resources
• Lead to commercial and political colonism
• Widening gap between rich and poor
• Dominance of foreign institutions

14. STRUCTURAL REFORMS POST NEW ECONOMIC POLICY OF 1991
International comparisons show that India has been among the
fastest growing Economies in the world
Economic reforms launched since June 1991 may be categorized under
two broad areas:
􀁸major macro-economic management
reforms
􀁸structural and sector-specific economic
reforms

15. Political reforms
Political Environment: - It affects different business units extensively. Components:
(a) Political Belief of Government
(b) Political Strength of the Country
(c) Relation with other countries
(d) Defense and Military Policies
(e) Centre State Relationship in the Country
(f) Thinking Opposition Parties towards Business Unit
• Implementation is complicated further when the central government and the
states are in the hands of different parties
•The rapidly increasing frequency of elections at the central and state levels during
the post- 1990 period of economic reforms has led the incumbent governments and
the contesting opposition parties to resort to 'vote-bank’ politics or 'competitive
populism‘
•Computerization of government and governance is the fastest way to reduce
corruption
•Lokpal: The Anna Hazare movement has taken up the anti-corruption cause through
the demand for a strong and effective Lokpal institution.
•Policies made by governments openly serve the interests of big corporates and
foreign capital at the expense of the people.

16. The areas in which the state has a comparative advantage over the
private sector include poverty alleviation programs human resource
development; provision of social services such as primary health and
primary education; and similar activities categorized as building human
capital and social infrastructure
The state also has a new role in setting up independent regulatory
authorities to encourage genuine competition and to oversee the
provision of services by the private sector in critical areas such as
utilities, water supply, telecommunications, and stock market operations

17. Socio-economic reforms in India
Led to expansion of opportunities in retail trade, communications, and financial, banking, and
real estate services
Globalization has meant an increased demand for residential, office and commercial space.
On a limited scale, residential space has been converted into commercial malls; new shopping
plazas have sprung up, and townships with quality infrastructure have been developed around
major cities to accommodate the branch offices of multinational and domestic companies.
Globalization has influenced city-level policies wherein new institutional and financial
Arrangements were forged to improve service delivery and management and
enhance city-level productivity
Today’s trade deficit, petroleum pricing, down equity markets, housing crisis, constricted flow
of funds, and overall cost of living is challenging us more than it is.
After globalization, the consumer goods industries have become ever more aggressive
advertisers and sellers. Most packaged foods, cosmetic aids and fashion accessories being
aggressively sold may be harmful.

18.  Business process outsourcing and Call Centers that flourished in Indian metropolises in
the last few years run in the nights to coincide with the daytime office hours in the
West. This working at nights requires adjusting the biological clock and social practices
to a different time, which is turning out to be a major cause for health-related and social
problems.
 Noticeable changes are occurring in family structure, especially in the urban centers,
and fertility is falling due to a weakening of traditional family controls and a declining
value given to procreation
 It has its impact on the social structure, values, social institutions and attitudes. India is a
Multilingual, multiethnic and multi-cultural society. Globalization has impacted noticeably on
cultural identity and social harmony among various social groups.
 Globalization has also added to the disparities among the states, with private capital
only concentrating on those developed states that have the infrastructure that guarantees
quick returns
 GDP, Inflation and Employment rate

19. SCOPE OF SOCIO-ECONOMIC REFORMS
 Influence of socio – economic environment
 Attitude
 Behavior
 Values which influence commitment, quality and quantity output and
employees’ dedication towards work.
a) Economic problems like poverty, malnutrition, inflation, etc. which
influence on the organization.
b) The quality of available human resource in organization and their
knowledge, education level, skills, norms, beliefs etc.
c) Social belief, customs, rituals and its influence on working and function
of an organization.
d) Educational level standard of living, degree of westernization and influence
of mass media will considerably influence the demand of certain goods
which in turn will influence the organizational productivity of different
goods.

20. Legal Reforms
 Change in Employment Laws
 Major amendments in laws that govern business functioning
 Flexible legal system for welfare of employees
 Reduced subsidies, tariffs, and restrictions leading to higher number of
loopholes in the legal system
 Free movement of capital in and outside country (FDI)
 New culture adoption leading to formation of a legal system that is more
unconventional
 Increase in environmental and Consumer protection laws
 Tax Laws
 Child Labour, Night-shift, Bonded labour contract

21. Technological reforms
Easy accessibility to technology
Computerized functioning of the economic activities
Rise of virtual world
Social media upheaval
Removal of distance related constraints
Standardization of technological arena
Scientific improvements and innovations (Research)
Technological advancement in production techniques
 Technical skill set upgradation
 Downsizing of manpower
 Hazardous and repetitive jobs taken over by machines
 Alienation of workers
 Scope of Internet Privacy Issues

22. ELEMENTS OF INTERNAL ENVIRONMENT
1) Physical Element
2) Technological Element
3) Social Element
4) Political Element (Organizational Conflicts)
5) Economic Element
6) Mission
7) Policies
8) Organizational culture
9) Organization Structure
10)HR systems

23. THE NEW BUSINESS ENVIRONMENT
1) Productivity
2) Knowledge Management
3) Quality
4) Responsiveness
5) Globalization
6) Outsourcing
7) High value addition
8) Information Technology
9) Excellence Culture
10)Benchmarking
11)Virtual organization

24. Impact of structural reforms on HRM in India
1. Redundant Manpower
2. Diversified workforce
3. Quality Management
4. Talent war and Attrition
5. Downfall of the trade union
6. Stress management and emotional Intelligence
7. Industrial Security
8. Cut-throat competition for growth
9. Standardization of skill set across the globe
10.Job-hopping due to abundance in opportunities

25. WHAT IS STRUCTURAL ADJUSTMENT?
Structural adjustment is a term which is often used to describe a package of reforms
usually advocated by the World Bank and the International Monetary Fund (IMF)
while granting loans to countries in deep debt or acute foreign exchange crisis.
Response of workers to structural adjustments in environment has been studied in
following three ways.
i) Individual negotiations over collective bargaining
ii) Individual Grievance Redressed over Industrial dispute
iii) Preference to participation in management
Response of union to structural adjustment in environment
1. Instead of taking confrontation, union has been adopting cooperation strategies
2. The trade union movement is itself undergoing considerably change as a result of
changes, mergers and joint ventures
3. Trade union as mobiliser of worker’s strength and unity has now become a
statutory tool to regulate the function of employees

26. THANK YOU