Business Economics BBA

Business Economics BBA

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1              State and explain Circular Flow of Income and Expenditure.

2              Describe the Price and Output Determination under Monopoly.

3              Critically examine the Liquidity Preference Theory of Interest.

4              Describe  Price  and  Output  Determination  under  Monopolistic Competition.

5              State and explain importance and limitations of Micro Economics.

6              What is an Economic problem? Give examples.

7              Explain the law of supply.

8              Explain the Revenue concepts. Prepare a Revenue Schedule and draw curves.

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Case study

Marks – 10

Case Study: Government intervention

In  Germany  in  2009  there  was  considerable  debate  about  the  extent  to  which  the government should be intervening in the economy.

 For example, its citizens were worried about the future of Opel, a German car brand that was part of the ailing General Motors. Some  wanted  the  government  to  make  sure  jobs  were  saved  no  matter  what.  Others,  however, were more hesitant and worried about becoming the government becoming too interventionist.  Traditionally  since  the  Second  World  War  the  German  government  has seen  itself  as  a  referee  in  market  issues  and  has  avoided  trying  to  control  parts  of  the  economy.  It  would  regulate  anti-competitive  behaviour,  for  example,  but  not  try  to  run many industries. However in the recession of 2009 when the economy was shrinking the government was forced to spend more to stimulate demand and had to intervene heavily to  save  the  banking  sector  from  collapse.  The  government  also  had  to  offer  aid  to  businesses to keep them alive.

Q.No 1: What are the possible benefits of a government intervening in an economy?

Q.No 2: What prompted greater intervention by the German government in 2009?

Q.No 3: What would determine whether the German continued to intervene on this scale in the future?

Q4. Arguments against government intervention in an economy:

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Q1. Customers are normally classified as part of a firm’s:

 (A): contextual environment.

 (B): internal environment.

 (C): operational environment.

 (D): general environment.

Q2. Microeconomic influences are defined as those which:

 (A): affect smaller businesses.

 (B): are related to changes in economic aggregates.

 (C): operate at the level of the firm, industry or market.

 (D): operate on an economy-wide basis.

Q3. Economic scarcity refers to:

 (A): a general shortage of goods available for consumption.

 (B): shortages of a particular good available for consumption.

 (C): finite demands for resources coupled with infinite resources.

 (D): infinite demands for resources coupled with finite resources.

Q4. If the government has an extra £5billion to spend on healthcare or education over the next 2 years and chooses to spend it on healthcare, then the ‘real cost’ of this decision is:

 (A): £2.5 billion per year of extra spending.

 (B): £5 billion spent on healthcare.

 (C): £5billion spent on healthcare divided by the size of the population.

 (D): £5 billion not spent on education.

Q5. An economy in which most decisions on resource allocation are taken by the government is known as:

 (A): a capitalist economy.

 (B): a command economy.

 (C): a free enterprise economy.

 (D): a market-based economy.

Q6. Which of the following does not necessarily apply to a market?

 (A): It involves the processes of demand and supply.

 (B): It is found in a given geographical location.

 (C): It involves interaction between buyers and sellers.

 (D): It is a mechanism designed to effect exchange.

Q7. Which of the following is NOT TRUE of the process of outsourcing?

 (A): It results in the sharing of risk between both companies.

 (B): It allows the outsourcing company complete control over production.

 (C): It can cuts production costs for the outsourcing company.

 (D): It allows the outsourcing firm to concentrate on it’s core competencies.

Q8. Which of the following is NOT TRUE of a public limited company?

 (A): There has to be a minimum of 2 shareholders.

 (B): There has to be a minimum of £50,000 of authorized share capital.

 (C): There has to be 1 director.

 (D): A certificate is needed from the Registrar of Companies.

Q9. When a company outsources production but the employees of the sub-contractor company do not put in sufficient effort, this is an example of:

 (A): division of labour.

 (B): vertical integration.

 (C): adverse selection.

 (D): moral hazard.

Q 10. If you hired a painter to decorate your house, you would be:

 (A): the principal.

 (B): an intermediary.

 (C): the agent.

 (D): a network.

Q 11. Vertical integration refers to the process:

 (A): where a company undertakes successive stages of the production process.

 (B): where a company diversifies into other markets.

 (C): where a company opens a branch overseas.

 (D): where production takes place as part of a team.

Q 12. In the Resource Based View of the firm the firms’ resources are divided into three types. Which of the following is NOT one of those types?

 (A): Physical capital resources.

 (B): Organisational capital resources.

 (C): Land physical resources.

 (D): Human capital resources.

Q 13. Which of the following would make a firm MORE likely to outsource an activity?

 (A): The activity is standardised.

 (B): The activity is very important for the organisation.

 (C): Specific assets are required for the activity.

 (D): The activity took place only infrequently.

Q 14. Which of the following is NOT an organisational structure recognized by the theoretical literature?

 (A): Divisional structure.

 (B): Government organisation.

 (C): Functional organisation.

 (D): Matrix organisation.

Q 15. A demand function for a product is constructed on the assumption that all the following remain constant except:

 (A): the price of alternative goods.

 (B): consumers’ tastes.

 (C): disposable income.

 (D): the price of the product.

Q 16. Which of the following would shift the demand curve for a specific brand of ice-cream to the left?

 (A): A fall in the price of the above brand.

 (B): The onset of hot weather.

 (C): A fall in the price of a rival brand.

 (D): An increase in disposable income.

Q 17. Which of the below conditions will result in the appearance of a ‘Giffen Good’?

 (A): The good is inferior.

 (B): The good is inferior and following a fall in price the income effect is greater than the substitution effect.

 (C): The good is seen as unpopular.

 (D): The good takes up a relatively small amount of consumers’ disposable income.

Q 18. If other things remain constant, how will an increase in the price of paint most likely affect the demand for and the price of paintbrushes?

 (A): Demand will decrease, but price will increase.

 (B): Both demand and price will decrease.

 (C): Demand will increase, but price will decrease.

 (D): Both demand and price will increase.

Q 19. A likely cause of the market supply curve shifting to the right would be:

 (A): an improvement in productivity.

 (B): businesses becoming less confident of the future economic climate.

 (C): the rise in the market price of substitute products.

 (D): a rise in the price of factor inputs

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Q 20. In a short run productive situation where more units of labour are combined with a fixed amount of capital, the value of the marginal product of labour will decline because:

 (A): the fixed factor becomes over utilised.

 (B): the workers just aren’t working hard enough.

 (C): the fixed factor is under utilised.

 (D): the cost of capital is rising.

Q 21. Which of the following would be seen as a short run variable cost for a shoe manufacturer?

 (A): Electricity for running the machines.

 (B): Loans taken out to buy the machines.

 (C): Business rates on the factory.

 (D): The fee paid to an advertising agency.

Q 22. The short run average total cost curve is minimised when:

 (A): average fixed cost has stopped declining.

 (B): average variable cost is also at a minimum.

 (C): the fall in average fixed cost is balanced by the rise in short run average variable cost.

 (D): the firm is producing with spare capacity.

Q 23. If the firm is maximising profit, which of the below is true?

 (A): Output is such that average revenue and average cost are furthest apart.

 (B): Total revenue is maximised.

 (C): Total cost equals total revenue.

 (D): Average cost is minimised.

Q 24. The firm should shut down in the short run if:

 (A): total revenue only just covers variable costs.

 (B): losses would be greater than fixed costs.

 (C): only making normal profit.

 (D): demand is falling.

Q 25. Which of the following would you expect to increase as a result of a very small increase in output? a) Raw materials b) Indirect labour c) Depreciation

 (A): a, b & c.

 (B): a & b only.

 (C): a only.

 (D): b & c only.

Q 26. The concept of ‘economies of scope’ is best characterised as the firm:

 (A): being able of easily exit the industry if demand where to fall.

 (B): having the capability of producing a range of output.

 (C): having a vision as to the future.

 (D): being able to produce a single product at lowest possible cost.

Q 27. The ‘long run’ is a production period during which:

 (A): all inputs can be varied.

 (B): most inputs can be varied.

 (C): all inputs can be varied other than plant size.

 (D): at least one input is fixed in quantity.

Q 28. The divorce of ownership from control refers to the:

 (A): demise of the joint-stock company.

 (B): power of shareholders over management.

 (C): observation that managers are unlikely to be shareholders.

 (D): observation that shareholders as owners delegate the running of the firm to managers.

Q 29. In Baumol’s model, the size of the profit constraint faced by an individual firm is likely to be relatively high in all the below cases with the exception of when:

 (A): the overall state of the market is buoyant.

 (B): profits declared by the firm in previous time periods were high.

 (C): profits made by rival firms are increasing.

 (D): the number of shareholders increase as major current shareholders release their shares.

Q 30.Consumer surplus comes about as a result of:

 (A): consumers having a strong desire for the good.

 (B): the consumer having an excess of disposable income.

 (C): the producer charging a different price for each unit consumed.

 (D): the consumer being willing to pay more than the market price.

Q 31.The value of price elasticity as price falls on a downward sloping linear demand curve that starts at a point on the price axis and finishes at a point on the quantity axis:

 (A): is always elastic so long as the curve is relatively shallow.

 (B): will become increasingly less elastic as you move down the curve.

 (C): is constant due to the linearity of the demand curve.

 (D): is always inelastic so long as the slope of the demand curve is relatively steep.

Q 32. The price elasticity of demand for a product will be lower:

 (A): the greater the proportion of income spent on the product.

 (B): the smaller the number of close complements.

(C): the smaller the number of close substitutes.

 (D): the higher the initial price.

Q 33. As the price of cinema tickets increases a study shows the value of price cross elasticity of demand between cinema attendance and popcorn consumption to be equal to + 1.5. Which of the following statements is true?

 (A): Cinema attendance and popcorn consumption are seen as substitutes.

 (B): The demand curve for cinema attendance will have shifted to the left.

 (C): The demand curve for popcorn will have shifted to the right.

 (D): If the price of popcorn had increased rather than the price of cinema admission then the price cross elasticity of demand would almost certainly have a lower value than + 1.5.

Q 34. A study shows the price elasticity of demand for the purchase of tickets to travel on a specific bus route to be price inelastic to a value of 0.7. Which of the below statements is untrue?

 (A): Price elasticity is likely to be higher during those hours when customers must use the service to travel to work.

 (B): An increase in price of 10% would lead to a fall in demand of 7%.

 (C): If a rival bus company providing a similar service at a similar price along the same route were to close, the above elasticity would almost certainly fall.

 (D): By decreasing price the company would loose revenue.

Q 35. If the profit constraint in Baumol’s model were to rise, which of the below are untrue?

 (A): To counter the necessity to make more profit the firm will increase sales by lowering price.

 (B): Price charged rises if the constraint were ‘operative’.

 (C): There would be no impact upon price so long as the constraint remained ‘inoperative’.

 (D): Total revenue falls if the constraint were ‘operative’.

Q 36. The impact of an increase in variable cost in Baumol’s model with an ‘operative’ profit constraint is that the:

 (A): firm may raise price and decrease output, yet would do so to a relatively lesser degree than a profit maximising firm in a similar situation.

 (B): firm is able to ignore the change in cost and maintain price.

 (C): firm will have to raise price.

 (D): firm will decrease price to increase sales to meet the higher profit.

Q 37. A ‘discretionary investment’ in Williamson’s model represents:

 (A): a way of spending surplus profit.

 (B): a gift by managers to shareholders by means of an additional dividend.

 (C): an additional investment undertaken by managers in excess of that required for the normal operation of the firm.

 (D): a free and anonymous gift by managers to charity.

Q 38. ‘Organisation slack’ exists in an organisation when:

 (A): sales are in decline.

 (B): shareholders do not have sufficient knowledge and expertise to correctly monitor the performance of managers.

 (C): a profit constraint is thought to be too high by both managers and shareholders.

 (D): costs are higher than necessary for a given level of activity.

Q 39. In Marris’s model the goals of managers and shareholders are seen to be more compatible than in other managerial theories because:

 (A): shareholders are seen to be more influential over management than in other models.

 (B): managers and shareholders both derive benefit from the growth of the firm.

 (C): shareholders are seen to be so lacking in real information as to how the firm should be run they are always satisfied with the performance of management.

 (D): management is seen to be more fragmented and less powerful.

Q 40. The essential feature of a Behavioural Theory of the firm is that:

 (A): the various groups or stakeholders within the firm all work harmoniously together to their mutual benefit.

 (B): emphasis is placed upon the complexity of organisations and the differing interests of its stakeholders.

 (C): shareholders are seen to be more influential over management.

 (D): profit is seen to be less important than in other theories.

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Industrial Relations & Labor Laws (EDL 309) -Semester III

Industrial Relations & Labor Laws (EDL 309) -Semester III

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Module I : Industrial Relations

Case study

A union or a similar collective group of employees is usually seen by its members as a way for employees to negotiate and communicate with their employers or management on a more level playing field than if each employee were to approach management individually. In line with this goal, the term “collective bargaining” refers to the actual process in which workers gather, and together bargain or make a deal with management on the key terms and conditions of employment.

Collective bargaining generally is aimed at making a deal or bargain with management that addresses a wide range of concerns in a particular workplace. This type of deal is a labor contract and is often referred to as a “collective bargaining agreement” or CBA.

Examples of some of the many topics covered in CBAs between management and employees include employee wages, hours, benefits, time off, raises, promotions, and disciplinary issues. However, CBAs also cover a number of additional topics ranging from worker safety to insurance, and can vary depending on the industry or workplace.

CBAs and the Law

Many of the legal issues involving unions are covered by the federal law known as the National Labor Relations Act (NLRA). The National Labor Relations Board (NLRB) is the federal agency charged with dealing with labor disputes when they become legal battles, and is also charged with taking enforcement action when violations occur.

In general, under the NLRA, employees have the right to join unions and collectively bargain. Notably, however, there are some types of employers and industries that are not covered by the Act. Some examples of these excluded industries include government workers, agricultural laborers, and independent contractors. For those employers and industries to which it applies, however, the NLRA prohibits employers from interfering with or preventing employees from organizing or engaging in activities that relate to organizing or forming a union.

In reality, the language of the law protects a wide range of employee activities and efforts to get together to improve their working conditions or their terms of employment. In other words, the protections afforded by the law are not limited to situations involving unions or face-to-face bargaining.

The “Good Faith” Collective Bargaining Requirement

Both sides of the employment relationship are required to undertake what is known as “good faith” bargaining. This term by its nature is pretty unclear, as evidenced by the large number of cases and disputes that end up with the NLRB involving whether one side or the other bargained in good faith. However, some common threads and generalities can be made about what are definitely not examples of good faith bargaining:

• Refusing to meet and bargain with the other party;

• Changing the terms of a bargain (or existing working conditions) unilaterally;

• Engaging in “sham” negotiations with the other side.

These are just some examples of conduct that would indicate a lack of good faith by one of the parties.

Unions’ Duty of Fair Representation

Employees should also be aware that their union has the responsibility to represent its members in a fair and equal manner. This doesn’t mean that the union has to do everything that individual members desire, nor act on their every wish. What it does mean, however, is that each member must be treated equally and in a fair manner.

If you feel your rights as a member have not been upheld equally or fairly by the union, there are typically grievance procedures that should be the first avenue to seek relief. If those procedures do not exist or have been exhausted, it may be time to consult with a local attorney specializing in employment law who will be able to advise on the matter, and if necessary, assist with bringing an action with the NLRB or the appropriate court.

No Deal! When Collective Bargaining Falls Short

As noted above, it is not uncommon for disputes to arise before, during, and after the negotiation process. When this occurs the dispute typically ends up in the hands of the NLRB which handles many labors disputes each year. The NLRB investigates claims and makes a determination as to whether further proceedings are warranted.

Need Legal Help with a Labor Issue? Find an Attorney Near You

Labor relations are complicated and there are often disputes between employers and their workers that require legal action. Unions typically offer legal representation to their members, but there may be instances where you’ll need to go it alone. Check out FindLaw’s directory of labor law attorneys to find one near you.

Article 43A of the Constitution of India deals with ‘Participation of workers in management of industries’ and falls under Part IV – Directive Principles of State Policy.

The State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry.

This article was inserted by the Constitution (Forty-second Amendment) Act, 1976, s. 9 (w.e.f. 3-1-1977).

The High-powered Expert Committee on Companies and MRTP Acts headed by Justice Rajinder Sachar of the Delhi High Court has also made certain recommendations about provisions to be made for workers’ participation in management of companies. (Vide paragraphs 18.127 to 18.143 of the Report). Parliament may take early steps to implement some of the recommendations made by the said Committee. It is significant that there is no recommendation made even in this Report about the right of trade unions to contest winding-up petitions. If the workers are issued shares then they would no doubt be entitled to participate in the winding-up proceedings as contributories. This may be one way of solving the problem by legislative means.

A process by which subordinate employees, either individually or collectively, become involved in one or more aspects of organizational decision making within the enterprises in which they work.

Workers’ participation in management is an essential ingredient of Industrial democracy. The concept of workers’ participation in management is based on Human Relations approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making process of the organization. Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in management. In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour Organization has been encouraging member nations to promote the scheme of Workers’ Participation in Management.

Workers’ participation in management implies mental and emotional involvement of workers in the management of Enterprise. It is considered as a mechanism where workers have a say in the decision-

The philosophy underlying workers’ participation stresses:

1. democratic participation in decision-making;

2. maximum employer-employee collaboration;

3. minimum state intervention;

4. realisation of a greater measure of social justice;

5. greater industrial efficiency; and

6. higher level of organisational health and effectiveness.

It has been varyingly understood and practised as a system of joint consultation in industry; as a form of labour management cooperation; as a recognition of the principle of co-partnership, and as an instrument of industrial democracy. Consequently, participation has assumed different forms, varying from mere voluntary sharing of information by management with the workers to formal participation by the latter in actual decision-making process of management.

The concept of WPM is a broad and complex one. Depending on the socio-political environment and cultural conditions, the scope and contents of participation change.

International Institute of Labour Studies:

WPM is the participation resulting from the practices which increase the scope for employees’ share of influence in decision-making at different tiers of organizational hierarchy with concomitant (related) assumption of responsibility.

ILO:

Workers’ participation, may broadly be taken to cover all terms of association of workers and their representatives with the decision-making process, ranging from exchange of information, consultations, decisions and negotiations, to more institutionalized forms such as the presence of workers’ member on management or supervisory boards or even management by workers themselves (as practiced in Yugoslavia).

The main implications of workers’ participation in management as summarized by ILO:

• Workers have ideas which can be useful;

• Workers may work more intelligently if they are informed about the reasons for and then intention of decisions that are taken in a participative atmosphere

• According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement.

• According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity.

• Clegg says, “It implies a situation where workers representatives are, to some extent, involved in the process of management decision making, but where the ultimate power is in the hands of the management”.

• According to Dr. Davis, “it is a mental and emotional involvement of a person in a group situation which encourages him to contribute to goals and share responsibilities in them”.

Objectives of Workers Participation in Management

The objectives of workers’ participation in management are as follows:

• To raise level of motivation of workers by closer involvement.

• To provide opportunity for expression and to provide a sense of importance to workers.

• To develop ties of understanding leading to better effort and harmony.

• To act on a device to counter-balance powers of managers.

• To act on a panacea for solving industrial relation problems.

Gujarat High Court

Gujarat Kamdar Sahakari Mandal … vs Ramkrishna Mills Ltd. on 7 April, 1994

The provisions of article 43A intended to herald industrial democracy and in the words of Krishna Iyer J., it marks the “end of industrial bonded labour”. The Constitutional mandate is, therefore, clear that, the management of the enterprises should not be left entirely in the hands of suppliers of capital, but the workers should also be entitled to participate in it because in a socialist pattern of society the enterprise, which is the centre of economic area, should be controlled not only by suppliers of capital but also by labour, The workers, therefore, have a special place in a socialist pattern of society. They are not mere vendors of toil. They are not a marketable commodity to be purchased by the owners of capital. They are producers of wealth as much as capital. They supply labour without which the capital would be impeded and they are at the least equal partners with capital in the enterprise. It is in the light of the aforesaid Constitutional philosophy, that the scheme which is put forward by the society of workers is required to be approached.

Specific of Purpose of Workers’ Participation

1. It helps in managing resistance to change which is inevitable. For the growth and development of industry, changes have to be welcomed, otherwise the organization will stagnate and be left behind. If the need for change is jointly felt by all partners of production its acceptance can be high. Workers’ participation in change strategy can facilitate acceptable solutions with a view to secure effective and smooth implementations of decisions.

2. Workers’ participation can encourage communication at all levels. Since both partners of production are involved in the decision-making there will be fewer changes of distortion and/ or failure in communicating the decision.

3. Joint decision- making ensures the there will be minimum industrial conflict an economic growth can be free form distracting strife.

4. Workers’ participation at the plant level can be seen as the first step to establishing democratic values in society at large.

Elements of Participation

The term “participation” has different meanings for different purposes in different situations. McGregor is of the view that participation is one of the most misunderstood idea that has emerged from the field of human relations. Keith Davis has defined the term “participation” as the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share responsibilities in them. This definition envisages three important elements in participation. Firstly, it means mental and emotional involvement rather than mere physical activity; secondly, participation must motivate a person to contribute to a specific situation to invest his own resources, such as initiative, knowledge, creativity and ingenuity in the objectives of the organisation; and thirdly, it encourages people to share responsibility for a decision or activity. Sharing of responsibility commits people to ensure the success of the decision or activity.

Forms of Participation

Different forms of participation are discussed below:

Collective Bargaining: Collective bargaining results in collective agreements which lay down certain rules and conditions of service in an establishment. Such agreements are normally binding on the parties. Theoretically, collective bargaining is based on the principle of balance of power, but, in actual practice, each party tries to outbid the other and get maximum advantage by using, if necessary, threats and counterthreats like; strikes, lockouts and other direct actions. Joint consultation, on the other hand, is a particular technique which is intended to achieve a greater degree of harmony and cooperation by emphasising matters of common interest. Workers prefer to use the instrument of collective bargaining rather than ask for a share in management. Workers’ participation in the U.S.A has been ensured almost exclusively by means of collective agreements and their application and interpretation rather than by way of labour representation in management.

Works Councils: These are exclusive bodies of employees, assigned with different functions in the management of an enterprise. In West Germany, the works councils have various decision-making functions. In some countries, their role is limited only to receiving information about the enterprise. In Yugoslavia, these councils have wider decision-making powers in an enterprise like; appointment, promotion, salary fixation and also major investment decisions.

Joint Management Councils and Committees: Mainly these bodies are consultative and advisory, with decision-making being left to the top management. This system of participation is prevalent in many countries, including Britain and India. As they are consultative and advisory, neither the managements nor the workers take them seriously.

Board Representation: The role of a worker representative in the board of directors is essentially one of negotiating the worker’s interest with the other members of the board. At times, this may result in tension and friction inside the board room. The effectiveness of workers’ representative at the board depend upon his ability to participate in decision-making, his knowledge of the company affairs, his educational background, his level of understanding and also on the number of worker representatives in the Board.

Workers Ownership of Enterprise: Social self-management in Yugoslavia is an example of complete control of management by workers through an elected board and workers council. Even in such a system, there exist two distinct managerial and operative functions with different sets of persons to perform them. Though workers have the option to influence all the decisions taken at the top level, in actual practice, the board and the top management team assume a fairly independent role in taking major policy decisions for the enterprises, especially in economic matters.

Levels of Participation

Workers’ participation is possible at all levels of management; the only difference is that of degree and nature of application. For instance, it may be vigorous at lower level and faint at top level. Broadly speaking there is following five levels of participation:

1. Information participation: It ensures that employees are able to receive information and express their views pertaining to the matters of general economic importance.

2. Consultative participation: Here works are consulted on the matters of employee welfare such as work, safety and health. However, final decision always rests at the option of management and employees’ views are only of advisory nature.

3. Associative participation: It is extension of consultative participation as management here is under moral obligation to accept and implement the unanimous decisions of employees.

4. Administrative participation: It ensure greater share of works in discharge of managerial functions. Here, decision already taken by the management come to employees, preferably with alternatives for administration and employees have to select the best from those for implementation.

5. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relation to production, welfare etc. is called decisive participation.

Pre-requisites for Effetive Participation

The pre-requisites for the success of any scheme of participative management are the following:

1. Firstly, there should be a strong, democratic and representative unionism for the success of participative management.

2. Secondly, there should be mutually-agreed and clearly-formulated objectives for participation to succeed.

3. Thirdly, there should be a feeling of participation at all levels.

4. Fourthly, there should be effective consultation of the workers by the management.

5. Fifthly, both the management and the workers must have full faith in the soundness of the philosophy underlying the concept of labour participation.

6. Sixthly, till the participative structure is fully accepted by the parties, legislative support is necessary to ensure that rights of each other are recognised and protected.

7. Seventhly, education and training make a significant contribution to the purposeful working of participative management.

8. Lastly, forums of participation, areas of participation and guidelines for implementation of decisions should be specific and there should be prompt follow-up action and feedback.

Question 1

“collective bargaining” refers to the actual process in which workers gather, and together bargain or make a deal with management on the key terms and conditions of employment.This statement is ___?

Select one:

a. True

b. Partially True

c. Wrong

d. Partially Wrong

Question 2

According to this case study , If you feel your rights as a member have not been upheld equally or fairly by the union, there are _____  that should be the first avenue to seek relief.

Select one:

a. Complaint Boxes

b. grievance procedures

c. Counsellers

d. None of the options

Question 3

As per this case study , Collective Bargaining Agreement (CBA) between management and employees include__?

Select one:

a. employee wages, hours

b. benefits, time off, raises

c. promotions, and disciplinary issues

d. All of the options

Question 4

as per this case study , the correct form of NLRB is ?

Select one:

a. National Labor Regulations Board

b. Nationalised Labor Relations Board

c. National Labor Relations Board

d. National Legal Relations Board

Question 5

As per this Case Study , which of the following can be examples of conduct that would indicate a lack of good faith by one of the parties.

Select one:

a. Refusing to meet and bargain with the other party

b. Changing the terms of a bargain (or existing working conditions) unilaterally

c. Engaging in “sham” negotiations with the other side

d. All of the options

Question 6

A union of employees is usually seen by its members as a way for employees to_____  on a more level playing field than if each employee were to approach management individually.

Select one:

a. negotiate with employers

b. communicate with their employers or management

c. Both A & B

d. None of these

Question 7

Collective bargaining is aimed at making a deal or bargain with management that addresses a wide range of concerns in a particular workplace. This type of deal is a labor contract and is often referred to as ____?

Select one:

a. “Cooperative bargaining agreement” or CBA.

b. “collective bargaining agreement” or CBA.

c. “Cumulative bargaining agreement” or CBA.

d. None of these options

Question 8

Objectives of Workers Participation in Management is/are?

Select one:

a. To provide opportunity for expression and to provide a sense of importance to workers

b. To develop ties of understanding leading to better effort and harmony.

c. To raise level of motivation of workers by closer involvement

d. All of the options

Question 9

The philosophy underlying workers’ participation stresses on which of the following ?

Select one:

a. higher level of organisational health and effectiveness

b. democratic participation in decision-making

c. maximum employer-employee collaboration

d. ALL of the options

Question 10

_________of the Constitution of India deals with ‘Participation of workers in management of industries’

Select one:

a. Article 43A

b. Article 44

c. Article 20

d. Article 26

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MODULE II : TRADE UNION MOVEMENT IN INDIA

Case study

The Directive Principles of State Policy contained in Part IV, Articles 36-51 of the Indian constitution constitute the most interesting and enchanting part of the constitution.

The Directive Principles may be said to contain the philosophy of the constitution. The idea of directives being included in the constitution was borrowed from the constitution of Ireland. As the very term “Directives” indicate, the Directive principles are broad directives given to the state in accordance with which the legislative and executive powers of the state are to be exercised.

As Nehru observed, the governments will ignore the directives “Only at their own peril.” As India seeks to secure an egalitarian society, the founding fathers were not satisfied with only political justice. They sought to combine political justice with economic and social justice.

The Directive Principles may be classified into 3 broad categories—

1. Socialistic

2. Gandhian and

3. Liberal-intellectual.

(1) Socialistic Directives

Principal among this category of directives are (a) securing welfare of the people (Art. 38) (b) securing proper distribution of material resources of the community as to best sub serve the common-good, equal pay for equal work, protection of childhood and youth against exploitation. etc. (Art.39), (c) curing right to work, education etc. Art. (41), (d) securing just and humane conditions of work and maternity relief (Art. 42) etc.

(2) Gandhian Directives

Such directives are spread over several Arts. Principal among such directives are (a) to organize village panchayats (Art. 40), (b) to secure living wage, decent standard of life, and to promote cottage industries (Art.43), (c) to provide free and compulsory education to all children up to 14 years of age (Art. 45), (d) to promote economic and educational interests of the weaker sections of the people, particularly, the scheduled castes and scheduled tribes, (e) to enforce prohibition of intoxicating drinks and cow-slaughter and to organize agriculture and animal husbandry on scientific lines (Arts. 46-48).

(3) Liberal intellectual directives

Principal among such directives are (a) to secure uniform civil code throughout the country (Art.44), (b) to separate the judiciary from the executive (Art.50), (c) to protect monuments of historic and national importance and (d) to promote international peace and security.

On the whole, Part IV contains a formidable list of directives given to the executive and the legislatures to follow in issuing orders or making laws. These directives make India a “plastic state.” The directives may be used by any party with any ideology. In fact, the Directive Principles are codified versions of democratic socialist order as conceived by Nehru with an admixture of Gandhian thought.

Part IV of the constitution does not form an operative part of the constitution. The directives are non-justiciable in character. The courts cannot compel the governments to enforce the directives.

But if there is no judicial sanction behind the directives, there are certainly political sanctions. Art. 37 make the directives, “fundamental in the governance of the country and in… making laws.” Hence the government cannot totally ignore them, for fear of adverse popular reaction. The opposition inevitably takes the government to task whenever the directives are blatantly ignored, thus scoring a political point.

The non-justiciability of part IV has exposed the directives to trenchant criticism. Jennings calls them “pious aspirations,” and “Fabian socialism without socialism.” Where characterizes them as “paragraphs of generalities.”

Yet many scholars appreciate the value of the directives. Sir B. N. Rau regards them as “moral precepts” with an educative value. Ambedkar considered them as powerful instruments for the transformation of India from a political democracy into an economic democracy. The directive principles according to Granville Austin, are “positive obligations”… to find a piddle way between individual liberty and Public good. “The directives constitute a sort of “instrument of instruction” to all governments in the great task of transforming a laissez-fire society into a welfare state, a socialistic pattern of society and eventually into a socialist society.

Parts III and IV, that is, chapters on Fundamental Rights and Directive Principles, together constitute the “conscience” of the Indian constitution. But, the differences between Fundamental Rights and Directive Principles of State policy are significant. The differences are discussed below :

• Firstly, the fundamental rights constitute a set of negative injunctions. The state is restrained from doing something’s. The directives on the other hand are a set of positive directions. The state is urged to do something to transform India into a social and economic democracy. As Gladhill observes, Fundamental Rights are injunctions to prohibit the government from doing certain things, the Directive principles are affirmative instructions to the government to do certain things.

• Secondly, the Directives are non-justiciable. Courts do not enforce them. A directive may be made enforceable by the courts only when there is a lam on it. Fundamental rights, on the other hand are justiciable. They impose legal obligations on the state as well as on individuals. Courts enforce them. If a law violates a fundamental right, the law in question will be declared void. But no law will be declared unconstitutional on the ground that it violates a directive principle against violation of a fundamental right, constitutional remedy under Art. 32 are available which not the case is when a directive is violated either by the state or, by individual. For this reason Prof K. T. Shah deprecates the Directive Principles as “Pious wishes” or a mere window dressing for the social revolution of the country.

Whenever conflicts arise between fundamental rights and directive principles, fundamental rights prevail over the directive principles because, in terms of Arts. 32 and 226, fundamental rights are enforceable by the courts. If a law is in conflict with a fundamental right, it is declared void by the Supreme Court. But no law can be declared void on the ground that it is violative of a directive principle. In 1951, in Champakam Dorairajan vs. the state of Madras, the Supreme Court held “The chapter on Fundamental Rights is sacrosanct and not liable to be abridged by any legislative or executive act. The Directive Principles of State Policy have to conform and are subsidiary to the chapter on Fundamental Rights.”

25th constitution amendment Act in 1971 by Article 31(c) provided that laws enacted to implement directives in Article 39 (b) and (c) shall not be declared void on ground of contravention of fundamental rights guaranteed by Articles 14 and 19. In 1976, during emergency, the 42nd amendment, sought to widen the scope of Article 31 (c), to place all laws passed for the implementation of any or all directive principles beyond judicial review. But the Supreme Court struck down this attempt at total exclusion of all laws to implement directives from judicial review on the ground that this will offend the ‘basic structure’ of the constitution. Thus Article, 31(c) is restored to pre-1976 position. The position today is that, in general, the fundamental rights enjoy priority over the directives. But the laws passed to implement Article 39 (b) and (c) cannot be declared void on ground of violation of fundamental rights guaranteed by Articles 14 and 19.

Importance of Constitutional Remedies

Mere codification of fundamental rights in the constitution is not enough unless remedies for the enforcement of those rights conferred by the constitution are also guaranteed by the constitution itself. In other words, rights to constitutional remedies are also important.

Article 32: This article provides for important remedies for enforcement of fundamental rights. This article confers the right to move either to the Supreme Court or under Article 226 to the High Court for any infringement of any of the fundamental rights.

As remedial measure the Supreme Court shall have the power under Article 32 to issue directions or Writs in the nature of Habeas Corpus, Mandamas, Prohibition, Quo-warranto and Certiorari, whichever may be appropriate, for the enforcement of any of the rights stipulated in the chapter on fundamental rights.

Supreme Court has been empowered to issue the Writ known as Habeas Corpus, demanding the presence of the imprisoned person before the court to obtain knowledge of the reason why he has been imprisoned and to set him free if there is no lawful justification for his imprisonment.

This Supreme Court and the High courts can also issue the Writ of Mandamas, giving directives to an individual, or an institution, or a subordinate court or the government requiring fulfillment of its responsibilities.

The Writ of Prohibition is issued by the Supreme Court or High Court to a subordinate court forbidding to continue proceedings in excess of its jurisdiction or to usurp a jurisdiction with which it is not legally vested with.

The object of the writ of Certiorari is also to secure that the jurisdiction of subordinate court is exercised properly and it does not usurp its jurisdiction. While Prohibition is available at an earlier stage, Certiorari is available on similar grounds at a later stage.

By the Writ of Quo-warranto the Court enquires into the legality of the claim asserted to a public office and to take action if the claim is not found justified.

Varieties of rights come up for enforcement by the issue of Writs under Article 32:

1. Fundamental rights guaranteed by the constitution;

2. Constitutional rights not having the status of fundamental rights;

3. Statutory rights;

4. Rights which flow from subordinate legislations;

5. Rights based on case law;

6. Customary rights;

7. Contractual rights.

It may be pointed out here that no redress in possible for the violation of social and economic rights contained in the directive Principles, for, those rights are non-justiciable.

Question 1 : As remedial measure the Supreme Court shall have the power under Article 32 to issue which of the following directions or Writs ?

Select one:

a. Habeas Corpus

b. Mandamas

c. Quo-warranto and Certiorari

d. All of the options

Question 2

Directive Principles of state Policy are contained in ——?

Select one:

a. Part IV, Articles 36-51 of the Indian constitution

b. Part II, Articles 6-15 of the Indian constitution

c. Part III, Articles 36-51 of the Indian constitution

d. Part V, Articles 20-40 of the Indian constitution

Question 3

Fundamental Rights & Directive Principles of State Policy are contained in which of the following Chapters of Indian Constitution?

Select one:

a. III & IV

b. IV & V

c. IV & VIII

d. X & III

Question 4

Fundamental Rights are injunctions to prohibit the government from doing certain things, the Directive principles are affirmative instructions to the government to do certain things.This Statement is ______?

Select one:

a. False

b. True

c. Partially True

d. Partially wrong

Question 5

which of the following are correct in the context of Quo-Warranto?

Select one:

a. The Court enquires into the legality of the claim asserted to a public office and to take action if the claim is not found justified.

b. To secure that the jurisdiction of subordinate court is exercised properly and it does not usurp its jurisdiction.

c. Both A & B

d. None of the options

Question 6

Which of the following are true in the context of The Writ of Prohibition ?

Select one:

a. the Court enquires into the legality of the claim asserted to a public office and to take action if the claim is not found justified.

b. Court demanding the presence of the imprisoned person before the court to obtain knowledge of the reason why he has been imprisoned and to set him free if there is no lawful justification for his imprisonment.

c. issued by the Supreme Court or High Court to a subordinate court forbidding to continue proceedings in excess of its jurisdiction or to usurp a jurisdiction with which it is not legally vested with.

d. Both A & B

Question 7

Which of the following are Varieties of rights come up for enforcement by the issue of Writs under Article 32 ?

Select one:

a. “Rights which flow from subordinate legislations “

b. Rights based on case law

c. Customary rights

d. All of the options

Question 8

Which of the following options CANNOT be categorised as Directive Principles ?

Select one:

a. Socialistic

b. Politicalistic

c. Gandhian

d. Liberal Intellectual

Question 9

Which of the following statements are true in the context of fundamental rights ?

Select one:

a. fundamental rights are Not enforceable by the courts.

b. fundamental rights are Partially enforceable by the courts.

c. fundamental rights are enforceable by the courts.

d. None of the options

Question 10

__________ in 1971 by Article 31(c) provided that laws enacted to implement directives in Article 39 (b) and (c) shall not be declared void on ground of contravention of fundamental rights guaranteed by Articles 14 and 19.

Select one:

a. 25th constitution amendment Act

b. 28th constitution amendment Act

c. 35th constitution amendment Act

d. 75th constitution amendment Act

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MODULE III: LABOUR MANAGEMENT CO-OPERATION

Case Study

Employers can take action, including dismissals, against employees who have been errant or recalcitrant. However, any action taken must follow the proper disciplinary procedure.

Progressive disciplinary action is a process whereby an employer takes disciplinary action against an employee in a progressive manner; that is, going from lesser to heavier intensity action.

A lesser form of disciplinary action may include counselling the employee and issuing warning letters. Heavier intensity action include the issuance of a showcause letter, suspending the employee, conducting domestic inquiry and finally dismissal.

There are various clauses in the Employment Act 1955 that pertains to taking disciplinary action in a progressive manner.

If an employer acts with due care in taking disciplinary action, the courts will not intervene. Following the process step by step will reflect fairness on the part of the employer and can minimise industrial court cases for unlawful dismissal.

From time to time, cases of misconduct and dismissal involving employees may arise, and it is crucial that employers know what steps to take under the regulation to avoid being challenged for wrongful dismissal or dismissal without just cause.

All misconducts and acts of indiscipline must be investigated to identify whether they are minor or major in nature. The handling of misconduct and some of the related clauses is regulated under Section 12, 13, 14 and 15 of the Employment Act 1955 and also in Section 20 of the Industrial Relations Act 1967.

A grievance is basically a complaint. In a workplace a grievance generally occurs as a result of treatment which is perceived to be unfair or harsh at the hands of a work colleague. Typical situations which might result in a grievance include:

• Being passed over for promotion

• Being given unpopular tasks more often than other workers (picked on)

• Sexual harassment

• Favouritism in the sharing of overtime work hours

Employers need to implement measures to allow any such problems to be resolved effectively and fairly. One such measure is to implement ‘grievance procedures’, the purpose of which is to make it easier for employees to come forward if they feel they are a victim of unfair treatment.

If employees have difficulty dealing with significant workplace issues then the likely result is a reduction in workplace morale, increased staff turnover or even the risk of the employee taking legal action.

Grievance procedures will commonly contain:

1 A recommendation that the first action the aggrieved party take is to attempt to resolve the problem by talking directly with the person causing perceived to be perpetrating unfair or harsh treatment.

2 If any such attempt to find a resolution is unsuccessful, the method by which to bring the matter to the attention of appropriate authorities.

3 The amount of time which the complainant has to commence the grievance.

4 The process by which the grievance will be investigated, including the length of time within which matter must be actioned.

5 The confidentiality that must be observed

6 Guidance on mediation strategies

7 The process for appointing persons to arbitrate on the matter

Any act of misconduct can be further defined as below:

Minor misconduct

Minor misconduct can be described as any act of indiscipline or behaviour by an employee that causes minimal harm or damage, and is less detrimental to the reputation of the personnel and assets of the employer.

Some examples of minor misconducts are occasional tardiness, absence without leave, leaving the workplace before time, careless use of company tools and equipment, not storing tools in proper order, not wearing uniform, not using basic safety equipment, using company property for personal purposes and all other similar acts.

All complaints must be put in writing on a formal complaint form provided by a supervisor or the head of department. If the complaint is found not to be an offence after investigations, the supervisor or head of department should respond to the complainant that there is no case of misconduct.

However, if an offence is found, the employee should be counseled immediately and the counseling is to be recorded.

A warning letter should be issued if the same misconduct is repeated. The letter must state the misconduct, and warn that serious disciplinary action can and may be taken against the employee in question if the misconduct is not corrected. Should the employee again commit the same misconduct, a second warning letter should be issued.

It is permissible that the first warning letter be issued by the respective head of department so that the employee is aware that the person he to whom directly reports, such as supervisor or manager, can take disciplinary action against his subordinate.

Regardless, the human resource department should issue the second warning letter and handle any other action if the situation becomes serious and needs further attention, as it would be more familiar in handling the progressive disciplinary processes. If the misconduct persists, it may be considered a major misconduct.

Major misconduct

A major misconduct is any act of indiscipline or behaviour that causes substantial harm or damage, is detrimental to or affects the reputation of the personnel and assets of the employer. Similar to minor misconduct, all major misconduct must be investigated.

Some examples of major misconducts are: insubordination, disobedience, theft, fraud, dishonesty, gambling, assault, violence, abuse, habitual absences, habitual late attendance, bribery, negligence of duties, failure to observe safety rules, chronic inefficiency in performance, drug and alcohol abuse, engaging in private work during working hour, destroying company documents and all other similar act of misconduct.

Depending on the merits of the case, several measures can be taken – including suspension with half-pay and the issuance of a show-cause letter. A final warning letter can and may be issued if the response given by the employee is not acceptable.

If the employee does not satisfy to the conditions set down, the employer may proceed to hold a domestic inquiry and to take a more serious disciplinary action against the accused employee, including dismissal.

Alternatively, depending on the weight of the misconduct, the employer can and may consider not suspending the employee, issuing instead a final warning letter.

If suspension with half-pay is required, the next immediate step is the issuance of a showcause letter. In a typical situation, the employee should be given a reasonable period of time to respond (example, five working days to reply to a showcause letter), but may be extended if the magnitude of the event warrants a longer process, such as if witness accounts need to be compiled.

A final warning letter may be issued if the reply is not acceptable. In situations where said misconduct persists, the employer may proceed with a domestic inquiry.

Domestic inquiry

In a domestic inquiry process, a panel is set up to determine whether the accused is “guilty” or “innocent” of the charge. The panel consists of a chairman and two panel members, and their role is to listen to the proceedings of the domestic inquiry and come to a decision. After that management will make a decision on punishment.

There will be one person from the office that can act as the secretary to prepare a verbatim report (word by word) during the domestic inquiry process, while another person from human resource can be the presenting officer. At this stage, the case against the employee should be supported with proof of evidence, and it should be guided by the principles of natural justice and of good conscience in its deliberations.

If the accused is found guilty, the domestic inquiry panel may recommend the punishment to management.

On the other hand, the employee can and may provide an avenue for an appeal to the management committee to reconsider for other lesser punishment, if any.

If the employee is found not guilty, the domestic inquiry panel will inform the managing director of its decision.

Then, management will inform the accused employee of the decision, which is guided by the domestic inquiry panel, and pay back any amount due to the accused employee during his period of suspension with half-pay.

Question 1: “All complaints must be put in writing on a formal complaint form provided by a supervisor or the head of department. If the complaint is found not to be an offence after investigations, the supervisor or head of department should respond to the complainant that there is no case of misconduct”. This statement is ____?

Select one:

a. True

b. False

c. Partially True

d. Partially false

Question 2

As per this case Study – “A warning letter should be issued if the same misconduct is repeated. The letter must state the misconduct, and warn that serious disciplinary action can and may be taken against the employee in question if the misconduct is not corrected. Should the employee again commit the same misconduct, a second warning letter should be issued”. This Statement is ____?

Select one:

a. False

b. True

c. Partially True

d. Partially Wrong

Question 3

Depending upon the case, which of the disciplinary actions can be taken?

Select one:

a. issuance of a show-cause letter

b. suspension with half-pay

c. Both a & B

d. None of these

Question 4

Example of major misconducts  can be?

Select one:

a. dishonesty, gambling, assault

b. violence, abuse, habitual absences

c. disobedience, theft

d. All of the options

Question 5

Examples of minor misconducts can be?

Select one:

a. absence without leave

b. careless use of company tools

c. not wearing uniform

d. All of the options

Question 6

If employees have difficulty dealing with significant workplace issues then the likely result is ?

Select one:

a. reduction in workplace morale

b. increased staff turnover

c. Risk of the employee taking legal action

d. All of the options

Question 7

Minor misconduct can be described as any act of indiscipline or behaviour by an employee that causes _______to the reputation of the personnel and assets of the employer.

Select one:

a. maximum harm or damage, and is more detrimental

b. minimal harm or damage, and is less detrimental

c. average harm or damage, and is more detrimental

d. None of these

Question 8

Progressive disciplinary action is a process whereby an employer takes disciplinary action against an employee in a progressive manner, that means __?

Select one:

a. Going from lesser to heavier intensity action.

b. Going from heavier to lesser intensity action.

c. Both a & B

d. None of these

Question 9

Situations which might result in a grievance is/are?

Select one:

a. Being passed over for promotion

b. Favouritism in the sharing of overtime work hours

c. Being given unpopular tasks more often than other workers

d. All of the options

Question 10

The handling of misconduct and some of the related clauses is regulated under Section 12, 13, 14 and 15 of ____?

Select one:

a. Factories Act 1948

b. Contract Act 1970

c. the Employment Act 1955

d. Minimum Wages Act

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MODULE IV : MANAGING EMPLOYEE DISCIPLINE

Case Study

In yet another initiative towards improving the ease of doing business in the country, Bandaru Dattatreya-led labour ministry has notified draft rule that would allow principal employer or contractor hiring contract labour to file a unified annual return under the Contract Labour (Regulation & Abolition) Act, 1970.

Under the rules, to be called as the Contract Labour (Regulation & Abolition) Central (Amendment) Rules, 2017, every contractor or principal employer shall upload a unified annual return in the Form XXIV specified in these rules on or before the February 1 following the close of the year to which it relates. The draft rules expires on April 14, 2017 after which the said rules will apply from the date of notification in the absence of any objections raised.

Besides, the employer or the principal contractor qalso have the option of filing the return manually or online. The principal employer or contractor shall also file a Unified Annual Return to the concerned authorities manually. In case, if, an employer maintains registers or records or reports in electronic form, such registers or records or reports shall also be taken into consideration,” the draft notification of the labour ministry said.

Both the government and the corporate sector employ a large number of contract workers. Contract labour accounts for 55% of public sector jobs and 45% of those in the private sector. Only about 300,000 contract labourers out of an estimated 80 million are employed in the organised sector.

The Object of the Contract Labour Regulation and Abolition) Act, 1970 is to prevent exploitation of contract labour and also to introduce better conditions of work. A workman is deemed to be employed as Contract Labour when he is hired in connection with the work of an establishment by or through a Contractor. Contract workmen are indirect employees. Contract Labour differs from Direct Labour in terms of employment relationship with the establishment and method of wage payment. Contract Labour, by and large is not borne on pay roll nor is paid directly. The Contract Workmen are hired, supervised and remunerated by the Contractor, who in turn, is remunerated by the Establishment hiring the services of the Contractor.

Registration And Licensing

The Act applies to the Principal Employer of an Establishment and the Contractor where in 20 or more workmen are employed or were employed even for one day during preceding 12 months as Contract Labour. For the purpose of calculating the number, contract labour employed for different purposes through different contractor has to be taken into consideration. This Act does not apply to the Establishments where work performed is of intermittent or seasonal nature. If a Principal Employer or the Contractor falls within the vicinity of this Act then, such Principal Employer and the Contractor have to apply for Registration of the Establishment and License respectively. The contractor The Act also provides for Temporary Registration in case the Contract Labour is hired for a period not more than 15 days. Any change occurring in the particulars specified in the Registration or Licensing Certificate needs to be informed to the concerned Registering Officer within 30 days of such change. From combined reading of Section 7 and Rules 17 & 18 of the Contract Labour (Regulation and Abolition) Central Rules, 1971, it appears that the Principal Employer has to apply for registration in respect of each establishment. Other important point to note is that a License issued for One Contract cannot be used for entirely different Contract work even though there is no change in the Establishment.

Significant judgments of the Supreme Court in the matter are:

Steel Authority of India Ltd. vs. National Union of Waterfront Workers & Ors. The Sail judgment stated that the contract workers would have no right to automatic absorption upon abolition. They would only have a right to a preference in employment if permanent workers were to be employed to fill in the vacancies created by the removal of the contract workers

upon abolition. The Bench further added that on issuance of notification by the appropriate Government under S 1 0(1) prohibiting employment of contract labour in a given establishment, it is for the contractor to provide work to his labour in other establishments, where the contract labour system is not prohibited. This decision reversed the Supreme Courts decision in Air Indias Case (contract labour of the erstwhile contractor stand absorbed on the rolls of the Principal employer on abolition of contract labour system by appropriate Government under section 10 of the Act).

2. Maharashtra General Kamgar Union vs. Cipla Ltd. Gist of this judgment is that, if contract workers filed a complaint of

any unfair labour practices against any principal employer alleging that he was, in fact, their employer and that the contractor was a mere name-lender interposed in the relationship merely to shield the principal employer, this complaint would become non-maintainable.

Question 1 : A workman is deemed to be employed as Contract Labour when____?

Select one:

a. he is hired in connection with the work of an establishment by or through a Contractor.

b. he is hired in connection with the work of an establishment as a regular employee

c. Both a & b

d. None of the options

Question 2

Any change occurring in the particulars specified in the Registration or Licensing Certificate needs to be informed to the concerned Registering Officer within_______?

Select one:

a. 45 days of such change.

b. 60 days of such change.

c. 7 days of such change.

d. 30 days of such change.

Question 3

As per Contract Labour (Regulation & Abolition) Central (Amendment) Rules, 2017, every contractor or principal employer shall upload a unified annual return in the  specified in these rules on or before the February 1 following the close of the year to which it relates.

Select one:

a. Form XXIV

b. Form XXV

c. Form XX

d. Form XXII

Question 4

As per this case study , “Contract labour accounts for 55% of public sector jobs and 45% of those in the private sector. Only about 300,000 contract labourers out of an estimated 80 million are employed in the organised sector” . This starement is ___?

Select one:

a. FALSE

b. TRUE

c. Partially Wrong

d. None of the options

Question 5

As Per this Case study , The Contract Workmen are hired, supervised and remunerated by the Contractor, who in turn, is remunerated by

Select one:

a. The Government agencies Only

b. By Himself

c. The Establishment hiring the services of the Contractor.

d. Both A & B

Question 6

as per this case study , The Judgement of supreme Court – “if contract workers filed a complaint of

any unfair labour practices against any principal employer alleging that he was, in fact, their employer and that the contractor was a mere name-lender interposed in the relationship merely to shield the principal employer, this complaint would become non-maintainable”. This refers to which of the following ?

Select one:

a. Maharashtra General Kamgar Union vs. Pfizer Ltd

b. Steel Authority of India Ltd. vs. National Union of Waterfront Workers & Ors

c. Maharashtra General Kamgar Union vs. Cipla Ltd

d. Steel Authority of India Ltd. vs. Maharashtra General Kamgar Union

Question 7

Contract Labour Act  applies to the Principal Employer of an Establishment and the Contractor where in ______are employed or were employed even for one day during preceding 12 months as Contract Labour.

Select one:

a. 10 or more workmen

b. 12 or more workmen

c. 20 or more workmen

d. 20 or Less workmen

Question 8

Contract workmen are ___?

Select one:

a. Direct employees

b. Indirect employees

c. Partially Permanent Employees

d. Either a or B

Question 9

The Object of the Contract Labour Regulation and Abolition) Act, 1970 is to

Select one:

a. prevent exploitation of contract labour

b. to introduce better conditions of work

c. Both a & B

d. None of the options

Question 10

Which of the following options is/are reasons that a Contract Labour is different from Direct Labour ?                    (A) Different  in terms of employment relationship with the establishment . (B) Different in terms of method of wage payment. ( C ) Contract Labour is not on the payroll of the company. (D) Contract Labour is a Direct Employee

Select one:

a. Only A & B

b. Only A & C

c. Only B

d. Only A, B & C

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Module V : Labour Laws

Case Study

The city is an old industrial centre in North Central India which flourished in cotton textiles, leather and leather products, woollen textiles, engineering products, etc. In the recent times though, the city has been in the news only for its rapid industrial decline, fast deteriorating socio-economic order and very high unemployment and crime rate. It had a militant working class movement, but as the capital has moved out of the city and the mills have closed down, the trade unions are in shambles and the working class movement has virtually collapsed.

The present case is situated in a premiere technological institute of the country: the Institute was set up in one of the most important industrial centres of the country in the late 1950s with US collaboration as part of the Nehruvian post-colonial nation building project. The Institute functions on the principles of parliamentary democracy and accords fair amount of autonomy to the faculty. In the early years, probably because of being part of the first generation in the phase of post-colonial nation building, some of the members of the faculty brought in notions of social concerns to this fully residential campus (mainly for teaching staff and students and partly for non-teaching staff as well). Some of them were able to find academic as well as practical expressions for their social concerns within the campus, given the liberal environment and a degree of academic freedom. The liberal culture of the campus was further enhanced by a vibrant employees’ union which came up in the early 1970s.

Employees at the lower levels were mostly from nearby places, while faculty and students had fair representation from different parts of the country. Efforts at unionisation of the temporary workforce in the Institute began in the late 1960s with participation of the academic community. The general socio-political environment of the region, country, and probably the whole world in the 1960s and 1970s, affected and furthered the movement in the Institute too. This resulted in a strong trade union, and eventually, a permanent work force within a few years. But by the 1990s, with the onset of the economic reforms, the industrial relations in the Institute too, as across the whole country, entered a new phase. In the last decade and a half many of the labour and union rights have receded, as permanent work and workers are being rapidly replaced by contingent workforce.

In the past decade, sub-contracting of work by the Institute has multiplied manifold, and therefore, the contingent workforce has also commensurately increased. Many kinds of jobs have been completely taken over by the contingent workers – construction and civil maintenance, security, sanitation, horticulture, and even research assistance and office help; though the last category is not dealt with in the present work. There has also been a phenomenal rise in the infrastructural facilities within the Institute, primarily because of monetary contributions from the alumni (mostly from those who have been ‘successful’ abroad) which have been pouring in, in the wake of liberalisation. Though we do not have the formal figures, yet by an informed estimate, at present the strength of the permanent work force is probably matched by the contract and temporary workers and would be around a couple of thousand each. The discussion here is limited to the so-called ‘unskilled’/ ‘semi-skilled’ manual work, where minimum wage is an issue.

Demand for Minimum Wages (MWs)

The MWs emerged as an issue in the campus in the early 1990s. An informal group called the Vivekanand Samiti (VS) began a literacy drive amongst the migrant Chattisgarhi workers employed on some of the construction sites in the campus. Initially the effort concentrated in getting the children of the workers to attend a temporary school . Through interactions with these children the volunteers of VS gradually came to know about the miserable wages being paid to the workers in the campus (which was even less than half of the stipulated minimum wages). They decided to take up the issue with the Institute authorities. Legally the primary responsibility for ensuring the payment of minimum wages lies with the ‘principal employer’, the Institute in this case. In actual practice the contract workers have little job security and no employment rights. No formal rolls are maintained by the contractors, and since these workers have no organisation to mediate with the employers, they literally work at the mercy of the employers’ will and live with the constant fear of losing their employment. Hence all these organising efforts by the VS had to be done surreptitiously. Though, in the process a few workers did loose their jobs and were blacklisted by the whole set of contractors working for the Institute. Some of these workers formed the core of the later efforts at organising, which led to the formation of a workers’ cooperative in the campus.

The simplicity of the issue, the absolutely unambiguous position of the law of the land on the minimum wages, and the overall irony of the context of an elite institution with no apparent dearth of funds and resources not paying the MWs to the lowest rung of workers, caught the imagination of many amongst the academic community, at least for a while in the beginning. Several faculty members and students supported the cause and the Institute found itself in an indefensible position as to the reasons for non-payment of minimum wages, but for some practical difficulties in implementing the same given the market forces, etc. Though the administration could not wish away the issue of MWs it could not implement it either as the body of contractors unitedly opposed it by adopting several deterring tactics like firing the protesting workers, threatening to stop work, etc. Under these circumstances the Institute formed a committee of a few concerned faculty members to deal with the issue. But given the political economy of MWs, the committee could not make much headway and failed to ensure the payment of minimum wages as a norm within the campus .

The core group of agitating workers and the initiated middle class supporters came up with an ingenuous solution to the problem. They decided to form a workers’ cooperative that would bid on behalf of the workers and take up contracts so that the workers would have the freedom to pay themselves the MWs without the interference of the contractors. Thus a workers cooperative, Samiti, was formed in 1992, though in its early phase it faced significant resistance from the administration. The Institute administration even refused to give tender forms to Samiti, and when the fledgeling cooperative did manage to bid, they would reject it on some ground or another. But Samiti survived and over the years, has grown to a size of around 200 members at present, and is widely acknowledged as the only contracting organisation on the campus which pays the MWs. Samiti, including its members and sympathisers, have been taking up several cases of gross violation of MWs and bringing them to the attention of the larger community and the authorities. But for all practical purposes except for Samiti market forces largely decided the norm . for the wages in the campus, irrespective of the stipulated MWs. But this is not the place to relate Samiti’s tale. We have attempted to capture some of the organisational features of Samiti in another work (Varman & Chakrabarti, 2004). We will touch upon Samiti in the final section to make certain observations regarding the labour markets.

As has been mentioned earlier, besides the global phenomena of recession of worker rights the situation in the campus was aggravated over the 1990s, probably because of a spurt in construction activity aided by huge sums of alumni money, where large numbers of workers (many of them migrants from distant places) were employed at wages which were only 50-60% of the statutory minimum wages. Concerned members of the Institute community have been regularly voicing their concerns at several formal and informal forums on the issue; some of the instances are as follows.

§ At least two reports on non-payment of minimum wages in the campus were prepared by students as part of their course work – one comparing the state of construction workers vis-à-vis the Minimum Wages Act, which made a grim reading on the conditions of the workers in the campus. The second report compared the state of other contract workers on cleaning work with those of Samiti and brought out how the latter was an exception in paying MWs. The faculty forum convener forwarded both the reports along with a letter signed by a set of faculty members expressing their concern ‘about the blatant flouting of minimum wage laws for contract jobs’, to the higher authorities seeking their response.

§ Several individual workers risked their jobs to register grievances about non-payment of minimum-wages. Many of these grievances were channelled either through the concerned members of the academic community, Samiti or Valmiki Samaj, a local chapter of an all India organisation of the Valmiki caste, who are involved in most of the cleaning work in the campus.

Probably because of all these sustained efforts, in November 2000 the administration decided to constitute another committee for monitoring minimum wages in the campus – Monitoring Committee – Wages (MCW). The appointment letter of the Committee was all of one line which indicated that probably no serious thought had been given to the functioning and role of the committee and it could at best be considered an official acknowledgement of all the criticism levelled on the issue of MWs. All that the office-order said was:

The committee shall oversee the disbursement of wages to Daily Wage Workers engaged in various units of the Institute and deal with the related disputes.

The following is the account of the journey of MCW from its inception in December 2000 to December 2005. An important aspect of the Committee and its functioning which should be mentioned at the outset, has been the sustained support it received from a large informal group consisting of members of the faculty, students, staff and other members/ residents of the campus community. The MCW had to tread uncertain and often extremely contestable territories, with almost no previous experience or precedence to go by. Under these circumstances the informal group acted as a sounding board both for new ideas as well as for delicate decisions. On situations of impasse with the authorities as well as with the contractors and the administration, the informal group has also formally supported the MCW, including by being part of official delegation on behalf of the Committee. Though it is difficult to adequately capture the significance of this informal group within the scope of the present note, one can only assert that such a group has been continually an integral part of the Committee’s efforts in various ways. In the following section we will attempt to capture various phases of the Committee and volunteers’ work in brief.

Question 1 : As Per this Case Study , a workers cooperative, Samiti, was formed in _____?

Select one:

a. 1950

b. 1992

c. 1890

d. 1990

Question 2

As per this case study ,An informal group called _____ began a literacy drive amongst the migrant Chattisgarhi workers employed on some of the construction sites in the campus.

Select one:

a. ALL India Trade union Congress (AITUC)

b. The Vivekanand Samiti (VS)

c. Bhartiya Mazdoor Sangh (BMS)Bhartiya Mazdoor Sangh (BMS)

d. Both a & C

Question 3

As per this case study -” In actual practice the contract workers have little job security and no employment rights. No formal rolls are maintained by the contractors, and since these workers have no organisation to mediate with the employers, they literally work at the mercy of the employers’ will and live with the constant fear of losing their employment”.  This statement is ___?

Select one:

a. True

b. False

c. Partially True

d. Partially wrong

Question 4

Efforts at unionisation of the temporary workforce in the Institute began in the______ with participation of the academic community.

Select one:

a. late 1960s

b. 1950’s

c. 1920’s

d. 1900

Question 5

In the past decade, sub-contracting of work by the Institute has multiplied manifold, and therefore, the contingent workforce has also commensurately increased. Many kinds of jobs have been completely taken over by the contingent workers – what are these jobs ?

Select one:

a. construction and civil maintenance

b. security, sanitation, horticulture

c. research assistance and office help

d. All of the options

Question 6

Legally the primary responsibility for ensuring the payment of minimum wages lies with __ ?

Select one:

a. the ‘principal employer’

b. the contractor Only

c. the Government

d. Both B & C

Question 7

Probably because of all the sustained efforts, in November 2000 the administration decided to constitute another committee for monitoring minimum wages in the campus  known as ?

Select one:

a. Mentoring Community of- Wages (MCW).

b. Marketing Committee – Wages (MCW).

c. Mentoring Committee – Wages (MCW).

d. Monitoring Committee – Wages (MCW).

Question 8

Reports on non-payment of minimum wages in the campus were prepared by students. (A)Ccomparing the state of construction workers vis-à-vis the Minimum Wages Act. ( B) Comparing the state of other contract workers on cleaning work with those of Samiti and brought out how the latter was an exception in paying Minimum wages.

Select one:

a. Only A

b. Only B

c. None of these options

d. Both a & B

Question 9

The city is an old industrial centre in North Central India which flourished in cotton textiles, leather and leather products, woollen textiles, engineering products, etc. In the recent times though, the city has been in the news only for

Select one:

a. its rapid industrial decline

b. fast deteriorating socio-economic order

c. very high unemployment and crime rate.

d. All of the options

Question 10

Through interactions with these children the volunteers of VS gradually came to know about the____ ?

Select one:

a. miserable wages being paid to the workers in the campus

b. Wages were even less than half of the stipulated minimum wages

c. Both a& b

d. None of these

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ASSIGNMENT 2

Case Study

For right or wrong reasons, Bata India Limited (Bata) always made the headlines in the financial dailies and business magazines during the late 1990s. The company was headed by the 60 year old managing director William Keith Weston (Weston). He was popularly known as a “turnaround specialist” and had successfully turned around many sick companies within the Bata Shoe Organization (BSO) group.

By the end of financial year 1999, Bata managed to report rising profits for four consecutive years after incurring its first ever loss of Rs. 420 mn in 1995. However, by the third quarter ended September 30, 2000, Weston was a worried man. Bata was once again on the downward path. The company’s nine months net profits of Rs 105.5 mn in 2000 was substantially lower than the Rs. 209.8 mn recorded in 1999. Its staff costs of Rs. 1.29 bn (23% of net sales) was also higher as compared to Rs. 1.18 bn incurred in the previous year. In September 2000, Bata was heading towards a major labour dispute as Bata Mazdoor Union (BMU) had requested West Bengal government to intervene in what it considered to be a major downsizing exercise.

With net revenues of Rs. 7.26 bn and net profit of Rs. 300.46 mn for the financial year ending December 31, 1999, Bata was India’s largest manufacturer and marketer of footwear products. As on February 08, 2001, the company had a market valuation of Rs. 3.69 bn. For years, Bata’s reasonably priced, sturdy footwear had made it one of India’s best known brands. Bata sold over 60 million pairs per annum in India and also exported its products in overseas markets including the US, the UK, Europe and Middle East countries. The company was an important operation for its Toronto, Canada based parent, the BSO group run by Thomas Bata, which owned 51% equity stake.

The company provided employment to over 15,000 people in its manufacturing and sales operations throughout India. Headquartered in Calcutta, the company manufactured over 33 million pairs per year in its five plants located in Batanagar (West Bengal), Faridabad (Haryana), Bangalore (Karnataka), Patna (Bihar) and Hosur (Tamil Nadu). The company had a distribution network of over 1,500 retail stores and 27 wholesale depots. It outsourced over 23 million pairs of footwear per year from various small-scale manufacturers.

Throughout its history, Bata was plagued by labor problems with frequent strikes and lockouts at its manufacturing facilities. The company incurred huge employee expenses (22% of net sales in 1999). Competitors like Liberty Shoes were far more cost-effective with salaries of its 5,000 strong workforce comprising just 5% of its turnover.

When the company was in the red in 1995 for the first time, BSO restructured the entire board and sent in a team headed by Weston. Soon after he stepped in several changes were made in the management. Indians, who held key positions in top management, were replaced with expatriate Weston taking over as managing director. Mike Middleton was appointed as deputy managing director and R. Senonner headed the marketing division. They made several key changes, including a complete overhaul of the company’s operations and key departments. Within two months of Weston taking over, Bata decided to sell its headquarter building in Calcutta for Rs. 19.5 crores, in a bid to stem losses. The company shifted wholesale, planning & distribution, and the commercial department to Batanagar, despite opposition from the trade unions. Robin Majumdar, president, co-ordination committee, Bata Trade Union, criticised the move, saying: “Profits may return, but honor is difficult to regain.” The management team implemented a massive revamping exercise in which more than 250 managers and their juniors were asked to quit. Bata decided to stop further recruitment.

The management team implemented a massive revamping exercise in which more than 250 managers and their juniors were asked to quit. Bata decided to stop further recruitment. The management offered its staff performance based salary. In 1996, for the first time in Bata’s 62-year-old history, the company signed a long-term bipartite agreement. This agreement was signed without any disruption of work. Recalls Majumdar: “We showed the management that we could be as productive as any other union in the country.” In the six-year period 1993-99, Bata had considerably brought down the staff strength of its Batanagar factory and Calcutta offices to 6,700.

In fiscal 1996, Bata was back in the black with the company reporting net profits of Rs. 41.5 mn on revenues of Rs. 5.90 bn (Rs. 5.32 bn in 1995). In fiscal 1997, Bata further consolidated the gains with the company reporting net profits of Rs 166.9 mn on revenues of Rs. 6.70 bn. A senior HR manager at the company admitted that with an upswing in Bata’s fortunes, even its traditionally intransigent workers were motivated to do better. In 1997, Bata workers achieved 93% of their production targets. The management rewarded the workers with a 17% bonus, up from the 15% given in 1996.

By the end of 1997, Bata still faced problems of a high-cost structure and surplus labour. Infact, the turnaround had made the unions more aggressive and demanding. Weston had failed to strike a deal with the All India Bata Shop Managers Union (AIBSMU) since the third quarter of 1997. The shop managers were insisting that Bata honor the 1990 agreement, which stipulated that the management would fill up 248 vacancies in its retail outlets. It also opposed the move to sack all the cashiers in outlets with annual sales of less than Rs 5 mn, which meant elimination of 690 jobs.

In 1999, the Bata management in a bid to further cut costs announced the phasing out of several welfare measures at its Batanagar Unit. Among the proposals were near total withdrawal of management subsidies, canteen facilities, township maintenance, electricity and health care schemes for the employees’ families. Other measures were aimed at increasing productivity, reorganizing some departments and extending working days for some essential services. On January 14, 1999, the BMU submitted their charter of demands to the management. The demands mainly revolved around economic issues. In the list of non-economic issues was the demand for reinstatement of the four dismissed employees.1 The Union had also demanded the introduction of a scheme for workers participation in management. On the economic front, the Union had demanded a wage hike of around Rs. 90 per week, additional allowances as provident fund over the statutory limit by the management, increase in ‘plan bonus’ and introduction of attendance bonus for migrant workers.

In July 1999, BMU was finally able to strike a deal. It signed a three-year wage agreement that included a lumpsum payment of arrears of Rs. 4,000 per employee. The management agreed to include 10% of the 400 contract laborers at Batanagar in its staff.

Other gains included an average increase of Rs. 45.50 in the weekly pay of the 5,600 employees in Batanagar, an improved rate of DA and increase in tiffin allowance. However, canteen rates had been doubled from Rs. 0.75 for a meal to Rs. 1.50. For the 500 families staying at Batanagar, the electricity rates had been doubled to Rs. 0.48 per unit. BMU was successful in preventing the management from dismantling the public health unit in which 80 people were employed. In September 1999, the West Bengal State labour tribunal in an order justified and upheld Bata’s action of suspending and subsequent dismissing of three executive members of the BMU. The tribunal had provided no relief to the dismissed members who had been found guilty of assaulting the chief welfare officer at the Batanagar unit on November 26, 1996.

More than half of Bata’s production came from the Batanagar factory in West Bengal, a state notorious for its militant trade unions, who derived their strength from the dominant political parties, especially the left parties.

Notwithstanding the company’s grip on the shoe market in India, Bata’s equally large reputation for corruption within, created the perception that Weston would have a difficult time. When the new management team weeded out irregularities and turned the company around within a couple of years, tackling the politicized trade unions proved to be the hardest of all tasks

On July 21, 1998, Weston was severely assaulted by four workers at the company’s factory at Batanagar, while he was attending a business meeting. The incident occurred after a member of BMU, Arup Dutta, met Weston to discuss the issue of the suspended employees. Dutta reportedly got into a verbal duel with Weston, upon which the other workers began to shout slogans. When Weston tried to leave the room the workers turned violent and assaulted him. This was the second attack on an officer after Weston took charge of the company, the first one being the assault on the chief welfare officer in 1996. Soon after the incident, the management dismissed the three employees who were involved in the violence. The employees involved accepted their dismissal letters but subsequently provoked other workers to go in for a strike to protest the management’s move. Workers at Batanagar went on a strike for two days following the incident. Commenting on the strike, Majumdar said: “The issue at Bata was much wider than that of the dismissal of three employees on grounds of indiscipline. Stoppage of recruitment and continuous farming out of jobs had been causing widespread resentment among employees for a long time.”

Following the incident, BSO decided to reconsider its investment plans at Batanagar. Senior vice-president and member of the executive committee, MJZ Mowla, said2: “We had chalked out a significant investment programme at Batanagar this year which was more than what was invested last year. However, that will all be postponed.”

The incident had opened a can of worms, said the company insiders. The three men who were charge-sheeted, were members of the 41-member committee of BMU, which had strong political connections with the ruling Communist Party of India (Marxist). The trio it was alleged, had in the past a good rapport with the senior managers, who were no longer with the organization. These managers had reportedly farmed out a large chunk of the contract operations to this trio.

Company insiders said the recent violence was more a political issue rather than an industrial relations problem, since the workers had very little to do with it. Seeing the seriousness of the issue and the party’s involvement, the state government tried to solve the problem by setting up a tripartite meeting among company officials, the labor directorate and the union representatives. The workers feared a closedown as the inquiry proceeded.

For Bata, labor had always posed major problems. Strikes seemed to be a perennial problem. Much before the assault case, Bata’s chronically restive factory at Batanagar had always been plagued by labor strife. In 1992, the factory was closed for four and a half months. In 1995, Bata entered into a 3-year bipartite agreement with the workers, represented by the then 10,000 strong BMU, which also had the West Bengal government as a signatory. It was in 1998, that the company for the first time signed another long-term bipartite agreement with the unions without any disruption of work. Apprehensive about labor problems spilling over to other units, the company entered into similar long-term agreements with the unions at its manufacturing units at Bangalore and Faridabad.

In February 1999, a lockout was declared in Bata’s Faridabad Unit. Middleton commented that the closure of the unit would not have much impact on the company’s revenues as it was catering to lower-end products such as canvas and Hawaii chappals. The lock out lasted for eight months. In October 1999, the unit resumed production when Bata signed a three-year wage agreement

On March 8, 2000, a lockout was declared at Bata’s Peenya factory in Bangalore, following a strike by its employee union. The new leadership of the union had refused to abide by the wage agreement, which was to expire in August 2001. Following the failure of its negotiations with the union, the management decided to go for a lock out. Bata management was of the view that though it would have to bear the cost of maintaining an idle plant (Rs. 3 million), the effect of the closures on sales and production would be minimal as the footwear manufactured in the factory could be shifted to the company’s other factories and associate manufacturers. The factory had 300 workers on its rolls and manufactured canvas and PVC footwear.

In July 2000, Bata lifted the lockout at the Peenya factory. However, some of the workers opposed the company’s move to get an undertaking from the factory employees to resume work. The employees demanded revocation of suspension against 20 of their fellow employees. They also demanded that conditions such as maintaining normal production schedule, conforming to standing orders and the settlement in force should not be insisted upon.

In September 2000, Bata was again headed for a labour dispute when the BMU asked the West Bengal government to intervene in what it perceived to be a downsizing exercise being undertaken by the management. BMU justified this move by alleging that the management has increased outsourcing of products and also due to perceived declining importance of the Batanagar unit. The union said that Bata has started outsourcing the Power range of fully manufactured shoes from China, compared to the earlier outsourcing of only assembly and sewing line job. The company’s production of Hawai chappals at the Batanagar unit too had come down by 58% from the weekly capacity of 0.144 million pairs. These steps had resulted in lower income for the workers forcing them to approach the government for saving their interests.

Question 1 : according to this case study ,throughout its history, Bata was plagued by labor problems . What were these? (A) frequent strikes (B) lockouts at manufacturing facilities.

Select one:

a. Only A not B

b. Only B not A

c. Both A & B

d. None of these

Question 2

AIBSMU stands for _____ in this case study.

Select one:

a. All India Bata Shop Managers Union

b. All india Bata specialist Managers Union

c. All India Bata Shop Managerial Union Committee

d. All India Bata Shop Managers Trade Union

Question 3

As per this case study , managing director William Keith Weston (Weston), he was popularly known as ___?

Select one:

a. Turnaround expert

b. Turnaround specialist

c. Either a or b

d. None of these

Question 4

As per this case study ,Who among the following was deputed as as deputy managing director of Bata ?

Select one:

a. William Keith Weston

b. R. Senonner

c. Mike Middleton

d. None of these

Question 5

As per this case Study – ” the three men who were charge-sheeted, were members of the 41-member committee of BMU, which had strong political connections with the ruling Communist Party of India (Marxist)”. This Statement is ___?

Select one:

a. True

b. Partially true

c. False

d. Partially Wrong

Question 6

Bata had a major labour dispute with BMU related to which of the follwing issues ?

Select one:

a. Low wages

b. non payment of wages

c. major downsizing exercise

d. All of the options

Question 7

In 1992, the factory was closed for four and a half months. In 1995, Bata entered into a______, represented by the then 10,000 strong BMU, which also had the West Bengal government as a signatory.

Select one:

a. 5-year bipartite agreement with the workers

b. 3-year bipartite agreement with the workers

c. 3-year bipartite agreement with the management

d. 5-year bipartite agreement with the management

Question 8

In July 1999, BMU was finally able to strike a deal. It signed a three-year wage agreement that included___?

Select one:

a. Total Payments to all workers

b. a lumpsum payment of arrears of Rs. 4,000 per employee

c. a lumpsum payment of arrears of Rs. 1,000 per employee

d. All Pending payment of arrears + Rs. 10,000 per employee

Question 9

In September 2000, Bata had  a major labour dispute with ?

Select one:

a. Bata Mazdoor Union (BMU)

b. Bharatiya Mazdoor Sangh (BMS)

c. All india Trade union Congress (AITUC)

d. None of these

Question 10

Which of the following was/were the demands of the union in Bata ?

Select one:

a. a scheme for workers participation in management

b. wage hike of around Rs. 90 per week

c. attendance bonus for migrant workers

d. All of the options

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Organizational Change & Development -Semester III

Organizational Change & Development -Semester III

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Module I : Organizational Development: An Introduction

Case study

British Gas is a British-owned energy supplier. British Gas is the UK s leading provider of energy and has over 16 million customer accounts. It employs over 20,000 people and was voted one of the 25 Best Big Companies to Work For by The Sunday Times in the UK in 2011. All organisations have employees working at different levels of responsibility. At the bottom, a business depends on its operatives to produce the products or services. Team leaders perform the day-to-day management role, with operational and senior managers setting direction and strategy for the business as a whole.

Theorist Henri Fayol identified the key areas of manager’s work. He proposed that the five key functions of management are:

Planning

• Organising

• Commanding

• Coordinating

• Controlling

Within British Gas, each individual operates as a member of a team, which is led by a team manager who has a range of supervisory duties. These include monitoring the performance of their team members. At British Gas the team managers are referred to as service managers. Service managers of electrical and technical service engineers need to organise routines in order to meet the needs of customers. They must also positively promote British Gas and its products. Their expert knowledge helps them to provide customers with sound advice that opens up opportunities to create new business. Occasionally, they have to deal with customer complaints. This is why customer service and good communication skills are of great importance to this role. As leaders of a team, all service managers within British Gas set personal and group targets for employees within their span of control. They also communicate their ideas and thoughts to members of the team, to other service managers and to operational managers. At all times they need to maintain good working relationships with team members. Being able to communicate effectively and keep focused on strong customer relations helps them to manage their workload effectively. Some of the benefits of being a service manager include a competitive salary, performance related bonuses and good pension provision.

In many cases an individual who started at British Gas as an apprentice, trainee or qualified engineer or electrician can advance to become a service manager. Career progression may eventually enable them to become an operational manager. The operational managers are responsible for making strategic decisions. To make such decisions operational managers require a range of key skills. These include skills and knowledge of customer service, teamwork, communication, IT and finance. As individuals progress from a service manager to operational managers within British Gas they need to up-skill. This helps them to adapt and develop as they undertake further senior responsibilities within the organisation. For example, they now have to take responsibility for customer satisfaction for a large part of the business. They do this by monitoring that work has been completed to the satisfaction of customers. Operational managers also have to monitor standards and set targets for improvements. They are responsible for managing budgets and have to ensure that their part of the business meet its budget objectives. At all times they must try to improve best practice. By doing this they can identify areas where costs can be reduced to improve profitability and efficiency. It is the vision of the operational managers that keeps the business moving forward, vital in such a highly competitive market.

Question 1 : According to theorist Henri Fayol, what are the key areas of manager’s work?

Select one:

a. Planning

b. Commanding

c. Controlling

d. All of the above

Question 2

How does a service manager take the responsibility to progress as an operational manager?

Select one:

a. The service managers have to take responsibility for customer satisfaction and for the progress they do it by monitoring that work has been completed to the satisfaction of customers

b. Performing the given task diligently

c. Encouraging the team to take extra responsibility

d. All of the above

Question 3

How is the hierarchical system within British Gas?

Select one:

a. Each individual operates as a member of a team, which is led by a team manager who has a range of supervisory duties

b. Each individual operates as a member of a team

c. All departments are led by the same team manager who has a range of supervisory duties

d. None of the above

Question 4

What are the benefits of a service manager at British Gas?

Select one:

a. Competitive salary

b. Performance related bonuses

c. Good pension provision

d. All of the above

Question 5

What are the responsibilities of an operations manager?

Select one:

a. Monitor standards and set targets for improvements

b. Managing budgets to ensure that their part of the business meet its budget objectives

c. Improve best practice

d. All of the above

Question 6

What are the skills that an operational manager should possess?

Select one:

a. Skills and knowledge of customer service

b. Communication Skills

c. Performance related bonuses

d. Both a and b

Question 7

What are the team managers referred as at British Gas?

Select one:

a. Line managers

b. Supervisors

c. Service managers

d. Team managers

Question 8

What is the role of operational manager?

Select one:

a. Making strategic decision

b. Monitoring the performance of their team members.

c. Deal with customer complaints

d. Provide customers with sound advice

Question 9

Which of the following are supervisory duties of team managers at British Gas?

Select one:

a. Managing the work of the team

b. Monitoring the performance of their team members.

c. Organising the work for each team member

d. All of the above

Question 10

Which of the following are the responsibilities of the service managers of electrical and technical department?

Select one:

a. Promote British Gas and its products

b. Provide customers with sound advice

c. Deal with customer complaints

d. All of the above

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Module II : Typology of Organizational Development Interventions

Case study

“A pharmaceutical machines manufacturing company got in touch with us when they were clogged by lot of internal challenges. They were unable to harness the market opportunities, or manage the work efficiently. They wanted to get into a Joint venture with a Multinational company in Germany, for which they had to set their company, ready in order to go through the audit and evaluation successfully.

After a detailed 360 degree diagnosis, we identified the gaps and stagnant areas. We drew an organizational developmental intervention and implemented it. This intervention ran over 12 months.

At the end of phase 1, the company saw the following improvements:

• Clear vision and mission for the management

• Long standing pending decisions on obsolete process and way of working made space for improved business processes.

• Inefficiencies were recorded objectively and handled through process refinement and employee training.

• Employee satisfaction was improved, through setting up and communicating the HR policies, defining Job roles and introducing performance management system.

• The overall top line of the company grew by more than 40% that year

• The company started attracting professional talent into the organization

Before Scenario the Challenges faced:

• Unable to harness growth/market opportunities. Stagnancy in Top Line

• To transform the organization from a conservative family owned business to a profession outfit.

• Production challenges

• Absence of HR setup or processes or policies

• Lack of clearly set processes made the working very person driven and time consuming.

• Resistance to Change at the staff level, Department Head level

• No Productivity Measures and the work at all departments was person driven rather than performance or process driven

An Organization Development Plan was drawn for first 12 months which is the First Phase, after a detailed diagnosis of the company.

• Priority Areas were identified and a Plan of Action was drawn.

• As a top –down approach we facilitated in recreating the Vision, Mission & values and set direction to where the organization wants to be in future.

• Organization restructuring for efficient manpower utilization

• Business Process Re-engineering to streamline the work flow

• Introducing best practices from other Industries, HR Strategy, HR Operational policies, Job descriptions, Manpower Planning, Recruitments

• Training and development, counseling and audit given to employees

In the second Phase, they introduced Performance Management System

• Departmental KPI’s were fine-tuned

• Job roles were revisited

• Performance Management Trainings were given to Managers and staff

• Supported to complete the implementation of the performance Management process

After the Interventions the company became a self-propelled organization. The organization finally became a system driven, target oriented. They were able to create the growth plan for the next 5 Years in place and plan for strategic joint ventures with world no 1 in respective fields in place.

Question 1 : By how % the overall top line of the company grew?

Select one:

a. 20%

b. 40%

c. 30%

d. 10%

Question 2

How long was the organizational developmental intervention carried on in the organisation?

Select one:

a. 5 Months

b. 3 Months

c. 2 Months

d. 12 Months

Question 3

How were the gaps and stagnant areas identified?

Select one:

a. Management discussion

b. Managerial role change

c. Detailed 360 degree diagnosis

d. None of the above

Question 4

In the first phase of intervention, which of the following improvements were seen within the organisation?

Select one:

a. Employee satisfaction was improved, through setting up and communicating

b. The overall top line of the company grew by more than 40% that year

c. Clear vision and mission for the management

d. All of the above

Question 5

What was introduced in the second phase of intervention?

Select one:

a. Performance Management

b. Introducing best practices from other Industries

c. Training and development

d. Business Process Re-engineering

Question 6

What was the challenge faced by the pharmaceutical company?

Select one:

a. Unable to harness the market opportunities

b. Manage the work efficiently

c. Internal challenges

d. All of the above

Question 7

What was the new strategy they looked forward for?

Select one:

a. Drop their line of business

b. Joint venture with a Multinational company in Germany

c. Re-engineering of the organisation

d. None of the above

Question 8

What were the objectives of the organisational plan in the first phase?

Select one:

a. Organization restructuring for efficient manpower utilization

b. Business Process Re-engineering to streamline the work flow

c. Departmental KPI’s were fine-tuned

d. Both a and b

Question 9

Which among the following challenges were faced by the organisation before the interventions?

Select one:

a. Stagnancy in Top Line

b. Production challenges

c. Absence of HR setup or processes or policies

d. All of the above

Question 10

Why was the company looking forward for interventions?

Select one:

a. They were clogged by lot of internal challenges

b. They were not able to manage their employees

c. Wanted to increase their expertise

d. None of the above

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Module III: Action Research & Organizational Design

Case Study

“Matt owns 10 mobile phone shops located across Northern Ireland. Although each outlet trades under the same name, Chatz, they are all very different. This is because Matt has always allowed the manager within each shop to have complete control over their respective outlet. Therefore, each of the stores has its own unique character in terms of store layout, presentation and location. They stock different brands of mobile phone and accessories and buy from different suppliers. Each of the stores is promoted locally.

Whilst this approach has served the business well in the past, Matt is planning to appoint a Purchasing Manager to take responsibility for stock purchases for all outlets.

Increasing levels of competition from national supermarkets and changes in consumer tastes have convinced Matt to centralise the decision-making process within Chatz. It is anticipated that many of the current responsibilities undertaken by store managers will be transferred to Head Office within the next 3 months. In considering the appointment of a Purchasing Manager, Matt is conscious of the need to widen the ‘span of control’ that this individual would have, to include supervisory duties related to successful management of stocks and the warehouse operations.”

Question 1 : How are the stores promoted?

Select one:

a. Regionally

b. Locally

c. Centrally

d. All of the above

Question 2

How has Matt planned to make the organisation a centralised organisation?

Select one:

a. By transferring the current responsibilities undertaken by store managers to the Head Office

b. By changing the role of store manager to purchase manager

c. By recruiting a supervisor for each store

d. All of the above

Question 3

The runing plan of Chartz has served __________ in the past.

Select one:

a. Inconveniently

b. Successfully

c. Incorrectly

d. All of the above

Question 4

What are the two ways Matt designed the organisation structure of Chatz?

Select one:

a. Each of the stores has its own unique character in terms of store layout, presentation and location

b. The stocks are of different brands of mobile phone and accessories and buy from different suppliers

c. The creation or change of an organization’s structure

d. Both a and b

Question 5

What is ‘span of control’?

Select one:

a. Individual will have to include supervisory duties related to successful management of stocks and the warehouse operations

b. Individual will have manage stocks and the warehouse operations

c. Individual will arrange stocks in the warehouses

d. None of the above

Question 6

What is meant by Organisational Design?

Select one:

a. Creation of roles & processes

b. The creation or change of an organization’s structure

c. Recruitment of new employees

d. Both a and b

Question 7

What is the new strategy planned by Matt for Chatz?

Select one:

a. Appointment of a purchasing manager

b. Change the promotional strategy

c. Change the names of the trade outlets

d. None of the above

Question 8

What is thought to be the responsibility of the purchasing manager?

Select one:

a. Managing the warehouse

b. Managing the stocks

c. Stock purchases for all outlets

d. All of the above

Question 9

What strategy has Matt thought of applying in the decision making process of Chatz?

Select one:

a. Centralised decision making

b. Decentralised decision making

c. Formal decision making

d. None of the above

Question 10

What will Matt have to do with the appointment of purchasing manager?

Select one:

a. Reduce the store managers

b. Widen the ‘span of control’

c. Manage the stocks in the warehouse through proper inventory system

d. None of the above

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MODULE IV : ORGANIZATIONAL DEVELOPMENT INTERVENTIONS

Case study

“The problem:

Linda, the CEO of a global software development company, knew she needed to have a tough conversation with her senior management team about how they were working together – or, more precisely, how they were not working together. Communication on the team had broken down because different team members had varying perspectives on important issues, and were not finding productive ways to address them. Some were angry but silent, while others were fighting openly – and loudly. The team knew they needed to discuss how to communicate across departments, how to make decisions together as a team, and how to manage the hand-off from the Sales department to Engagement Management once a new client had been signed on, a process that had been historically unclear and was getting more and more fraught with confusion over time.

The underlying problem:

We conducted our initial round of diagnostic interviews with each member of the 6-person senior management team. We discovered that there was a long-running history of miscommunications and turnover on the leadership team that contributed to the current difficult team dynamics. In particular, two members of the team represented opposite views from one another on a series of topics facing the team. These two team members, the Chief Marketing Officer and the Chief Technology Officer, had very different perspectives on how certain decisions had come to be made, and how those should now change. Linda, the CEO, was unsure how to manage the quickly deteriorating relationship between the CMO and CTO, but she knew something needed to be done.

The solution:

After the initial interviews, we helped the CMO and the CTO explore the nature of their relationship, their different roles in the company, as well as their different management styles and personalities. We enabled them to listen to one another, and to share their own perspectives, reasoning and interests. While they still disagreed on some topics, they discovered that some of their initial disagreements had been the result of misinterpretations and stylistic communication differences. This helped them give one another the benefit of the doubt more readily than before, and to agree on two major decisions that had previously been deadlocked and were holding up the team. They recommended those decisions to the CEO.

As the relationship between the CMO and CTO improved, we facilitated a series of team-wide meetings. We put the thorny issues facing the team on the table for discussion, one by one. The team discussed its communication and decision-making processes and the hand-off from Sales to Engagement Management: how did these happen at the company today? What worked, and what didn’t? How did this team want these to work going forward?

Results:

Through the team-wide meetings, each of the officers made a series of commitments for actions to take in the next 3 quarters to follow up on the solutions the team had generated. The CEO committed to being more proactive when disagreements on the team arose, and to tracking everyone’s commitments over time.

Over the next few months, the senior management team identified how best to make decisions going forward, how to communicate in good times as well as under stress, and they resolved the Sales/Engagement Management hand-off. As a result, the company’s overall bottom line improved by 25% and the working relationships and satisfaction of the senior management team members increased significantly.

Process results:

Through this experience, each of the team members also learned how to more authentically listen to other people’s viewpoints and how to calmly and more effectively express their own. They learned that sometimes what drives other people’s behavior is not what it seems on the surface. The CMO and CTO in particular learned that people’s viewpoints are impacted as much by the role they play in the organization as by their personality. They used this knowledge to minimize jumping to conclusions before trying to understand the other person’s motivations and perspective.”

Question 1 : How did the senior management team intervention helped the organisation ?

Select one:

a. The management could identify the best way to make decisions going forward

b. The management knew how to communicate in good times as well as under stress

c. The management could resolve the Sales/Engagement Management hand-off

d. All of the above

Question 2

How did this strategy of team intervention help the organisation?

Select one:

a. The working relationships and satisfaction of the senior management team members increased significantly

b. The company’s overall bottom line improved by 25%

c. The company managed to change the roles in the management level

d. Both a and b

Question 3

What is the % of overall improvement?

Select one:

a. 50%

b. 25%

c. 30%

d. 45%

Question 4

What was the cause discovered for disagreement in their discussion on reasoning and perspective sharing?

Select one:

a. Misinterpretations and stylistic communication differences

b. Miscommunication

c. Misinterpretation

d. None of the above

Question 5

What was the first step taken to resolve the misunderstanding between the CMO and CTO?

Select one:

a. Explore the nature of their relationship

b. Different roles in the company

c. Different management styles and personalities

d. All of the above

Question 6

What was the issue found after the diagnostics interview?

Select one:

a. Miscommunications and turnover on the leadership team

b. Team dynamics

c. Team management

d. None of the above

Question 7

What was the next step taken after sorting the relationship between CMO and CTO

Select one:

a. Team meeting with the CEO

b. Team-wide meetings for discussion on thorny issues

c. Change of roles within the team

d. All of the above

Question 8

What was the result of team-wide meeting?

Select one:

a. They were able to make team goals

b. They could decide the targets for the year

c. Each of the officers made a series of commitments for actions to take in the next 3 quarters

d. None of the above

Question 9

What were the leanings for the senior management team from the intervention?

Select one:

a. How to manage team meetings

b. How to more authentically listen to other people’s viewpoints

c. How to calmly and more effectively express their own views

d. Both b and c

Question 10

Who were the team members that represented opposite views from one another on a series of topics facing the team?

Select one:

a. Chief Marketing Officer

b. Chief Technology Officer

c. Chief Finance officer

d. Both a and b

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Module V : Change Management

Case Study

When Asa Griggs Candler founded The Coca-Cola Company in the late 1800s, there was no way he knew his company would one day be valued at upwards of $180 billion. That’s a lot of money for a business that sells soft drinks.

But Coca-Cola didn’t become the powerful force it is today by sheer chance.

An illustration: In the 1980s, Coke’s biggest rival, Pepsi, was aggressively targeting it. This caused Coca-Cola to reevaluate its offerings. Eventually, the company decided to concoct a new, sweeter soda. They called it simply New Coke.

Unfortunately, the public didn’t take too kindly to the new beverage. But Coke’s executives didn’t let the mishap derail their success.

Quickly, management decided to pull New Coke and replace it with the older, established formula. Lo and behold, Coca-Cola Classic was born, and Coke maintained its market dominance.

Question 1 : During which period was Pepsi introduced as a rival to Coke?

Select one:

a. 1880s

b. 1980s

c. 1970s

d. None of the above

Question 2

How did Coca-Cola expand its market?

Select one:

a. By introducing simply New Coke

b. By introducing diversified products

c. By establishing the formula of Lo and behold

d. None of the above

Question 3

Introduction of which product shook the market for Coke?

Select one:

a. Mirinda

b. Limca

c. Pepsi

d. None of the above

Question 4

What change strategy did Coca-Coal adapt to compete with its rival Pepsi?

Select one:

a. Coca-Cola decided to concoct a new sweeter soda called simply New Coke

b. Coca-Cola introduced a substitute similar to Pepsi

c. Coca-Cola started advertising more

d. None of the above

Question 5

What does Coca-Cola primarily sell?

Select one:

a. Sweetened carbonated beverages

b. 500 brands to customers in over 200 countries

c. Sugary Drinks

d. All of the above

Question 6

What was the value of the company in 2016?

Select one:

a. $180 billion

b. $120 billion

c. $ 150 billion

d. $ 130 billion

Question 7

When does Coca-Cola enact on their change strategy?

Select one:

a. If there is a customer demand

b. If there is a drop in sales

c. If there is a drop in sales

d. If there is and market positioning change

Question 8

When the simply New Coke strategy did not work, what was the new change management step taken by the management?

Select one:

a. Pulled the New Coke and replace it with the older

b. Named the older coca-cola as Coca-Cola Classic

c. Established a formula Lo and behold

d. All of the above

Question 9

Which among the following are other products of Coca-Cola?

Select one:

a. DASANI

b. Vitamin water

c. Evian

d. All of the above

Question 10

Who is the founder of Coca-Cola?

Select one:

a. Asa Griggs Candler

b. Caleb Bradham

c. John Pemberton

d. None of the above

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Assignment 2

Case Study

“In the years since it was founded in 1973, the Sacramento Natural Foods Co-op has blossomed into a $15 million business. With 7,000 members/owners, it is the second largest single-store grocery cooperative in the nation in terms of sales and volume. However, when a vocal minority of its democratic membership quashed plans to expand to a second store, the business was at a crossroads. With tensions running high, Cultrera interviewed Eric Douglas of Leading Resources Inc. (LRI). Cultrera was impressed by Douglas’ track record for managing change and gaining consensus within large organizations. “I was looking for someone with really good communication skills,”Cultrera said.

D2K: Establishing Trust as a Foundation for Long-term Growth

Together Douglas and Cultrera mapped out a five-stage process they called “Directions 2000” or “D2K.” The process was carefully crafted to engage as many member-owners as possible in a productive dialogue with management and each other. At each stage of the process, Douglas guided the participants toward an understanding of the complex business issues under consideration while improving their communication and problem-solving skills. Because the issues were complex, and emotions were running high around the issue of expansion, flexibility had to be at the heart of the process itself.

They got into the process themselves and realized that changes needed to be made and the proceeded following the steps below:

Stage 1: Identifying Basic Values

The guiding force behind any effective strategic plan is a clearly articulated set of values and a strong vision. But with member-owners representing a broad demographic spectrum, getting their agreement on a common vision was extremely challenging. Douglas and LRI consultants addressed the challenge by organizing 13 focus groups – 200 people representing specific constituencies such as top shoppers, most active owners and staff – to brainstorm about values and vision.

Stage 2: Casting a Wider Net

Using input from the focus groups, LRI drafted a survey with 50 questions about values and visions and distributed it to all 7,000 Co-op member-owners. LRI’s analysis of the 1,645 returned surveys confirmed that pricing was most important to members. Member-owners were evenly divided on the question of whether to expand to additional locations. A third issue that came into focus from the survey was the 5% member-owner discount: Owners did not want to give it up, even if it meant they paid higher prices in the store.

Stage 3: Moving Beyond Conflict to Strategy

With the survey data in hand, a group of 25 people – comprised of 15 member-owners, seven members of the Board of Directors and three members of management – began working together as the D2K Planning Team under the guidance of LRI consultants.

Within a few weeks, the team had defined the purpose and values – what Douglas calls the “strategic foundation.” The team then faced the question of vision – and the deep conflict over whether or not the Co-op should expand to a second store.

As a first step, Douglas broke the drafting committee into two teams to generate deeper discussion. The resulting dialogue between the teams ultimately led to a draft vision that called for the Co-op to extend its services “to as many people as possible in the communities we serve.”

“This vision was based on a philosophy of inclusion,” said Keat who was a Planning Team member. “The Co-op offers something very special in the quality of its products, its support for local farmers, and its reliance on cooperative economic principles. Our vision was to share that.”

“We tested this vision again and again within the Planning Team,” Douglas said. As they grew more comfortable, team members used a combination of brainstorming exercises, management input and survey feedback to develop seven key goals to achieve the vision. LRI consultants carefully translated their decisions into a draft strategic plan.

Stage 4: Honoring the Process through Feedback

The next step was presenting the draft plan to member-owners. Rather than ask for “thumbs up or thumbs down,” LRI created a survey asking member-owners to rate each component of the plan, as well as the process itself. Member-owners were also invited to attend “town hall” forums to discuss the draft and provide feedback.

The resulting feedback was overwhelmingly positive. More than 95% of those responding said they supported the process. More than 90% said they supported the vision. Even more surprising was that, “Many of the member-owners who approved the plan had only been touched tangentially by the process – through taking the survey or reading about it in the Co-op’s newsletter,” Douglas said. “But because they had been touched, they supported the change.”

Stage 5: From Approval to Action

After unanimously voting to approve the plan, the Board handed it over to management to implement. “It makes my job as general manager a whole lot easier,” Cultrera said. “Now, when we run into pockets of controversy or resistance, it’s very easy to say, ‘Well, thank you. I really appreciate your input. But we heard from a lot of people who said this is what they want us to do.’ I feel like when there are other issues we need to face on a nitty-gritty level, we can call that process up again.”

Roadmap to the Future: From Plan to Action

That opportunity was right around the corner. Fresh from the D2K victory, the Co-op again hired LRI to implement one of the plan’s key initiatives. This was the hot button issue of deciding whether to keep or modify the 5% member-owner discount.

True to the D2K process model, Douglas and Cultrera ensured a high level of member-owner involvement at every stage. They convened a half-dozen “focus groups” to educate member-owners about the impacts of the discount. As with D2K, a Planning Team representing a broad spectrum of viewpoints was selected by LRI to explore alternatives and make a recommendation to the Board.

“At that point, we ran up against the fact that grocery store finance is not easy,” said Douglas. “Yet the team had to learn it in order to make a cogent decision.”

As team members became convinced of the wisdom of changing to the discount structure, some wanted to survey member-owners about the alternatives they were considering. “But a new survey would only confirm what the earlier survey told us,” Douglas said. “Without going through the education process, people would resist giving up the discount.” The team finally agreed to stage a series of forums that would bring member-owners from the Planning Team face to face with fellow member-owners still skeptical about making a change.

It was a critical part of the process that Mendenhall calls “transformative.” “One planning team member really turned the group around just on the force of her own presentation,” Mendenhall said. “As she talked about what she and the group had gone through, you’d start to see heads nod. You could see she felt it from the heart.”

With positive feedback from member-owners, the Board approved changing to an end-of-the-year patronage refund that has worked well at a number of co-ops throughout the country, combined with special pricing programs such as monthly category specials. Some of the original benefits – such as a 10% discount on Owner Appreciation Days – remained in force.

“We’ve learned that there are a variety of ways to involve members in decision-making, besides just sending everything out for a member vote,” said Mendenhall. “Communication and cooperative education is very important.”

Cultrera agrees. “Because we kept the lines of communication open with the ownership throughout this long process, we heard from people we had never heard from before. By the end of it, member-owners clearly honored the process, so they trusted the plan. It’s given the organization a tremendous amount of strength and ability to keep moving forward.”

The Co-op’s annual sales increased to $17 million. Its employees had received an across-the-board pay increase reflecting the plan’s commitment to a quality workplace. Meanwhile, the Co-op had begun looking at new locations for a second store, this time with the clear support of its owners.

Question 1 : According to Menden hall, what is important in decision-making?

Select one:

a. Communication

b. Cooperative Education

c. Talking to the team

d. Both a and b

Question 2

After the planing stage, what is the next step of presenting the draft plan called?

Select one:

a. Honoring the process through feedback

b. Moving beyond conflict to strategy

c. Casting a wider net

d. None of the above

Question 3

What is the new process introduced by Douglas and Cultrera?

Select one:

a. D2K

b. Directions 2000

c. D3K

d. Both a and b

Question 4

What was the step taken to approve the plan?

Select one:

a. Unanimously voting

b. Implementing the plan

c. Prepared the employee for new projects

d. None of the above

Question 5

Which among the following was the first step taken while incorporating the new process?

Select one:

a. Casting a Wider Net

b. Identifying Basic Values

c. Moving Beyond Conflict to Strategy

d. None of the above

Question 6

While identifying basic values how did Douglas and LRI address the challenges?

Select one:

a. By guiding the employees at every step

b. By organizing 13 focus groups – 200 people representing specific constituencies

c. By managing the employees

d. All of the above

Question 7

Who worked towards the planning of D2K after the survey?

Select one:

a. 15 members owners

b. 7 members of the Board of Directors

c. 3 members of management

d. All of the above

Question 8

Why did Douglas break the drafting committee into two teams?

Select one:

a. To generate deeper discussion

b. To reduce people in one forum

c. To manage employee problems

d. None of the above

Question 9

Why did Douglas guide the participants at every stage?

Select one:

a. Because the issues were complex

b. Because emotions were running high around the issue of expansion

c. Because flexibility had to be at the heart of the process itself

d. All of the above

Question 10

Why was the new process crafted?

Select one:

a. To engage as many member-owners as possible in a productive dialogue with management and each other

b. To improve employees communication skills

c. To manage employee problems

d. None of the above

10 on 10

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Hospital Organization (EDL 339)

Hospital Organization (EDL 339)

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MODULE I : HEALTHCARE ORGANIZATIONS IN INDIA

While tourism is a major source of income for any country, medical tourism is a comparatively new trend. In recent times, medical tourism has become a way for several third-world countries with high-end medical facilities to provide medical services to patients from across the world. These services are usually made available at a less than 60% cost than at developed countries like the USA. India, with its huge pool of medical graduates, and the availability of world-class medical facilities in several hospitals in its important cities, is fast emerging as the destination of choice for medical tourism. The Indian Government has made several policies to encourage medical tourism, bringing in special processing of medical visas and providing hospital with incentives for taking in international patients. Taking advantage of this situation, several corporate hospitals in India have set up entire departments to deal with international patients, and provide the not only with the required treatment, but also pre and post medical care support services including visa processing, pickup from the airport, providing accommodation support, and end-to-end medical care including counseling and rehabilitation support. Several reputed hospitals have acquired in international Joint Commission International (JCI) certification which assures foreign patients of quality of the medical services. The Apollo Group of Hospitals is one of the pioneers in the area of medical tourism. The first hospital in India to receive the JCI accreditation, the Apollo Group now has six branches that have the JCI accreditation. The group has a special International Wing that takes care of medical tourists. The services provided by the Apollo hospitals to patients coming in from other nations include tele-consultation with experts for diagnosis and possible cures, video-conferences with patients where required, help in providing visa, pick up from the airport, support in providing suitable accommodation to the patient and their attendants, medical facilities and services, nursing, and counseling and rehabilitation services. They also have translators available, who can help them communicate with the doctors and attendants in the hospital. A counselor is made available, who can provide orientation to the patients and guide and help them whenever required. The Apollo group of hospitals treats more than 50000 foreign patients from 55 countries annually. Apollo Chennai also runs a Wellness Center on its premises, which offers holistic healing services such as Ayurveda, yoga, aromatherapy, meditation, pranic healing and music therapy to its international patients, as part of a special recovery package. Medical tourism in India is estimated to grow to USD 9 billion by 2020. With the high-end services provided to its international patients, Apollo is set to play a very important role in cornering a sizeable portion of the business.

Question 1: “When a person travels to a different country for medical treatment, it is called:”

Select one:

a. Tourism

b. Sight-seeing

c. Medical tourism

d. Insurance planning

Question 2

Popular treatments opted by medical tourists include:

Select one:

a. “Heart, bone and hip replacement”

b. Cosmetic surgeries

c. Skin grafting and oncology

d. All of the above

Question 3

The advantages of coming to India for medical treatment include:

Select one:

a. “Healthcare personnel well-versed in English, leading to reduced language barriers”

b. Growing compliance with international quality standards

c. Both of the above

d. None of the above

Question 4

The Apollo group is a pioneer in the area of medical tourism. Which of the following statements supports the given statement?

Select one:

a. The Apollo group of hospitals treats several international patients regularly.

b. Apollo group was the first in India to receive JCI accreditation

c. Apollo group provdes teleconsultation to patients

d. All of the above

Question 5

What aspects of treatment are covered under medical tourism packages?

Select one:

a. Pre-screening of the patients medical condition

b. Teleconference and/or video conference for consultation between patient and the specialist doctor

c. “Actual medical treatment, nursing, counselling and rehabilitation”

d. All of the above

Question 6

What steps is the Indian government taking to promote medical tourism?

Select one:

a. Providing easy ways to process visas under the category of medical tourism

b. Providing incentives to hospitals treating international patients

c. Both of the above

d. None of the above

Question 7

Why do people prefer to travel to other countries for medical treatment?

Select one:

a. The required treatment is not available in their home country

b. The available treatment is very expensive in their own coountry

c. There is a long waiting time for the start of the medical procedure required

d. All of the above

Question 8

Why does the government encourage medical tourism?

Select one:

a. It promotes the doctors and health facilities of the country throuoghout the world

b. Medical tourism brings in lots of revenues for the country

c. It helps the country improve its infrastructure

d. For the goodwill it creates

Question 9

Why is India a preferred destination for medical tourists?

Select one:

a. India has high-end medical equipment and skilled doctors available

b. The cost of medical treatments in India is much cheaper compared to the USA or UK

c. “India also provides for alternate medical treatments like Yoga, Ayurveda and pranic healing”

d. All of the above

Question 10

Why is JCI accreditation important?

Select one:

a. It is an international accreditation that assures the quality of services provided by the hospital

b. It looks good for the hospital to show international accreditation

c. It is not important. It is just an additional certificate

d. All of the above

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MODULE II : HOSPITALS AS ORGANIZATIONS

Key performance indicator (KPI) is defined as a quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objectives for performance.

The standards for any industry do not remain the same over time. As times change and demands rise, there is a subsequent rise in the healthcare needs. Due to this, the standards of patient care are pushed to a new high. KPIs in a hospital help track operational effectiveness and help understand how the hospital is performing. KPIs aid in assessing operations and setting goals within a hospital.

Some key performance indicators for a hospital are:

Staff-to-Patient Ratio: A deficit in staff directly affects the quality of patient care. A good ratio could help in better handling of patients.

Patient Wait Time: Longer wait times mean lower patient satisfaction scores. Minimizing the wait time makes patients feel well-attended to.

Average Length of Stay: Lengthy hospital stays could be due to administrative oversight or post-operative complications. A hospital should ensure that the stay of the patient is minimum besides making sure that they are not being prematurely discharged.

Occupancy: This shows the average number of patient rooms in use at one time, giving an idea of how small or how big the facility is compared to its actual demand.

Claim Processing: The time and amount being spent on processing a claim and the rate of claim denial should be considered and kept as low as possible.

Medication Errors: The number of errors in treatment, medication, dosage, etc. is to be well documented to measure the flaws in treatment procedures and their incidence.

Patient Follow-Up: This measures the follow-up done to know the patient’s improvements after his/her visit to the facility.

Trainings: This helps track the amount of training provided in each department.

Patient Satisfaction: Various tools like surveys, feedbacks, etc. are used to understand the overall patient satisfaction as it can serve as a great marketing tool for a hospital.

Media Mentions: Keeps track of how often the hospital is mentioned in the media and also whether the mention is positive or negative.

While these are the mainstream KPIs that could be used by hospitals, there are other KPIs which can be considered trying. These include – number of educational programs, number of preterm births, number of educational programs, patient confidentiality, number of partnerships with advocacy groups, childhood immunizations, etc.

All KPIs should be subject to the SMART criteria, i.e., the KPIs should have a Specific purpose, have a Measurable value, be Assignable, Realistic and have outcomes seen within a predefined Time period.

KPIs should be aimed at improving efficiency of the hospital and maintaining quality of patient care and operations. They play an important role in the performance measurement process by helping to identify and appropriately measure levels of service performance. The National Standards for Safer Better Healthcare recognizes the use of KPIs as part of the process to systematically monitor, evaluate and continuously improve the quality of care.

Question 1: KPIs should to subject to _______ criteria.

Select one:

a. SMART

b. NSSBH

c. NABI

d. HIMT

Question 2

Longer patient-wait time results in _______.

Select one:

a. Improved hospital performance

b. Reduced patient satisfaction

c. Better marketing

d. Better patient care

Question 3

Media mentions should be evaluated for what reason?

Select one:

a. To publicize on social media

b. To increase the count of mentions

c. To add them to the hospital bulletin for everyone to see

d. To keep track of what positives and negatives are being mentioned

Question 4

The KPI for claim processing should help in

Select one:

a. Increasing rate of claim denial

b. Reduce time and amount spent on claim processing

c. Not giving the discharge summary on patient s exit

d. Increase the bill amount of the patient

Question 5

What does a deficit in patient care result in?

Select one:

a. Increased hospital performance

b. Decreased pressure on staff on board

c. Increased patient care

d. Decreased patient care

Question 6

What does KPI stand for?

Select one:

a. Knowledge Process Interface

b. Key Performance Indicators

c. Knowledge Protocol Indicators

d. Knowledge Process Investigation

Question 7

What is to be done to the medication errors that take place within the hospital?

Select one:

a. Document them all

b. Oversee them

c. Repeat them

d. Blame the patient

Question 8

What should ideally be done to know the patient s improvements after his/her visit to the facility?

Select one:

a. Follow-up by hospital staff

b. Wait for patient s re-visit

c. Estimate the well-being

d. None of the above

Question 9

What should KPIs be aimed at?

Select one:

a. Reducing quality of healthcare

b. Having a deficit in staff

c. Improving efficiency

d. Increasing patient stay at the hospital

Question 10

Which one of the following recognizes KPI use to improve the quality of care?

Select one:

a. National Standards for KPI in Hospitals

b. National Performance Monitor Board

c. National Standards for Safer Better Healthcare

d. Quality Control Board

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MODULE III: ORGANIZATIONAL DESIGN

A network organization is best defined as an organization formed by intersecting and cross-cutting linkages between several separate organizations, usually connected on a project basis. One of the organizational design is networks, and it can be found in many areas of healthcare. In a study by A. Willem and P. Gemmel, they focused on two governance aspects of health care networks, i.e., governance structure (structures for collaboration) and governance mechanisms (coordination in networks), and attempt was made to search answers to questions such as:

• Which kinds of governance exist in health care networks?

• Which kind of governance is assumed to be preferable for health care networks?

To study if the three kinds of governance mechanisms can be found together or independently, a case study was done. It also focused on whether a governance structure is associated with a particular governance mechanism, and lastly whether there are effective configurations of governance structure, governance mechanisms, and network attributes. Three types of governance mechanisms are markets, hierarchy, and relational governance, and the relational model is typically associated with networks.

Relational governance refers to synchronization based on trust, reciprocity, and universal norms and values that are rooted in the relationships between the network partners. The sample consisted of 22 healthcare networks in Flanders. Most networks were of psychiatric care, disabled, the elderly or those in palliative care.

Based on the data, six out of the 22 cases were classified as effective. Qualitative data revealed that goals differ, even within a similar category of care. For instance, “Psychiatric care networks 1 and 2” were both perceived as effective, but the first network’s main objective was improving care while the second network’s was developing additional care. “Psychiatric care network 2” did not adequately reach its goals, although it was still perceived as effective. Objectives in the networks ranged from cooperation and patient referral to integrated care and establishing new services.

A balance in governance mechanisms might be preferable. Hierarchical governance mechanisms may be important for the success of healthcare networks if combined with relational and contractual governance mechanisms.

Networks can be perceived as competent despite lack of trust, or inflexibility; but some characteristics, such as low levels of legitimacy or relational governance, seem to be occurring more often among the less effective networks

In the most effective networks balanced combination of relational, contractual, and hierarchical governance was observed, but such balance was absent in seven out of 16 cases of less effective networks. It was concluded that in a complex healthcare environment, network effectiveness could be increased by a balanced combination of governance mechanisms.

Question 1: “In a complex healthcare environment, network effectiveness could be increased by: “

Select one:

a. Markets

b. Balanced combination of governance mechanisms

c. Hierarchy

d. Relational governance

Question 2

“In hospitals, which type of departmentation is common?”

Select one:

a. By Function

b. By Committee

c. By Geographical location

d. All of the above

Question 3

“Which organizational structure ensures improved coordination between the departments, flexibility and responsiveness to customer requirements?”

Select one:

a. Matrix structure

b. Functional structure

c. Divisional structure

d. None of the Above

Question 4

Relational governance refers to synchronization based on:

Select one:

a. Trust

b. Reciprocity

c. Universal norms and values

d. All of the above

Question 5

What are the basic organization designs?

Select one:

a. Bureaucratic model

b. Team model

c. Matrix model

d. All of the above

Question 6

What are the disadvantages of bureaucracy?

Select one:

a. Maladaptive

b. Rule-bound

c. Overly cautious and unproductive

d. All of the above

Question 7

What are the governance aspects of health care networks?

Select one:

a. Governance structure (structures for collaboration)

b. Governance mechanisms (coordination in networks)

c. Both of the Above

d. None of the Above

Question 8

What are the types of governance mechanisms?

Select one:

a. Markets

b. Hierarchy

c. Relational governance

d. All of the above

Question 9

What variables should be taken into consideration when planning organizational design?

Select one:

a. Degree of Environmental Stability

b. Control

c. Nature of work

d. All of the above

Question 10

Which structure minimizes or eliminates organizational boundaries?

Select one:

a. Boundaryless Organisations

b. Network Organisations

c. Both A and B

d. None of the Above

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MODULE IV : HOSPITALS AND ORGANIZATIONAL STRUCTURE

Horizontal Integration:  Apollo Health had acquired Nova Specialty Hospitals and relaunched it as Apollo Spectra in 2015. Nova Specialty had a chain of 11 short-stay surgery centers spread across eight cities, and post-acquisition it added 45 modular OTs, 350 patient beds were providing inpatient and outpatient facilities. The combined turnover was estimated to be around INR 115 – 125 crore for the year ending March 2015. Apollo also introduced preventive health checks and sugar clinics in the new centers. The exclusive surgery center model minimizes hospital-acquired infections resulting in the elimination of unnecessary hospitalization and thereby leading to remarkable medical outcomes.Vertical Integration:According to Mckinsey and Company, Vertical integration is a risky strategy and is complex, expensive, and hard to reverse. It can be profitable and fruitful only if done after a careful and detailed analysis. Example of a transformative merger is the USD 69 billion deal between pharmacy giant CVS Health and insurer Aetna. CVS has 9,700 retail pharmacies and 1,100 walk-in clinics, and generated USD 177.5 billion in net revenue in 2016, but its most significant profit driver is its pharmacy benefits manager (PBM) enterprise which is a middleman between pharmaceutical manufacturers and dispensers like pharmacies.  After its purchase of Aetna, the third largest health plan in the US, aims to reduce medicine prices and push for the most effective treatment choices, to achieve more competitive insurance premiums. By joining forces with CVS, Aetna can take advantage of its roughly 10,000 clinics to have a greater reach to people, while the gain of Aetna’s 22 million members would be a significant boon to CVS’ Minute Clinics. CVS/Aetna merger will also discourage new ventures coming from Amazon or other players. About 97 percent of Aetna’s shareholders and 98 percent of CVS shareholders are in favor of the merger, but the final approval is still on hold as U.S. Department of Justice wants CVS Health and Aetna to each provide detailed information.Apollo Hospitals entered in a retail pharmacy business that caters to the wellness market, along with the therapeutic medicine supplies to the patient population, also including skin care, cosmetics, beauty and other healthcare related products. Presently 2400 plus Apollo pharmacies function and Apollo is aiming at 2,000-plus pharmacy outlets in the next three to four years.

Question 1: A horizontal service-line leadership after a horizontal Integration

Select one:

a. help to avoid capital and other resource duplication

b. Improves market capture

c. promote performance improvements and achieve efficiencies

d. All of the above

Question 2

A hospital merging with a retail pharmacy is the example of:

Select one:

a. Horizontal Integration

b. Vertical Integration

c. Neither of A or B

d. Both A and B

Question 3

Hospital tie up with an Insurance company is an example of:

Select one:

a. Horizontal Integration

b. Vertical Integration

c. Neither of A or B

d. Both A and B

Question 4

Merger between CVS and Aetna is an example of

Select one:

a. Horizontal Integration

b. Vertical Integration

c. Neither of A or B

d. Both A and B

Question 5

Top companies in Health Care and Market Research — Navicure and ZirMed are merging. What type of integration is this?

Select one:

a. Horizontal Integration

b. Vertical Integration

c. Neither of A or B

d. Both A and B

Question 6

Vertical integration

Select one:

a. is easy to implement

b. is always profitable

c. Can be done without risk analysis

d. “is a risky strategy which is complex, expensive, and hard to reverse”

Question 7

What is important aspect to look into during a horizontal integration plan?

Select one:

a. Staff availability

b. Governance Structure

c. Revenue Generation

d. Location

Question 8

What is required before any merger or acquisition?

Select one:

a. Revenue Generation

b. Adequate analysis of risks

c. Personnnel

d. Stakeholders Interest

Question 9

What is the most valuable tool for achieving coordination in hospitals

Select one:

a. Structure

b. Planning

c. Personnel

d. Expertise

Question 10

Which of these is an example of horizontal Integration?

Select one:

a. A hospital merging with another hospital providing similar or more services

b. A hospital merging with a retail pharmacy

c. A Hospital opening branches in different cities

d. A hospital opening centers in different countries

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MODULE V : ORGANIZATIONAL STRUCTURE AND HOSPITAL PERFORMANCE

Various models of organizational structure exist. A matrix model is one where employees are answerable to two management structures: one, the project manager, and other, the functional manager controlling specific activities like manufacturing, finance, or marketing. Some advantages of this model are:

•         Reduction in management layers

•         Break down of traditional department barriers

•         Clarity in tasks and goals

•         Improved coordination between the departments

•         Efficient use of resources

•         Flexibility and responsiveness to customer requirements

•         Quick decision making

However, this model is not easy to implement and can generate conflicts. 

John Hunter Hospital was commissioned in January 1991 in Newcastle. Stimulated by competition and changing health environment,  the hospital was planned on the model of decentralization of allied health services, mainly physiotherapy department.  To cope with the external pressures and fulfill external demand, Matrix Management Model (MMM) was implemented from the inception.  Rather than being employed by a physiotherapy department, physiotherapists were assigned to one of six patient care divisions (PCDs):

1.       pediatrics

2.       obstetrics and gynecology

3.       medicine

4.       surgery

5.       anesthesia and intensive care, and

6.       emergency medicine

Physiotherapists and other allied health staff had dual lines of reporting, one to the chairperson of the respective PCDs and other to the director of physiotherapy.

Initial benefits were enhanced team approach to patient care, increased staff satisfaction in clinical matters and improved continuity of care. But the hospital started facing issues, especially in its recruitment process.  Recruitment to a position spanning two PCDs required permission from the chairman, the business managers in both PCDs and the general manager. This was a complex and time-consuming procedure, leading to recruitment delays.  The problem intensified due to lack of interest by the involved administrators, and lack of recognition of the importance of the position.  Missing clarity on role definition among managers of PCDs and physiotherapy and a lack of recruitment experience added to the issues.

Another concern was staff development, especially for the physiotherapists rotating between PCDs. PCDs were not ready to bear the cost of courses or conferences, especially if it was considered irrelevant to that PCD. If the physiotherapist was permanently to the particular PCD, it would take up the costs, but this was creating jealousy among staff as all PCDs were not able to afford training costs. 

The complexity of service planning, quality improvement, and human resource management, the lack of authority over the budget for both salaries and wages and goods and services were some of the problems faced by the hospital.  The lack of authority over the goods and services budget resulted in inefficiencies in ordering, inability to obtain required goods and didn’t allow the hospital to benefit from economies of scale. The hospital was also finding it difficult to hire a permanent Head of the Department.

In February 1995, John Hunter Hospital undertook a strategic planning process.  A new division – Clinical Support Services was setup, with centralization various services into clinical departments based on professional lines of responsibility.  Post restructuring, the hospital saw:

•         Improved efficiency in its recruitment process

•         Savings and efficient purchases due to budgetary control

•         Resourceful use of time as less time was consumed by cumbersome administrative processes

•         More time was spent on professional issues and clinical care

Question 1: A manager s perspective on change concentrates on

Select one:

a. Quality

b. Return on Investements

c. Employee Satisfaction

d. None of the Above

Question 2

After how many years of inception the hospital decided to restructure

Select one:

a. 4

b. 3

c. 10

d. 5

Question 3

Individual change management focuses on

Select one:

a. Employee Satisfaction

b. Return on Investements

c. Quality

d. None of the Above

Question 4

John Hunter Hospital was following which organizatinal structre at inception?

Select one:

a. Decentralized

b. Matrix

c. Both of the Above

d. Centralized

Question 5

Possible outcomes of change could be

Select one:

a. Employees resist the change

b. Valued personnel leave the organization

c. Productivity declines

d. All of the Above

Question 6

Restructuring may be done to

Select one:

a. Improve care quality

b. Increase patient turnover

c. Expand services

d. All of the Above

Question 7

The healthcare industry is currently undergoing mass-scale changes everywhere primarily because of:

Select one:

a. Rising costs of healthcare

b. Disparity in healthcare access

c. Both of the Above

d. None of the Above

Question 8

The success of the change depends on

Select one:

a. Employee Satisfaction

b. Improved Quality

c. Increased Rvenues

d. All of the Above

Question 9

This structure was in favour of physiotherapists

Select one:

a. Agree

b. Disagree

c. Partially

d. Mostly

Question 10

What were the challenges faced by the hospital

Select one:

a. Recruitment Delay

b. Ambiguity in Roles

c. Dissatisfied physiotherapists

d. All of the Above

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ASSIGNMENT 2

The North East Ambulance Service (NEAS), a Foundation Trust of the UK’s National Health Service (NHS), received NHS Foundation Trust status in 2011. Foundation Trusts were created to allow decisions to be made by local organizations and communities, free from central government control and able to decide how best to spend the Trust’s income, based on the needs of the local community. The NEAS delivers front-line services from 61 stations across 3,230 square miles. The NEAS serves a population of over 2.7 million people offering emergency response services and a patient transport service, which provides pre-planned non-emergency transport for patients travelling for outpatient appointments in the region. A hazardous area response team is trained to deal with major incidents and delivers specialist response services. The NEAS responds to over 360,000 emergency and urgent incidents each year. With over 2,000 staff, 500 vehicles, and nearly 10 million miles travelled per year, the NEAS is an essential service in UK’s North East.

In 2015, NEAS found itself facing several challenges that were impacting staff engagement.

The key challenges were 1) a 24/7 working pattern, resulting in a 168-hour week which conflicted with the day time working hours of managers, 2) less time given to team meetings as staff were not based at a dedicated site, 3) communicating with staff was challenging because they were constantly mobile, and 4) the high demand for services left staff with little time for becoming involved in staff engagement activities.

To address these issues the trust initiated several improvement measures to bring about a positive change. The range of initiatives included restructuring, changes to the management, new strategic partnerships, and a review of their values and internal culture.

To begin with, the NEAS redefined its vision and values. The mission and vision of the NEAS were articulated based on interviews with stakeholders and on staff feedback.

The NEAS also took an active decision to make improvements to staff engagement in other ways too, one of which was by restructuring its operational management teams. The trust introduced frontline managers to support ambulance crews. When ambulance crews are exposed to distressing and stressful situations, the frontline manager is available to provide guidance and relevant support services, and to offer counselling. The crew does no longer have to process and deal with difficult experiences independently.

Alongside the restructuring, the NEAS also reviewed its organizational culture. The findings identified several issues that needed to be addressed. These included a greater focus on employee welfare, improvements in policy and procedures to embed quality care and safety deeper into the culture. The staff was involved in helping to shape the new vision, mission and values. Team-building activities were improved and a leadership program focusing on building a compassionate culture was initiated. Thanks to the numerous engagement interventions, scores yielded by the annual staff survey and the staff friends and family test (FFT) improved.

Question 1: “As seen in the NEAS case, restructuring may affect:”

Select one:

a. Staff engagement

b. Staff recruitment

c. Working patterns

d. None of the above

Question 2

“Before the restructuring, the challenges facing the ambulance crew included: “

Select one:

a. Frequent team meetings

b. Less demand for services

c. A 24/7 working pattern

d. All the above

Question 3

“In a restructuring, articulating or redefining the mission and vision is the exclusive responsibility of:”

Select one:

a. Senior Manager

b. Staff

c. Operational Management Team

d. None of the above

Question 4

“In the NEAS context, which of the following can be considered a change management initiative?”

Select one:

a. Introduction of a leadership program

b. Team-building activities

c. Annual staff surveys

d. All the above

Question 5

Frontline managers have the ultimate responsibility for ensuring:

Select one:

a. The right number of ambulances are available

b. Investigating and dealing with complaints

c. The well-being of ambulance crew

d. None of the above

Question 6

The clinical care manager (CCM) role was created to:

Select one:

a. Offer counselling in distressing situations

b. To go on duty with the staff and have conversations about work

c. Offer support and guidance in stressful situation

d. None of the above

Question 7

The objective of the NEAS restructuring was:

Select one:

a. To add resources

b. To improve front-line services

c. To reduce the time spent by staff on the road

d. To enhance staff engagement

Question 8

The operational management team was restructured by:

Select one:

a. Adding new resources

b. Downsizing

c. Adding new station officers

d. Creating a new role

Question 9

Which of the following activities may be used for an effective restructuring?

Select one:

a. Proactive change management measures

b. Strategic partnerships

c. Changes in the management structure

d. Articulating a mission and vision statement

Question 10

Which of the following statements is true? Restructuring is:

Select one:

a. A strategy for dealing with organizational troubles in a real-life environment.

b. The obvious impact of troubles in an organization.

c. A reaction to increased workloads.

d. A strategy to enhance management s decision-making skills.

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Hospital Planning (EDL 341)

Hospital Planning (EDL 341)

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Module I : Guiding Principles

Case Study

SIMUL8 Studio is a simulation tool and a visual and interactive online platform, which imitates the processes of an existing or proposed system. Simulation can accurately represent the real processes by adding timings and rules around the tasks, resources, and constraints.

By using a virtual representation to test the impact of process changes and ‘what if’ scenarios, simulation helps get an overview of impact of change on the whole system. It has enabled organizations to improve processes rapidly, increase efficiency and reduce costs.

Benefits of Simulation

• It is less expensive than real life experimentation

• Possible to test diverse ideas under the same situations

• Establishes long-term impact of process changes

• Simulation provides impartial insight to assist process improvement

• Determines the potential results of random events

• Simulation allows thinking about every aspect of a process and this rethinking can sometimes result in improved operations

Isle of Wight NHS Trust, an integrated acute community mental health and ambulance health care provider in England, used BED. P.A.C. simulation software for bed management. Their primary objective was to deviate from the spreadsheets planning and be able to handle the variation that exists in reality. Answers for some other questions were also needed: effect of winter pressures on inpatient beds, the effect on inpatient bed utilization of reducing delayed discharge patients, the downstream capacity constraint of community nursing beds, how to use short-term predictions to show where inpatient bed capacity problems may arise over the next seven days.

Arrivals of elective and emergency patients across each specialty were analyzed and these forecasts along with 12 months of historical data of arrivals, length of stay and discharge times were uploaded to the software. The BED.P.A.C. automatically created daily patient arrival patterns and profiles of the typical length of stay depending on time and day of arrival and specialty. The results illustrated hourly capacity for emergency and elective beds separately, and also where patients would need to be shifted to avoid waiting times.

Bed.P.A.C.’s results were shared with the clinical staff and discussed to investigate “what if” scenarios. The detailed and highly sophisticated results increased enthusiasm of the clinical staff and encouraged effective and productive discussions towards improvement. The confidence intervals provided for each scenario were critical in showing the level of risk with the bed planning choices and the vulnerability to fluctuations in demand.

The simulation showed that the Isle of Wight required more beds to meet the present demand; these beds could be the hospital beds, or community or patients’ bed at home with appropriate support. BED. P.A.C. helped achieve the right balance between acute and community care. Other benefits included increased bed capacity for medical patients by approximately 17%, increase in community bed capacity through redesign of existing surplus capacity and increase in home-care packages

The Isle of Wight chose Bed.P.A.C. over alternative bed planning and management tools because it was rapid, engaging, as the ‘what if’ scenarios were visually compelling and easily comprehended by the clinical staff, and enhanced level of detail and accuracy. The Isle of Wight now has a full suite of detailed system performance metrics with confidence intervals provided for every result giving confidence in their analysis and ensuring buy-in from clinical staff. Also, it means they have substantial evidence to generate and have the difficult conversations that must happen to produce the right plan for optimal hospital performance.

Question 1: “The costs of permissions/approvals, architectural design falls under the category of “

Select one:

a. Hard costs

b. Soft Costs

c. Financing Costs

d. Other Costs

Question 2

A successful hospital is based on

Select one:

a. good planning

b. good design and construction

c. good administration

d. All of the Above

Question 3

Results of the simulation

Select one:

a. lead to productive solutions

b. motivated clinical staff

c. reduced uncertainity

d. All of the Above

Question 4

SIMUL8 has enabled organizations to:

Select one:

a. improve processes

b. increase efficiency

c. reduce costs

d. All of the Above

Question 5

Simulation can accurately represent the real processes by adding timings and rules around ___________.

Select one:

a. tasks

b. resources

c. constraints

d. All of the Above

Question 6

the BED.P.A.C. was used to meet what challenges?

Select one:

a. Bed Capacity Planning

b. Inadequate Staff

c. Increased Costs

d. None of the Above

Question 7

he first phase in planning for a hospital invovles

Select one:

a. Needs Assesment

b. Defining a plan

c. Both A and B

d. None of the Above

Question 8

What are the pressures of change

Select one:

a. To reduce cost and increase efficiency

b. extend care to remote areas

c. provide a Multi-disciplinary Approach

d. All of the Above

Question 9

What is SIMUL8?

Select one:

a. Simulation tool

b. Software program

c. Excel datasheeet

d. None of the Above

Question 10

Which program was used by the Isle of Wight NHS Trust?

Select one:

a. SIMUL8 Professional

b. BED. P.A.C.

c. Scenario Generator

d. None of the Above

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MODULE II

The global increase in demand for healthcare services raises the+B3:B8 need to minimize expenditures on “non-core” activities like maintenance and operations with a subsequent rise in the demand for high-level built-facilities.  The increased competitiveness in the healthcare business puts considerable pressure on hospitals to enhance facility management. For efficient facility management, proper facility planning is the key.  Over the last four decades, facilities management has witnessed significant development, owing to five global trends –

1.       Increased construction costs

2.       Studying effects of space on productivity

3.       Increased performance requirements

4.       Contemporary bureaucratic and statutory restrictions

5.       Recognition that performance of facilities is highly proportional to maintenance

A facilities planning committee in a hospital should be responsible for developing strategic facilities plan to determine the best occupancy options while meeting the department’s changing needs. Financial impact is a major consideration for any facility planning. The impact of facility decisions, financial analysis and cost effectiveness should be long-term tasks for any health care set up.

Facility planning involves various tools of planning for successful outcomes. The three key outputs of facility planning involve strategic facility plan, master plan and annual facility plan. Of all, the strategic facility planning (SPF) plays a key role as it aims at developing a flexible and implementable plan based on the specific and unique considerations of the individual business. The four main aspects of SPF include understanding, analyzing, planning and acting. The SPF identifies the type, quantity and location of spaces required to fully support the organization’s business initiatives. The master plan provides a framework for the physical environments that incorporate the buildings. The master plan develops the natural conditions and constructed infrastructure and systems at the functional, aesthetic and temporal levels. The annual facility plan deals with developing a comprehensive plan each year to address the new or changing priorities and focus on departmental initiatives.

Building Performance Indicator (BPI) is also a key component of facility planning. This aims to compute the actual physical performance score for each system in a given building and the entire facility. This provides a physical performance indicator to be measured on a 100-point rating scale. This procedure acts as a physical assessment mechanism that monitors the building, its systems and components.

SWOT Analysis is another planning tool used to strategically evaluate the strengths, weaknesses, opportunities and threats in the facility. Strategic Creative Analysis (SCAN) is another process for strategic planning, decision making and analyzing case studies.

Besides having the right tools for facility planning, setting up the plan in the right manner plays a key role in paving the way for successful planning outcomes. Some major steps in planning are:

•         Document the primary objectives to be addressed in the SFP

•         Evaluate sites, zoning, costs, labor, competition and all factors critical for success

•         Conduct financial and risk analysis to focus on finding the maximum value

•         Develop alternatives with recommendations and priorities

•         Develop a process for marketing the recommended SFP to gain management approval

•         Obtain financial and other approvals needed to launch the action phase

Question 1: “In the case study, maintenance and operations are termed as _______ activities. “

Select one:

a. Non-core

b. Key

c. Crucial

d. Significant

Question 2

“____ acts as a physical assessment mechanism that monitors the building, its systems and components.”

Select one:

a. Strategic Facility Planning

b. Annual facility planning indicator

c. Core plan

d. Building Performance Indicator

Question 3

BPI in the case study stands for?

Select one:

a. Bill Price Index

b. Building Performance Indicator

c. Blood Pressure Increase

d. British Phonographic Industry

Question 4

How many global trends have influenced facilities management over the last four decades?

Select one:

a. 6

b. 5

c. 4

d. 10

Question 5

What does SCAN stand for?

Select one:

a. Simplified Computing Analysis Network

b. Strategic Creative Analysis

c. Sample Copy for Assessment and Negotiation

d. Sample for Clinical Assessment and Negotiation

Question 6

What does SWOT stand for?

Select one:

a. Strategic Wellbeing Of Towers

b. Seller s Write-Off Trust

c. “Strengths, Weaknesses, Opportunities and Threats”

d. Source Worked Organic Traffic

Question 7

Which of the following aims at developing a flexible and implementable plan based on the specific and unique considerations of the individual business?

Select one:

a. Strategic facility plan

b. Master plan

c. Annual facility plan

d. Core plan

Question 8

Which of the following aims to compute the actual physical performance score for each system?

Select one:

a. SWOT

b. SCAN

c. KPI

d. BPI

Question 9

Which of the following is NOT a part of the four aspects of strategic facility planning?

Select one:

a. Understanding

b. Analyzing

c. Constructing

d. Planning

Question 10

Which of these provides a framework for the physical environments that incorporate the buildings?

Select one:

a. Strategic Facility Planning

b. Master Plan

c. Annual facility plan

d. Core plan

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MODULE III: OPERATIONAL PLANNING

Besides having great doctors, it is the equipment in any hospital that helps provide high-quality patient care. The advancements in technology have paved a way to simplify complex procedures and minimize the associated risks. Procuring high-quality equipment and maintaining them within the facility is often a costly affair. Yet, proper planning can help minimize the cost and improve operational efficiency, while lack of planning could result not only in wastage of money, but also lower standards of patient care. Many healthcare leaders across the globe are searching for innovative care delivery models that ensure lowering of costs with a concurrent improvement in quality.With an increase in the incidence of heart disease in Indian lifestyle, many patients refrain from taking appropriate treatment owing to the costs associated with it. According to a study done in the early 2000s, around 2.4 million Indians required a heart surgery annually, but only 60,000 received it. Hospitals today should be focusing on minimizing costs and optimizing productivity. An example of one such hospital is Narayana Health, which combines innovative technology and a highly efficient delivery system across its 31 tertiary hospitals in 19 cities.With a tight focus on efficiency, Narayana Health has achieved savings through the smart use of equipment and telemedicine, connecting around 800 centers to be the world’s largest telemedicine network. Using technology with proper planning has paved the way for this system to treat more than 53,000 patients through telemedicine. In its new spread to the Caribbean, hospital leaders at Narayana Health are trying the use of solar power and importing of supplies from India to run their operations cost-effectively. With such measures being implemented, this health system has performed 12 percent of all cardiac surgeries in India, resulting in patient outcomes that rival those in the United States. Technology helps surgeons quickly develop expertise and work towards better patient outcomes. According to a report by Narayana Health, there have a 1.4 percent mortality rate in the first 30 days of coronary artery bypass graft surgery compared to 1.9 percent in the US.Going by its technology and equipment planning, Narayana Health has added the following as part of its new equipment during 2016-17:

• Da Vinci Surgical Robotic System at MSMC Hospital, Bengaluru. It is used to facilitate complex surgeries, using minimally invasive approach.

• Surgical Operating Microscope with vascular and tumor fluorescence, Model Pentero 900, Make Carl Zeiss for SRCCNH Hospital, Mumbai.

• Low radiation biplane Cath lab system at SRCC Hospital, Mumbai. This will greatly help safety and efficiency of pediatric catheterization.

• A new 128 Slice CT scanner at Jaipur Hospital and SRCC Mumbai each to upgrade the diagnostic services to the next level.

• Installed digital LINAC Accelerator at NSH Howrah to treat cancer patients with external beam radiation technology.With all the latest technology and equipment in place and costs of procedures being minimal, Narayana Health reports a total comprehensive income of rupees 830 million and an increase of 314.5% over the years 2015-16.

Question 1: About how many people in India required heart surgery in the early 2000s?

Select one:

a. 5 million

b. 2.4 million

c. 3.6 million

d. 1 million

Question 2

Advancements in technology have what benefits for hospitals?

Select one:

a. They simplify complex procedures and reduce risk

b. They speed up the treatment of diseases

c. They attract international patients

d. They reduce probability of humar errors in diagnosis

Question 3

How can technology help surgeons?

Select one:

a. Technology helps surgeons quickly develop expertise and work towards better patient outcomes

b. It helps minimize the cost of surgery

c. Sugeons can earn more per operation

d. None of the above

Question 4

How does telemedicine help to reduce cost of medical care?

Select one:

a. Medical experts are able to connect to patients virtually and help them

b. “Actual physical travel of patients and doctors is avoided, thus leading to cost savings”

c. Diagnosis can be done virtually by sharing of reports online

d. All of the above

Question 5

How has Narayana Health benefitted with the correct use of technology?

Select one:

a. It has seen an increase in the incidence of heart disease in India

b. “It has achieved savings through the smart use of equipment and telemedicine,”

c. It is able to treat more international patients

d. It is aiming for lower standards of patient care.

Question 6

What are some ways in which technology has become embedded into hospital structure?

Select one:

a. Telemedicine

b. Hospital Management Systems

c. Imaging equipment like MRIs

d. All of the above

Question 7

What are the challenges of implementing advanced technology is hospitals?

Select one:

a. Patient data is likely to get compromised

b. healthcare workers are more focused on technology and less on patient care

c. Healthcare workers may resist the new processes and refuse to learn how to handle the new technology

d. “Patients face problems, as they have less faith on technology”

Question 8

What has Narayana Health used to connect about 800 hospitals globally?

Select one:

a. Branding

b. Web technology

c. Telemedicine

d. OTC treatment

Question 9

What was the percentage of increase in the comprehensive income of Narayana Health over the years 2015-16?

Select one:

a. 388%

b. 100%

c. 314.50%

d. 50%

Question 10

Why is operational efficiency of paramount importance for a hospital?

Select one:

a. So that all equipment is utilized to the maximum

b. It reduces expenses and helps provide better patient care

c. So that the time spent by healthcare workers is more productive

d. It helps in better planning for patients diagnosis and treatment

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MODULE IV : TECHNOLOGY PLANNING

Pharmacy is the health care service that comprises art, practice and profession of choosing, preparing, storing, compounding and dispensing medicine and medical devices, advising healthcare professional and patients on their safe, effective and efficient use.

The key components of physical planning of a hospital pharmacy include –

•         Location

•         Size

•         Lighting

•         Storage Area

•         Prescription Area

Location of a hospital pharmacy is ideally on the ground floor of the hospital with storage preferably in the basement. The pharmacy should be readily accessible from the elevator and all areas of the hospital. Every hospital pharmacy should have a separate OPD unit to serve OPD patients. This can ideally be done by having a window access facing outwards for OPD patients and OTC prescription customers, while the main opening could be faced within the hospital facility.

The essential constituents of various areas in a pharmacy include – storage cabinets, standard counters, glass storage shelves, sectional drawer cabinets, cupboards, desk, computer, telephone, list of available drugs and information board.

WHO states that the doctor-population ratio in India is about 1:1218. People appear to rely on alternative health-care professionals, chemists, traditional medicine practitioners, faith healers, etc. to meet their health needs and reduce personal costs. Pharmacists play a crucial role in health care in the community.

With the physical requirements being on one side, a pharmacy can effectively run only in the presence of a qualified pharmacist. The pharmacist working within a hospital pharmacy should be responsible for effective dispensing of drugs. Thorough checking of prescription details should be done in order to avoid dispensing errors.

In a cross-sectional study conducted in Bengaluru in 2016, it was seen that about 19% of pharmacists check for all particulars on the prescription, like patient particulars, date of prescription, drug name, drug dose, frequency, signature of the doctor and registration number of the doctor, before dispensing drugs. The study also showed that the most commonly dispensed OTC drugs were analgesics, contributing to about 90% of all drugs being dispensed. Drugs like antipyretics, antihistamines, antacids follow with 68%, 49% and 46% respectively. Dispensing of drugs without prescription appeared to be common in residential areas compared to commercial areas.

Proper storage and timely discarding of drugs should be done in order to ensure patient safety and drug efficacy. In the study, it was seen that 97% of pharmacies had a refrigerator but 31% of these did not have a power back-up. With frequent power cuts in India, the drugs that are meant to be stored in cool temperatures will be exposed to temperature fluctuations without a power back-up, putting the efficacy of the drug and patient safety at risk. It was also revealed through the study that 62% pharmacies conducted a check for nearing expiry drugs on a monthly basis.

When functioning within a hospital, pharmacy is a major contributing factor towards patient health and safety. As most of the inmates of the hospital depend on the in-house pharmacy for medications, it becomes the responsibility of the pharmacist to dispense drugs with minimal or no errors at all.

Question 1: Does a hospital pharmacy serve only the admitted patients?

Select one:

a. “No, it serves OPD patients as well.”

b. “Yes, that is why a hospital pharmacy is set up”

c. “Yes, a hospital pharmacy serves only patients who undergo surgery”

d. Hospital pharmacy only provides the medicines as ordered by doctors in particular wards; it does not sell directly to patients.

Question 2

Effective dispersal of drugs can be done when:

Select one:

a. The pharmacist checks the expiry date on the drugs he is dispensing

b. The pharmacist checks the prescription thoroughly before dispersing

c. “Drugs are stored safely in the pharmacy, in dry and cool conditions”

d. All of the above

Question 3

The essential parts of a pharmacy are:

Select one:

a. storage cabinets

b. multiple dispersal counters

c. Information about available drugs

d. All of the above

Question 4

What kind of dispensing errors might occur in a pharmacy?

Select one:

a. Fake prescriptions may be fil;led up if the pharmacist does not check the prescription details carefully

b. “Wrong medicine with a similar name, or a wrong dosage may be dispersed”

c. Medicines that are beyond the expiry date may be issued to patients

d. All of the above

Question 5

What percent of antacids were dispensed by pharmacists without a prescription?

Select one:

a. 68%

b. 46%

c. 49%

d. 74%

Question 6

What role do pharmacists play in the Indian healthcare sector?

Select one:

a. They do not play any part in healthcare sector other than dispensing medicines at the pharmacy

b. “They are informal prescribers of medicines for small ailments, as healthcare is expensive in India”

c. They provide regular medical advice in the absence of a doctor

d. People repy more on pharmacists than on a MBBS doctor

Question 7

Where does dispensing of drugs without prescription appear to be common?

Select one:

a. Residential areas

b. Commercial areas

c. Medical camps

d. Hospitals

Question 8

Which of the following is NOT a key component of the physical planning of a hospital pharmacy?

Select one:

a. Location

b. HVAC

c. Lighting

d. Size

Question 9

Which of these are most commonly dispensed without a prescription?

Select one:

a. Antacids

b. Antipyretics

c. Analgesics

d. Antihistamines

Question 10

Which of these is an ideal location of a hospital pharmacy?

Select one:

a. First floor

b. Ground floor

c. Cellar

d. Outside the building

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MODULE V : STRATEGIC PLANNING

Knowledge management, established as a discipline in 1991, is defined as the process of capturing, developing, sharing, and effectively using knowledge. Knowledge management efforts typically concentrate on strategic objectives such as improved performance, competitive advantage, innovation, the sharing of lessons learned, integration, and continuous improvement. Knowledge management it facilitates decision making, stimulates innovation and helps learn from past experiences. A proficient integrated healthcare knowledge management information system (HKMIS) is used in many countries to manage this information. A perfect HKMIS is a triad of three disciplines — Medicine, ICT, and Management.

National Health Management Information Systems (HMIS) was developed by Ministry of Health, Government of Pakistan, in collaboration with the provincial healthcare departments and international agencies during 1990-93 and HMIS was institutionalized in all the provincial healthcare headquarters of the country. Despite all the efforts, this system was not working to its full potential and some of the challenges faced were:

• Reports generated by the facility based HMIS received low priority

• Poor monitoring

• Facility staff looked upon HMIS as an additional workload

Additionally, the scope was limited to the Primary Level healthcare facilities and no data from inpatient/hospital, private care facilities or from the health facilities other than Provincial Health Departments were captured.

A SWOT analysis was done on HKMIS deployed in two public sector healthcare organizations of Pakistan. Hospital A had 1025 healthcare professionals with a total count of 1800 employees in 36 departments. Hospital B had 1225 healthcare professionals with a total count of 2100 employees in 32 departments, with in-patients (A>30000, B>25000 per year) and out-patients (A>1000000, B>900000 per year). Data was collected through various methods, including interviews. Some of the questions revolved around understanding among staff regarding terminologies like knowledge management, HKMIS, and the role, importance and benefits of technology in hospitals, weaknesses of existing HKMIS, opportunities and strategies to improve existing HKMIS and salient threats faced by HKIMS.

Strengths included betterment in:

• Provision of health care services

• Data maintenance and medical errors

• Data storage

• Confidentiality of sensitive information

• Fast communication between stakeholders

• Cost savings

• Access to accurate and relative information

• Productivity of end users

• Availability of timely data and reduced possibility of data loss

• Paperless environment

• Quality and originality of documentation and reporting

Weaknesses included a lack of

• Top management commitment and seriousness

• Competent staff

• Specific and professional training programs

• Professional reporting structure

• E-health services

• Access to internet and collaborative tools/applications

• Interest and professional ethics in learning new systems

• Proper recording of healthcare data

• Accountability and transparency

• Sufficient hardware and software maintenance staff

• Motivation or reward criteria

• Interoperability between service providers and increased costs of IT adoption

Opportunities included improvements in:

• Reporting and data presentation capabilities

• Quality of healthcare services

• Effective and efficient resources utilization procedures

• Support for knowledge management and decision making

• Patients trust and satisfaction

• Human resource management

• Proactive healthcare practices

• Costing and budget analysis for enhanced funds utilization

• Allocation of resources for supporting IT infrastructure

• Unification and integration of Public and Private sector health records

• Training programs and facilities, public awareness and community support programs.

Threats:

• Ineffective and inefficient governance

• High staff turnover rate due to political interventions

• Undue transfers and postings of professional staff

• Patients perceptions on privacy and confidentiality of health data

• Load shedding and electrical surges

• Rapid changes in technology and IT systems

• Unreliable and unrealistic system and reporting requirements

• Data under security and hacking threats

• End users resistance to systems change and implementation

The SWOT analysis brought many external and internal factors to light. Definite steps can be taken to use HKMIS to its full potential and reap its benefits by exploring the opportunities and mitigating the effects of recognized weaknesses and threats, leading to improved quality of care.

Question 1: ” .. is an excellent tool to use in order to identify a performance goal for improvement, identify partners who have accomplished these goals and identify applicable practices to incorporate into a redesign effort.”

Select one:

a. Benchmarking

b. SWOT analysis

c. Balance Scorecard

d. Gap/Capability Analysis

Question 2

A perfect HKMIS is a mix of

Select one:

a. Medicine and ICT

b. ICT and Management

c. “Medicine, ICT and Management”

d. Medicine and Management

Question 3

How did the case study help in the use of HKMIS?

Select one:

a. It gave a list of areas of improvement and the strengths of the HKMIS program

b. It helped build a willingness to implement HKMIS

c. The threats to HKMIS imlementation showed the futility of implementing it

d. None of the above

Question 4

It’sessential for a hospital to take into account the existing organizational structure as well as external factors to determine where it needs to improve its performance or where it needs to focus.

Select one:

a. Sometimes

b. Always

c. Depends on circumstances

d. No

Question 5

Knowledge management efforts typically concentrate on

Select one:

a. improved performance

b. Competitive advantage

c. innovation

d. All of the Above

Question 6

Strategic planning enables an organization to

Select one:

a. Plan its future in an orderly and systematic way

b. ensures that a hospital remains relevant and responsive to patient and community needs

c. Maintain the salaries of its employees at good levels

d. All of the Above

Question 7

What was the outcome of the SWOT analysis?

Select one:

a. Recognised Gaps

b. Discovered Opportunities

c. List Strengths

d. All of the Above

Question 8

Which methods help identify weaknesses in the system

Select one:

a. SWOT Analysis

b. Gap Analysis

c. Both of the above

d. Benchmarking

Question 9

Which tool gives direction to an organization’s future?

Select one:

a. SWOT Analysis

b. Benchmarking

c. Market Analysis

d. All of the above

Question 10

Why was the SWOT analysis done at the public sector hospitals?

Select one:

a. Poor monitoring

b. No data from patner hospitals

c. facility staff looked upon HMIS as an additional workload

d. All of the Above

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ASSIGNMENT 2

In January 2001, a great many hospital buildings across Gujarat were affected during a catastrophic earthquake. Hospital facilities were housed in seismically vulnerable structures and were badly damaged or destroyed. About 167,000 persons were injured and needed immediate medical attention. Emergency medical response was seriously affected and the existing healthcare system in most of the affected regions failed when it was needed most. The widespread damage to hospital buildings and other structures also resulted in significant loss of medicines, supplies, and other medical equipment.

Among the buildings destroyed was the 281-bed Civil Hospital of Bhuj, the largest hospital of the Kachchh district, designated as referral hospital to treat the medical needs of about 1 million people. Collapse of the hospital building killed 172 people (including doctors and para-medical staff) and disrupted all medical services.

One of the lessons learned were that the infrastructure of health care facilities must be earthquake resistant. The new 300-bed hospital, designed with assistance from New Zealand earthquake engineering and completed in 2003, was fitted with a lead-rubber base-isolation system. The 280 lead-rubber bearings were part of the building’s foundations, allowing the structure to remain virtually stationary during an earthquake. The new 30,000m²-hospital was the first building in India to be fitted with the technology and is reputed to be able to withstand a force 10 tremor on the Richter scale.

In the aftermath, the National Disaster Management Authority (NDMA), the Government has formulated comprehensive National Disaster Management Guidelines: Hospital Safety (February 2016). A key objective is to ensure structural safety of hospitals (especially of critical facilities). The provisions laid down are the minimum required standards that shall be adhered to by all healthcare facilities and address both internal and external disasters that are likely to affect hospitals.

The guidelines observe that it is not simply the structural resilience but also operational resilience of hospitals that needs to be addressed. The February 2016 guidelines on Hospital Safety were therefore developed with the vision that all hospitals in India will be structurally and functionally safer from disasters. The usual reason for hospitals being put out of service during emergencies is functional collapse wherein elements that allow a hospital to operate on a day-to-day basis are unable to perform during emergency. These include labs, operating theatres, medical records, medical services, and the administrative process, etc.

The structural components of a healthcare facility comprise the design of buildings, resilience of material used etc. are. The guidelines on structural safety have noted that the Base Isolation System is an expensive technology option, though it is effective to counter the ill-effects of a strong earthquake.  The guidelines provide that it may be adopted in important hospitals in seismic zones IV and V, and shall be adopted only when the safety of the hospital building is established by 1) Analytical methods (recommended in the guidelines) and 2) Full scale experimental testing of the base-isolation devices demonstrating that they are capable of resisting expected strong earthquake shaking.

It has also been found that making new hospitals and health facilities safer from disasters is not costly and incorporating mitigation measures into the design and construction of new hospitals accounts for less than 4 percent of the total investment. On the other hand, retrofitting hospital structures is a time-consuming and lengthy process.

The following structural systems have been prohibited for use in new hospitals: 1) Flat-slab buildings, with or without structural walls 2) Pre-stressed floor systems 3) Precast constructions (with natural or man-made materials), in part or whole of the structure 4) Pre-engineered structures in part of the whole of the structure 5) Large cantilever structures and long span structures and 6) Unreinforced masonry buildings.

Structural Elements of all new hospital structures shall be made of Reinforced Concrete and/or Structural Steel, except for structures in seismic zone II, where Reinforced Masonry may be used. Structural Walls shall be made of Reinforced Concrete (RC) and provided in select bays running through the full height of the building, irrespective of choice of material of the basic structural system adopted for the hospital, namely RC or Structural Steel. Structural walls made of steel plates or timber may be allowed in the construction of hospitals only in Seismic Zone II. Even then, safety of such hospital buildings with steel plate or timber structural walls shall be established by a) analytical methods and b) full-scale experimental testing of structural walls.

The provisions are applicable to all healthcare facilities in the government sector and their equivalent counterparts in the private sector. Smaller facilities may choose to adapt relevant sections of the guidelines as per their context and local conditions.

Question 1: Precast constructions

Select one:

a. may be adopted only in new buildings

b. are prohibited in new buildings

c. may be adopted is seismic zone II

d. may be adopted only after full-scale experimental testing

Question 2

Reinforced masonry

Select one:

a. may be used only in new buildings

b. is prohibited in new buildings

c. may be used in seismic zone II

d. may be adopted only after full-scale experimental testing

Question 3

Retrofitting hospital structures to make them safe during a disaster

Select one:

a. is a less expensive option than building a new hospital based on the new structural recommendations

b. accounts for less than 4 percent of the total investment of a new hospital

c. is costlier and time-consuming

d. is prohibited

Question 4

Structural walls in hospitals shall be made of

Select one:

a. reinforced concrete (RC) and/or structural steel

b. steel plates or timber if safety has been established

c. “unreinforced masonry, if safety has been established by full-scale experimental testing “

d. none of these

Question 5

Structural walls made of steel plates or timber may be allowed in

Select one:

a. the construction of hospitals only in Seismic Zone II

b. Retrofitting of existing hospitals

c. Government hospitals

d. Private hospitals

Question 6

The following structural systems are recommended in new hospitals

Select one:

a. pre-stressed floor systems

b. pre-engineered structures in part of the whole of the structure

c. flat-slab buildings

d. reinforced concrete

Question 7

The NDMA guidelines (2016) provide that lead-rubber base isolation systems:

Select one:

a. Are prohibited in new buildings

b. May be adopted in seismic zones IV and V

c. May be adopted only in seismic zone II

d. Are permissible only where existing buildings require structural changes

Question 8

The NDMA guidelines address

Select one:

a. earthquake-resistance only

b. fire-resistance and non-structural vulnerabilities only

c. external disasters only

d. both external and internal disasters

Question 9

The NDMA guidelines are not applicable to hospitals in:

Select one:

a. the government sector

b. the private sector

c. smaller facilities

d. hospitals not in seismic zones

Question 10

The overall safety of a health facility is determined by:

Select one:

a. “structural elements, eg. building design, etc”

b. “non-structural elements, eg, architectural finishes inside, equipment, etc”

c. both structural and non-structural elements

d. earthquake-resistance and fire resistance

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Hospital Functions and Services (EDL 340)

Hospital Functions and Services (EDL 340)

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MODULE I : HOSPITAL FUNCTIONS AND SERVICES

“The mortality rate for patients treated at teaching hospitals is 25 percent lower than that of patients in regular hospitals,” reports an extensive study published in the New England Journal of Medicine. Likewise, the American Journal of Obstetrics & Gynecology states in one of its studies that there is no increased risk for negative outcomes in surgeries performed by residents, except for a slightly prolonged operative time. According to a data analysis published in the Journal of Maternal-Fetal and Neonatal Medicine, the risk of rectal injuries was present following labor and delivery regardless of operator status. This study, involving over 17,000 women, showed that the complications of labor and delivery did not increase if the patient was treated by a resident instead of an attending physician. The findings published in Surgical Laparoscopy & Endoscopy have drawn similar conclusions, noting that resident surgeons did not pose a threat to safety of patients. While most patients consider resident involvement a risk to surgery at teaching hospitals, many medical professionals claim residents to be extremely beneficial. Vascular Surgeon, Jon Schellack has been working with surgical residents for 25 years. According to him, a better environment is created for patients and doctors through the residency program. “The medical students and the residents are very inquisitive, always looking up the patient’s problem, diagnosing, researching, challenging me and asking me questions,” he says. Stephen Yang, a professor of surgery and oncology at the Johns Hopkins University School of Medicine, in his paper published in 2008, states that the mortality rates were low and complications were lesser at teaching hospitals. Jarret Brashear, a third-year general surgery resident, says he has never had a patient reject his care because he was a resident. He adds that the residents are always supervised when performing procedures, and patient safety is the priority. Philip Young, a gynecologic surgeon and clinical professor of reproductive medicine at the University of California-San Diego School of Medicine says that a good private hospital will provide the same care as a good teaching hospital, except a teaching hospital has more resources and is better at taking care of oddball things. As per the US New Best Hospitals 2014-15, the top five hospitals in the U.S. were Mayo Clinic, Massachusetts General Hospital, Johns Hopkins, Cleveland Clinic and UCLA Medical Center. All of these hospitals were the ones that had surgical residency programs. In a study that evaluated over 1.5 million patients, a 10 percent reduced risk of mortality was seen in teaching hospitals for the three most common health problems like heart attack, heart failure and pneumonia. Professor of surgery at Harvard Medical School and vice president of the Massachusetts General Hospital for Quality and Safety, David Shahian, who evaluated the outcomes of these 1.5 million patients says, “Residents are qualified medical doctors and every teaching hospital has professional doctors constantly available.” Through the studies conducted globally, it can be noted that teaching hospitals have better care facilities and services. It is evident through these studies that resident surgeons pay close attention to patient safety and are effective at their procedures of patient handling. Talking about the quality of care in teaching hospitals, Shahian says “training of residents is much more closely supervised than it was decades ago.” Resident involvement always adds to the quality of care, he adds.

Question 1: “According to the article, what is less at teaching hospitals?”

Select one:

a. Patient care

b. Mortality and complications

c. Facilities and equipment

d. Resident doctor performance

Question 2

“In a hospital, the highest risk of martality of patients is due to:”

Select one:

a. hospital acquired infections

b. incomepetence of doctors

c. “heart attack, heart failure and pneumonia”

d. All of the above

Question 3

“While performing any medical procedure, the highest priority is:”

Select one:

a. Teaching the procedure to resident doctors

b. Reducing the time and money involved in the procedure

c. Patient safety

d. All of the above

Question 4

How is patient safety ensured in a teaching hospital?

Select one:

a. “Resident doctors are always supervised, so scope of errors is reduced”

b. “Medical students and residents are very inquisitive, and so thoroughly understand the patient’s problems to provide the best care”

c. “Teaching hospital has more resources available, so issues can be taken care of quickly”

d. All of the above

Question 5

Many studies conducted across the globe have shown that teaching hospitals

Select one:

a. are not fulfilling the need they were designed for.

b. have higher rates of patient mortality.

c. have more doctors than requiured.

d. have better care facilities and services

Question 6

Supervision of resident doctors in a teaching hospital:

Select one:

a. is not required.

b. is more closely supervised that a few years ago.

c. is done by the peer group

d. is a rule.

Question 7

The top rated 5 hospitals in the USA are all:

Select one:

a. teaching hospitals.

b. private hospitals.

c. inaccessible to common man.

d. ones with t he best equipment and resources

Question 8

What advantages does a teaching hospital provide to resident doctors?

Select one:

a. “Resident doctors are able to take care of several patients with different complaints, and thus are prepared to handle any disease condition effectively”

b. Resident doctors are allowed to handle all complicated and emergency cases

c. Resident doctors are available 24/7 in a teaching hospital

d. There are no specific advantages

Question 9

Why is it beneficial to have resident doctors present during a surgery?

Select one:

a. They will be able to learn effectively

b. Patient priority is taken care of

c. resident surgeons pay close attention to patient safety and are effective at procedures of patient handling.

d. All of the above

Question 10

Why would a patient refuse to get treated by a specific doctor?

Select one:

a. “If the patients feel that the doctor is not competent enough, they may refuse to allow that doctor to treat them”

b. Patients cannot refuse the services of any doctor

c. Patients prefer to go to doctors referred by their family and friends.

d. None of the above

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MODULE II : CLINICAL SERVICES

Emergency services, across the globe, play a significant role in saving lives of patients who need urgent medical assistance. Emergency Medical Services (EMS) took off in India in the year 2005, before which ad-hoc emergency providers were the hospitals and their respective taxis. This service, otherwise known as the “108 Ambulance Service Project” is aimed to ensure emergency care to the rural as well as urban India. Starting then, there has been much effort in building various services to minimize life risk during accidents. Various policies have been coming up, ideas kept pouring in and strategies are being laid by the government as well as the private healthcare providers to attend to emergencies and save lives.

In one such effort, the Tamil Nadu government has installed an app-based system in ambulances to reach any emergency within a set time of 3 minutes. This feature announced by the Tamil Nadu Health Systems Project (TNHSP) officials, will work like the app-centered system used by cab aggregators like Ola and Uber. With the help of this app, the ambulances can track the accident spot in no time and thereby reduce the average response time.

In a similar approach, Telangana Chief Minister K. Chandrasekhar Rao launched a unique Bike Ambulance Service in early 2018. This service is aimed at providing services at the accident spot itself. Mr. Rao flagged off 50 bike ambulances, in an effort to allow services to reach the victims faster through narrow routes. The Telangana government is also ready to increase the budget for the medical and health in its next budget session. “Apart from giving better education and good health services to the poor, there is no other priority,” said the CM as he talked of the plans and priorities for the state.

In another advancement brought across by a startup company in Vishakapatnam, an Internet of Things (IoT) device is all set to be installed in some of the major traffic junctions across the city. This device is a first of its kind system that creates geo-fencing to identify any ambulance within 500 meters radius from the traffic signals and triggers an alert in the traffic junction box to turn the lights green to allow the ambulance to pass through. Greenline Labs of Visakhapatnam, the startup that brought across this idea, has created a technology called Emergency Response Automation (ERA) to create the geo-fencing.

With many such efforts being made to make emergency services quickly available for victims of accidents, there is surely going to be an improvement in emergency care in India. Traffic has so far been identified as the major setback in making ambulance and emergency services reach within the stipulated time, leading to loss of many lives. Such approaches to minimize the reach-time of ambulances are sure to bring emergency services within closer reach for accident victims and aid in saving lives, given that the quality of treatment is maintained.

Question 1: “In case of an accident occurring, what should the onlookers do?”

Select one:

a. Call a taxi or autorickshaw and transport victim to the nearest hospital

b. Call 108 or alternate number for an ambulance

c. Call the police and let them handle everything

d. Do nothing

Question 2

“Recently, a bike-ambulance service was launched. In which state was this launched?”

Select one:

a. Telangana

b. Tamilnadu

c. Karnataka

d. Delhi

Question 3

Emergency Medical Services (EMS) is otherwise known as ______ in India.

Select one:

a. Bike Ambulance Service

b. Emergency Response Automation (ERA)

c. 108-Ambulance Service

d. Geo-Fencing Services

Question 4

How can digital technology help in EMS?

Select one:

a. Several apps can be developed to help in emergency medical services

b. Technology helps the government in tracking the services

c. Tracking of patients is easier using technology

d. Technology has no role to play in emergency services

Question 5

What challenges does an emergency medical service provider face?

Select one:

a. “Locating the patient becomes a challenge, due to haphazard city planning”

b. “Coverage of area for ambulance services is limited, keeping in mind the size of India”

c. Bad road conditions and traffic slow down the ambulances.

d. All of the above

Question 6

What is the importance of ambulance services?

Select one:

a. Ambulances are used to transport patients from one place to another

b. Hospitals can get more number of patients when they run an ambulance service

c. “Ambulance has medically trained personnel who can immediately start treatment of patients in emergency situations, while transporting them to hospitals”

d. Ambulance services are not necessary

Question 7

What is the logic in fitting ambulances with app-based systems?

Select one:

a. Apps are not required to be installed for ambulances

b. Apps can help the ambulance to be located by the hospital

c. It sounds hi-tech

d. App-based systems help the ambulances navigate the routes better and reach the patient quickly

Question 8

Which of the given statements is false?

Select one:

a. “The Emergency Medical Services in India run under the name “”108″” in most Indian cities.”

b. Rural areas do not require provisions for emergency medical care

c. The Indian government and some provate firms are making efforts to improve emergency medical services in the country.

d. Several digital technologies are being used to improve the emergency medical services provided to patients

Question 9

Which of the given statements is true?

Select one:

a. Emergency Medical Services can be a substitute for providing first aid to accident victims

b. Ambulance services are only run by corporate hospitals

c. Emergency medical services provide first aid to patients in emergency situations and ensure they get appropriate medical treatment at the earliest

d. Emergency medical services work only in urban areas

Question 10

Why is speed a necessity for an ambulance?

Select one:

a. “Ambulances have to typically travel long distances, thusm they need to be fast”

b. There is no deendancy on speed in operating an ambulance

c. “Due to bad road conditions and traffic, ambulances cannot travel fast.”

d. “Am ambulance needs to reach the patient in time, so that treatment can start immediately”

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MODULE III: CLINICAL SUPPORT SERVICES

Established in the year 1983, Apollo Hospitals is Asia’s largest healthcare group and India’s first corporate hospital. Ever since its entry into the private healthcare sector, Apollo Hospitals has ventured into diverse platforms of the healthcare ecosystem, which includes hospitals, pharmacies, primary care, and diagnostics. Besides these mainline services, Apollo Hospitals has its significant presence in health insurance services, medical colleges, e-learning, nursing, hospital management, and research foundation, among others.Apollo Pharmacy, a part of Apollo Hospitals, is the first and the largest branded pharmacy network in India. The company had about 2,742 outlets by the end of September 30, 2017, and has accelerated its expansions to reach the target of 3,000 stores by mid-2018. Its International Quality Certification, the genuineness of medicines, round-the-clock operations, 24×7 customer support and over 400 self-branded products are a few of its notable qualities. The online portal of Apollo Pharmacy, www.apollopharmacy.in, has more than 4000 products in widespread categories like OTC medicines, baby care, personal care, health foods, vitamins and supplements, etc. The retail outlets are well-stocked with medicines, OTC drugs, and FMCG products. The outlets are equipped with computerized systems and competent pharmacists. Providing the ease of shopping to its customers, Apollo Pharmacy features online ordering and home delivery options for a wide range of OTC and FMCG products. It also features an option to upload prescriptions to order prescription medicines.The nationwide distributors of Patanjali Ayurved, the Pittie Group, recently announced its distribution arrangement with Apollo Pharmacy. With this move, the latter group will ensure the availability of the Patanjali products across all the Apollo Pharmacy stores in the country. “This tie-up with Apollo pharmacy will enhance the reach of Patanjali. It is another step towards our mission of providing high-quality products to every Indian consumer,” said Aditya Pittie, CEO of Pittie Group.The logistics unit of Flipkart, called Ekart, has also tied-up with over 300 outlets of Apollo Pharmacy. Ekart will use these outlets to drop-off shipments to be picked up by the customers. These pick-up points will be displayed to the customer while he places the order. The ordered products will be delivered to the Apollo Pharmacy outlet by the Ekart delivery personnel, after which the customer is alerted with a four-digit pin to pick up the product. The receiving store of Apollo Pharmacy keeps the shipment for five days, after which it returns the product upon pick-up failure. An undisclosed amount will be paid to Apollo by Ekart for keeping these shipments.With healthcare being the need of the hour, Apollo is sure to take its services ahead to match the rising demands and improve its reach further.

Question 1: ABC VED matrix helps a pharmacy to:

Select one:

a. Categorize the drugs in the pharmacy

b. Have a proper control over its supplies

c. Meet the drug requirements of the hospital

d. Monitor the exact usage of the drugs and quantities

Question 2

Apollo Pharmacy provides which of the following features to its customers?

Select one:

a. Online ordering of medicines

b. Home delivery of medicines

c. 24/7 operations

d. All of the above

Question 3

Apollo Pharmacy sells What type of products?

Select one:

a. Critical drugs

b. General and medical supplies

c. “OTC drugs, medicines and FMCG personal care products”

d. All of the above

Question 4

Inventory control in the pharmacy is very important because:

Select one:

a. It is a major portion of the hospital’s annual budget

b. Hospitals need to keep a tight control on the pharmacy

c. Hospitals need to monitor each and every drug usage

d. None of the above

Question 5

Non-availability of which of the following would immediately affect the operation of a hospital?

Select one:

a. Essential items

b. Vital drugs

c. Desirable items

d. Emergency drugs

Question 6

Pittie Group is the nationwide distributors of:

Select one:

a. Patanjali Ayurved

b. Flipkart

c. Apollo Pharmacy

d. FMCG Products

Question 7

Products sold by Patanjali can be classified under which category?

Select one:

a. Essential items

b. Vital drugs

c. Desirable items

d. Emergency drugs

Question 8

The largest branded pharmacy in India is:

Select one:

a. Patanjali Ayurved

b. Pittie Group

c. Apollo Pharmacy

d. Apollo group

Question 9

Why is a good pharmacy important for a hospital?

Select one:

a. “A pharmacy purchases, stores, and distributes drugs, medicinal preparations and chemicals to patients”

b. Tracking of all medications is possible

c. It is possible to investigate pharmaceutical problems arising in the use of medications

d. All of the above

Question 10

Why is Apollo Pharmacy is tying up with other distributors like Patanjali?

Select one:

a. To improve its market presence

b. To reach a greater number of customers and improve its brand identity

c. To gain goodwill in the market

d. To avoid competition

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MODULE IV : ANCILLARY SUPPORT SERVICES

The World Health Organization states that 85% of hospital wastes are non-hazardous, 10% are infectious and 5% are non-infectious (but included in hazardous wastes). About 15% to 35% of the total hospital waste generated is considered as infectious waste. These wastes threaten the public since hospitals are situated in the heart of the city. Therefore, medical waste must be disposed of properly. Waste generated in the process of healthcare includes scalpels, blades, hypodermic needles, gloves, clothes, bandages, discarded body fluids, human tissues and organs, PVC products, chemicals and radioactive wastes. Inadequate management of such biomedical waste can be associated with risks to patients, healthcare workers, sanitation workers, communities, the general public and the environment.

The Indian government has recently updated the regulations regarding biomedical waste management in the country, to bring in better processes to manage the various types of biomedical waste generated.

A study was done to observe and assess the proportions and quantities of different constituents of wastes, their handling, storage, treatment and disposal methods in different health-care settings in two different cities: Pune and Bhopal. The study aimed to observe and assess the processing systems for biomedical waste disposal, including the hazards associated, the development of new waste management plans, policies, and protocols, establishing recommended training programs.

Pune is the second largest city in the state of Maharashtra and the eighth largest metropolis in India with a total population of 5,92,00,000 as per 2017 census. The total hospitals in the city are around 1000 that cater to around 3,500 patients daily. As per a study done in June 2011, Pune has a 19.58% share in BMW generated in the state of Maharashtra; a total of 5000-8000kg/day of bio-waste is generated in the city, and this includes corporation run hospitals that generate almost 2,000kg of bio-waste every day. The bio-medical waste is collected from all the hospitals and healthcare facilities in Pune and treated at the Kailas Crematorium plant.

As per the Medical Waste Rules, 1998 Amendment, it is obligatory for all the clinical establishments in the city to get an authorization from the Maharashtra Pollution Control Board (MPCB). Approximately about 1,200 kg biomedical waste is transported every day to towns located over 140 km from Pune. A survey was conducted at ten hospitals from Pune city revealed that more than 55% of the hospital employees are not aware of the adequate collection, handling, and treatment of the biomedical waste. About 45% of owners of the healthcare facility are found to be ignorant, and 62% of respondents do not consider biomedical waste management as a serious issue.

Bhopal: In a study conducted in Bhopal in 2011, of the approximately 245 hospitals in Bhopal city, 32 hospitals are governed by the State Govt., four by the Central Govt., while 209 are private hospitals. Bio-medical waste generated at Central Govt. hospitals is 556 kg/month, State Govt. hospitals is 7937 kg/month and in private hospitals it is 12,224 kg/month.

Safe and effective measures for biomedical waste management are not only a legal necessity but also a social responsibility. There is a need for education as to the hazards associated with improper waste disposal. Lack of concern, awareness, motivation, and high cost factors are some of the problems faced in proper biomedical waste management. A major stymie to the practice of waste disposal is apathy to the concept of waste management. Healthcare providers should always try to reduce the waste generation in their clinic or at the hospital on a day-to-day basis. Proper collection and segregation of bio-medical waste is very important.

Question 1: “As per the Medical Waste Rules, 1998 Amendment, is it necessary for all the clinical establishments in the city to get their authorization?”

Select one:

a. Authorization is not required

b. “Yes, it is obligatory to get the authorization “

c. Authorization is objected

d. None of the above

Question 2

“In cities with large population, the biomedical waste is commonly disposed: “

Select one:

a. To a common biomedical waste treatment plan

b. To a dump yard at the end of the city

c. In any of the open area/plot inside the city

d. In a waste bin within the hospital premises

Question 3

“The development of new waste management plans, policies and protocols helps in”

Select one:

a. Waste of time

b. Not helpful for disposal of wastes

c. Better biomedical waste disposal

d. None of the above

Question 4

About _________ of Hospital waste is considered as infectious waste in hospitals

Select one:

a. 60% to 70%

b. 40% to 50%

c. 15% to 35%

d. None of the above

Question 5

Bio-medical waste means

Select one:

a. “Any waste that is generated during the initial diagnosis, treatment, immunization of human beings or animals “

b. Waste produced during research activities during the production in hospitals and health camps

c. Waste produced at home

d. Both A and B

Question 6

Biomedical waste management rules are established because

Select one:

a. BMW poses a serious health hazard for people and the community

b. The quantity of waste generated is huge

c. There is a lack of concern regarding biomedical waste management

d. Hospitals are unsure of how to dispose of biomedical waste

Question 7

Important steps involved in the management of biomedical waste are:

Select one:

a. Handling

b. Segregation and collection

c. Disposal

d. All of the above

Question 8

Inadequate management of biomedical waste can be associated with

Select one:

a. No risk to healthcare workers

b. “Risk to patients, healthcare workers, sanitation workers, etc.”

c. Risk to the environment

d. Both B and C

Question 9

The problems that are faced in the proper management of hospital waste are:

Select one:

a. Cost factors

b. Lack of concern

c. Lack of motivation

d. All of the above

Question 10

Which of these are most important for safe biomedical waste disposal practices?

Select one:

a. Legal regulations

b. Education and training of healthcare workers regarding safe biomedical waste disposal practices

c. Availability of cost effective waste disposal methods

d. All of the above

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MODULE V : GENERAL SUPPORT SERVICES

In today’s technology-driven world, social media offers a great platform for building brands and marketing. Many industries take the support of Facebook, LinkedIn, Twitter, Pinterest, Google Plus, YouTube, Instagram, etc. Organizations are building a huge fan base on social media, thus leveraging the online platform to increase awareness about their products and services.      

In recent years, the healthcare industry has evolved in terms of its marketing strategies. Digital marketing and online presence have become its new tools. Earlier, online marketing was not a media of choice for many healthcare marketers, as there was a gap in understanding how social media can be integrated into their marketing strategies. Also, their concern about patient privacy and compliance with HIPAA regulations, etc. restricted them from using social media as a marketing platform. However, in recent times healthcare organizations have realized that these obstacles can be conquered easily.

Let us look at a case study about how a hospital utilized social media marketing to its advantage.

Shrikhande Hospital and Research Center is a 20-year-old IVF & Surrogacy center in Nagpur. Well-equipped with the most advanced technology in reproductive medicine, the hospital has a team of experts in Gynecology, Urology, and Embryology. It has 10000 embryo transplants to its credit. The organization wanted to tap into social media marketing and hence approached an expert company ‘Digital Skills’ for the same.

The prime objectives were to enhance the brand reach to netizens across various social media platforms, engage the audience, provide the right information to patients on pages, and drive traffic to the hospital website via social media. However, there were certain challenges. Most physicians think that social media is a waste of time and for practicing doctors direct advertising to promote their services is not feasible. It was challenging to visualize how an IVF & surrogacy center can make use of social media. Also, being a local set-up, the target audience was limited.

Digital Skills then came up with a strategy for better brand presence– build a digital ecosystem and focus on creating brand awareness. The message of good health and various disease prevention measures were posted on the social media, thus creating the image of a health conscious ecosystem. Also, promotions with crisp and engaging content were done on special days, festivals, and events.

The execution included a well-planned calendar for promotions, split into daily and monthly basis for each social media platform. Appropriate messages were created considering the target audience. Engaging updates were posted daily on social media. Special series of updates, contests, etc., were run on select days.

The result was a whopping 446% increase in brand reach. In just four months, the number of likes increased from 400 to 4500. Direct messages were received on Facebook, twitter and LinkedIn pages from patients across the world. There was 300% increase in clinic footfall by driving social media traffic to the website. The hospital was able to establish a self-brand within their peer community.

Question 1: “Earlier, what was the concern of healthcare marketers in using social media”

Select one:

a. Brand reachability

b. Cost

c. Patient’s privacy

d. Ease of use

Question 2

Shrikhande hospital marketed_______________ to the consumers?

Select one:

a. Goods

b. Services

c. Experiences

d. Events

Question 3

Shrikhande hospital opted for ________________ type of media

Select one:

a. Print Media

b. Display marketing

c. Electronic Marketing

d. Direct Selling

Question 4

The content created by Digital Skills on social media was ______________________

Select one:

a. Lengthy

b. engaging

c. non-informative

d. falsified

Question 5

The social media campaign helped in increasing the ______________________

Select one:

a. Brand reach

b. brand visibility

c. both of the above

d. None of the above

Question 6

The ultimate result of the social marketing was _______________

Select one:

a. Increase in footfall

b. decrease in trust

c. less brand awareness

d. all of the above

Question 7

What could the hospital establish within their peer community

Select one:

a. brand association

b. Self-brand

c. both of the above

d. none of the above

Question 8

What did Digital Skills company decided to build ________________________

Select one:

a. hospital

b. digital ecosystem

c. display marketing

d. direct market

Question 9

What was the primary objective of social media marketing for Shrikhande hospital?

Select one:

a. Increasing sales

b. Brand awareness

c. Health education

d. Social service

Question 10

What were the challenges noticed in healthcare digital marketing for Shrikhande?

Select one:

a. Limited local audience

b. Well-equipped

c. Cost

d. no proper guidance

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ASSIGNMENT 2

A study sponsored by the Directorate of Health Services, Government of Madhya Pradesh was conducted at a representative sample of public health facilities in MP to measure patient satisfaction about various components of patient department (OPD) services. One district was identified from each of the 8 administrative divisions in the state. To select OPD patients from each district, a sample of OPD patients were drawn from the public health facilities, i.e., district hospital (DH), civil hospital (CH), community health center (CHC), and primary health center (PHC). One DH, one CH, one CHC and one PHC were identified from each district. Thus, 561 OPD patients (47% male, 53% females) were covered from 32 public health facilities of the state. Of these, 45% belonged to the 16-30 years age group and 6% to the 0-15 year age group.The questionnaire covered information related to patient’s choice of health facility, registration process, perception towards availability of basic amenities, behavior of doctors and other staff, facilities available in pharmacy and dressing room.  Inexpensiveness and good infrastructure was one of the most cited reasons (83%) for choosing the public health facilities. The majority (81%) said that the main source of information about the hospital was family members/relatives. The time taken to reach the hospital was less than 15 minutes for more than half of the respondents (58%). Almost all the respondents did not find any problem in locating the hospital (93%) or locating different departments within the hospital (87%). One of the major reasons for choosing the public health facility was unavailability of other health facilities in the area.Registration counters were reported to be over-crowded by 64% OPD patients. This was observed more at the higher level health facilities (DCs) compared with lower level health facilities (PHCs). However, patients were happy with the behavior of registration clerks at all the facilities. It was found that respondents were more satisfied with the basic amenities such as seating arrangement for the patients and attendants, cleanliness, toilets, and drinking water at higher level facilities, i.e. district and civil hospitals as compared to community health centers and primary health centers. The main reason being the higher level facilities have better infrastructure than the lower health facilities.The sitting arrangements were found adequate by more than half of the respondents (54%) and 71% respondents found hospitals adequately cleaned. Regarding toilet facility, 44% respondents said it was available and clean, but 49% respondents said it was available but dirty. It was observed that the waiting time for OPD patients at the higher level health facilities is longer than the lower level health facilities, because of the high patient load at district and civil hospitals. Most of the patients (78%) at PHCs said that they have to wait less than 10 minutes for the doctor whereas in case of DH, CH and CHC; 54%, 52%, and 51% patients respectively said so. The majority of the patients (above 85%) have observed that doctor’s behavior was good at all the facilities and they also felt that the doctor has given adequate time to see the patients.Data revealed that the patients at lower level health facilities (CHC and PHC) were more satisfied with the queue system at the pharmacy than at the higher level health facilities (DH and CH). Most of the OPD patients also perceived that the behavior of the pharmacist was good particularly at the higher level facilities (DH and CH). Behavior of pharmacist was either good or satisfactory for all the OPD patients. Regarding the quality of drugs, OPD patients were happier at CHC and PHC as compared to DH and CH and the overall response to the quality of drugs was either good (64%) or satisfactory (33%) and only 3% considered it poor.

Question 1: Which of the following were the most cited reasons for which OPD patients chose a particular health facility?

Select one:

a. Inexpensiveness

b. Good infrastructure

c. Dressing room and pharmacy facilities

d. Good reviews

Question 2

Which of the following healthcare facilities comprise India s secondary healthcare?

Select one:

a. Community health center

b. Primary health center

c. District hospital and Civil hospitals

d. Only Civil hospitals

Question 3

Which of the following healthcare facilities comprise India s primary healthcare ecosystem?

Select one:

a. Community health center and primary health center

b. District hospital and Civil hospital

c. Only primary health centers

d. Corporate hospitals

Question 4

Which of the following has been seen to be the highest cause of decreased satisfaction with a hospital?

Select one:

a. Mismatch between patient s expectation and services received

b. Length of waiting list

c. Non-availability of medicines

d. Time given to the patient by doctor

Question 5

Which of the following factors influence choice of hospital?

Select one:

a. Proximity/time taken to reach the hospital

b. Word of mouth recommendations by family and friends

c. Unavailability of other health facilities in the area

d. All of the above

Question 6

The patients at higher level health facilities (DH and CH) were less satisfied on one aspect compared to the outpatients at lover level facilities. This was:

Select one:

a. Behavior of the pharmacist

b. Queue system at pharmacies

c. Quality of drugs

d. None of the above

Question 7

The higher waiting times at higher level facilities (district and civil hospitals) are attributable to?

Select one:

a. Non-availability of doctors

b. Inefficient registration processes

c. High patient load

d. Behavior of registration clerks

Question 8

Public health services can be improved by making them more responsive to people’s needs and expectations.

Select one:

a. TRUE

b. FALSE

c. True only in case of corporate hospitals

d. False in case of government hospitals

Question 9

Customer satisfaction with a hospital is most influenced by:

Select one:

a. Clinical outcomes

b. Non-clinical outcomes

c. Patient expectations

d. Both clinical and non-clinical outcomes

Question 10

“The main source of information about hospitals is through hospital staff, such as pharmacists and hospital clerks.”

Select one:

a. TRUE

b. FALSE

c. True in case of corporate hospitals

d. True in case of small hospitals of 50 beds or less

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International trade Procedures & Documentation (EDL 313)-Semester III

International trade Procedures & Documentation (EDL 313)-Semester III

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1st Module Assessment

Case Study

Philippines: Adopting the Transaction Basis for Customs Valuation

This study describes the challenges faced by customs officials in the Philippines when they adopted transaction valuation to facilitate imports, and the way in which they overcame these challenges. The Philippines government needed to adopt its international treaty obligations into domestic law, and it did that with two laws. It enacted Republic Act (RA) 8181 in 1997, which enabled transaction valuation reform. However, various obstacles hindered the implementation of this law, and so in 2001 the government adopted RA 9135 to fix the problem in RA 8181 so as to authorize post-entry audit systems.

There had been two major concerns in the Philippines regarding the country’s obligations to shift its customs values from notional published values to transaction values. On the part of the customs authorities, they expected customs collection to go down as importers took advantage of their legal rights, undervalued their imports with fake invoices knowing that customs authorities would never know on time that they did so and so paid lower duties and taxes than they ought to. On their part, domestic producers were fearful that implementation of this obligation would erode their trade protection. The Philippines has nevertheless implemented its obligation and has used transaction values in customs assessments since 2000.

Three and a half year later, the then Customs Commissioner, Antonio M. Bernardo, has been pleased to see that customs collections have been going up. However, domestic producers are still concerned and keep adjusting to these changes. This study documents the policy reform process, assesses the impact of the reform and highlights the tasks yet to be done to implement transaction valuation reform effectively and properly.

I. Why reform customs valuation?

In 1996, when the Philippines enacted RA 8181, its customs valuation procedures deserved a major overhaul, at least from the perspective of reducing corruption and facilitating trade. Its pre-reform rules virtually allowed customs authorities to exercise wide discretion and compel importers to make deals with customs authorities to secure the most privately profitable terms for their businesses, in particular because of high tariff protection. Multiple customs valuation rules had been a tradition since RA 1937 in 1958, when customs authorities could legally calculate duties and tax assessments based on wholesale prices in exporting countries, with domestic prices adjusted appropriately to make these comparable to border prices or invoice values. That was because the law failed to specify when a particular rule should be employed. Because it also prescribed high tariff protection in order to protect domestic industries, RA 1937 sowed the seeds of corruption in customs administration in the Philippines.

The reforms following RA 1937 aimed at undoing the abuses of customs officials. Since 1972 there have been efforts made to publish home consumption values, defined to be the wholesale price of the good at about the time of exportation from the principal markets of the exporting country, and to delegate to the Philippine consular office staff the task of gathering data on home consumption values (HCV) and certifying the authenticity of these values.

The next initiative came in March 1987, when through Executive Order (EO) 186, customs authorities used fair market values, which were defined as the wholesale price of the merchandise being exported to the Philippines in the principal market of the exporting country at the time of exportation or, in the absence of that information, that of a similar good being sold in the Philippines. The EO also ordered the use of the actual cost of freight and insurance instead of an across-the-board 10% surcharge to cover such costs and incorporate other expenses needed to bring the goods to the Philippines to obtain the dutiable value..

With hardly any resulting improvement, EO 186 had to be complemented by a pre-shipment inspection (PSI) requirement to authenticate the declared values of imported merchandise. In 1987 the government contracted the services of the Swiss-based Société Générale de Surveillance (SGS) to do pre-shipment inspections for imported merchandise with a value of at least US$500 coming from Japan, Hong Kong and Taiwan. Thus, in April 2000, when the Philippines had to implement RA 8181, the government decided not to renew the contract with SGS and stopped PSI altogether.

II. RA 8181: a good attempt given the constraints

When the Philippines government incorporated into domestic law its legal obligations under the WTO’s transaction valuation agreement in 1996, the political atmosphere in the country was become increasingly hostile to WTO compliance laws. To give legal weight to these obligations only served to sustain the confrontation between those against globalization and those behind the integration of the economy into the global trading system.

The action taken by the Senate was to retain the use of published values to deter undervaluation, even as transaction values were ordered to be used for customs valuation purposes starting in 2000. The use of published values per se is in compliance with the WTO’s transaction valuation rules, if the prices published are transaction values at the time the merchandise is imported. In the Philippines, however, the published values were home consumption values, not updated in line with the market,(3) neither were the data comprehensive enough to cover all possible imported merchandise

Adjusting import assessment procedures

The customs agency adjusted its import assessment system to implement RA 8181. Pre-shipment inspection had to go, customs officials having concluded that retaining the PSI for valuation purposes would only create problems; they decided not to extend their PSI contract with SGS. The Commissioner, however, extended SGS services for three months or until 31 March 2000 to give the bureau the opportunity to master the new systems and procedures under RA 8181.

The value range information system (VRIS) was introduced to deter attempts to undervalue imported merchandise. The system consists of a database giving high and low transaction values of the merchandise imported in commercial quantities to the Philippines. If the declared value of a given shipment falls outside the range, the importer would have to show the relevant documents to the Valuation and Classification Review Committee (VCRC) to support his declared value. According to Philippines customs authorities, Article 17 of the WTO Customs Valuation Agreement allows the use of the VRIS for validation purposes. If the documents presented failed to remove reasonable doubt, the importer would need to post a bond to support the conditional release of the shipment.

As SGS’s PSI contract ended in March 2001, the Super Green Lane (SGL) facility became operational. The SGL is a facility meant for regular importers, most of whom were concerned about harassment in the post-PSI import processing system. To use this facility, an importer would need to be accredited by the bureau as a low-risk importer. In theory, the SGL goods require only an hour to process, and processing simply involves the matching of payment of duties and taxes with assessment.

SGL merchandise does not go through the bureau’s selection system. Examination of goods may be conducted at random and at the premises of the importer. SGL importers are subject to post-release audit, the purpose of which is to verify whether their import activities are in accord with the bureau’s and other government agencies’ regulations and to help these importers improve compliance.

III. RA 9135: improving the law

The Philippines customs officials realized that using published values as laid down in RA 8181 would only complicate customs administration. However, they needed a proposed alternative to published values before they went back to Congress to ask for an amendment of the law. When the chairman of the Senate Ways and Means Committee asked them for an alternative to published values to assure revenues, the customs officials were not ready with a good answer. They had heard about customs audits from training programmes sponsored by the Asia Pacific Economic Co-operation council (APEC) and executed by individual governments, but did not know how the audits were carried out in the countries that used them.

The need to improve RA 8181

The prevailing message at the Senate hearing was that while RA 8181 enabled transaction valuation, it had to be improved in order to reduce discretion, make valuation more transparent and provide the customs authorities with a post-entry audit system to improve compliance and assure revenues. Rey Nicolas, a customs collector, explained that the six methods were alternate, exclusionary and hierarchical methods, and that the proposed bill in fact limited discretion by making the law more systematic and clear on when and on what to use each method. Senator Enrile, answering a representative of the PMAP, said that the Senate wanted to improve RA 8181. If declared transaction values were truthful, no problem would arise. However, if mistakes occurred, the post-entry audit process would sort these out and help importers improve their compliance in subsequent import transactions.

President Arroyo signed RA 9135 into law on 28 April 2001. Besides enabling transaction valuation in the Philippines, this Act is more transparent and more compliant with the WTO customs valuation agreement, removes unnecessary discretion and assures revenues more positively than does RA 8181.

V. Concluding remarks: lessons learned

The Philippines customs authorities and private businessmen had serious concerns about this reform. The customs agency feared that its revenue collection would be reduced, since it expected the majority of importers to take advantage of its poor capacity for enforcing compliance. Importers would undervalue their merchandise and pay lower duties and taxes. If government officials were worried that undervaluation would reduce collection, Filipino domestic producers were concerned about the erosion of trade protection. Those in the private sector who stood to benefit from the reform were in no position as yet to fathom out the positive consequences. Thus the prospects of poor collection and import competition dominated the policy discussions at the time the government was adopting this reform.

Locking the reform in

The reform does not end with a piece of legislation. There are its implementation and enforcement, which brings this study to a parting remark The risk to watch out for is that the audit group goes down the path of arbitrary selection of those to be audited and in the search for importers’ violations of the Tariff and Customs Code. The cost of failure of post-entry audits is reduced collections, the lack of or incomplete implementation of regulations, and corruption.

There are other improvements in implementation that the Commissioner may want to consider. One is to improve its product description convention so that it becomes more precise and the list is regularly adjusted in line with the market. This reduces unnecessary friction between customs authorities and importers regarding the use of the value range information system..

Question 1: An importer would need to be accredited by the bureau as a____ importer.

 a. Medium risk

 b. High-risk

 c. low-risk

 d. Both a & c

Question 2. APEC stands for ___

 a. Asia Prone Economic council

 b. Asian Pacific Economy council

 c. Asia Pacific Economic Co-operation council

 d. Asia Prone Economy count

Question 3. Philippines adopted ______ to facilitate imports

 a. transaction valuation

 b. Technology

 c. Both a & b

 d. Only a

Question 4. Philippines had to implement RA 8181, the government decided not to renew the contract with SGS and___ stopped altogether.

 a. SPI

 b. SSI

 c. PSIII

 d. PSI

Question 5. President Arroyo signed_____ into law on 28 April 2001

 a. RA 1878

 b. RA 9135

 c. RA 1897

 d. RA 9876

Question 6. Senate wanted to improve ____

 a. RA 6798

 b. RA 8181

 c. RA 8799

 d. RA 4567

Question 7. SGL importers are subject to ____ audit

 a. Post Launch

 b. Pre Launch

 c. post-release

 d. Pre-Release

Question 8. The cost of failure of post-entry audits is reduced collections and ___

 a. Payments

 b. Receipts

 c. Both a & b

 d. corruption.

Question 9. The reform does not end with a piece of ___

 a. Rules

 b. legislation

 c. Procedures

 d. Norms

Question 10. _a customs collector

 a. Rey Nicolas

 b. Jorge

 c. Maria

 d. Annna

10 on 10

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2nd Module Assessment

Case Study

In 2004 Mauritius, a small island state located thousands of kilometres from its major markets, was facing two major challenges: the probable erosion of preferential treatment for its main export product (sugar) and a serious disruption to its textile and apparel industry, as a result of the impending expiration of the global restraint system that encouraged producers to seek out locations that could benefit from marginal quota allocations.

Mauritius’ participation in the multilateral trading system and in various regional agreements reflects its interests as a small, export-oriented economy with advantages in a few products, sugar, textiles and clothing in particular. As part of its economic success is due to preferential market access granted by major trading partners, Mauritius is taking steps to adjust to changes in this international environment.

Notwithstanding its considerable geographic disadvantage and the shocks sustained by the traditional pillars of its economy, Mauritius is a success story. The degree of success achieved is particularly evident when this country is compared to other island states with similar resource limitations.

This case study of Mauritius, based on background research and interviews conducted in Port Louis in May 2004, attempts to examine the basis for this success and to explore the future direction of the economy.

The local and external players and their roles

Mauritius is a multi-racial environment where the official language of business, English, is mixed freely by locals with a French-based patois that most appear to use in their day-to-day dealings with friends and colleagues. The differing ethnic backgrounds of the population, which in other parts of the world so often give rise to political strife and economic discrimination, are embraced positively in Mauritius and seem to have been melded into a distinct local culture.

One cannot help but be impressed by the degree to which the business community and government in Mauritius collaborate on projects designed to improve the country’s economic and trade prospects. There is a long-standing tradition in Mauritius of addressing problems and opportunities through institutional arrangements that bring together main players from the private sector and relevant government agencies. The Chamber of Commerce was already established in the mid-nineteenth century and the Mauritius Chamber of Agriculture opened its doors in 1853.

The single most important co-ordinating body for the private sector in Mauritius is the Joint Economic Council (JEC), established in the early 1970s shortly after the country gained independence. Although dialogue between the JEC and the government was hampered initially by mutual suspicion, the body has evolved over time into an ideal forum for sharing new ideas as well as developing shared views of problems and how best to pursue the country’s economic development. According to Jean Noël Humbert, the general secretary of the Mauritius Chamber of Agriculture, it was in the JEC that discussion was first initiated on turning Port Louis into a regional seafood hub (discussed below) and where the government agreed on the need to fast-track both seafood-related investment approvals and fisheries permits in order to remove any practical difficulties to making the vision a reality.

Crisis management is another important role of the institutional structures evolved in Mauritius. The Sugar Sector Strategic Plan (2001-5) was developed and discussed through these government-industry groupings. The non-sugar strategic plan was also formulated within these structures, as have been the various initiatives to deal with necessary adjustment in the textiles and clothing sector.

Mahmood Cheeroo, the secretary general of the Mauritius Chamber of Commerce and Industry, says that the Mauritian economy has necessarily been open and export-oriented from the start. After serious difficulties in the late 1970s, when Mauritius was the first to adjust under an IMF standby agreement, a strong government with a political mandate undertook a tough restructuring campaign and, with a structured and co-operative buy-in from the business community, charted a course for strong export-led growth in the 1980s..

Challenges faced and outcomes

Mauritius is situated at a considerable distance from international markets with significant purchasing power. Transportation costs are onerous and market development can be expensive. The country has benefited importantly over the past thirty years from preferential arrangements for sugar purchases by the EC as well as from the fact that the quota restraint system for international trade in textiles and apparel helped to create a significant garment production industry on the island.

Overcoming the disadvantages of distance: the tourism sector

Supachai pinpointed a major element when he alluded to the problems faced by small developing countries thousands of kilometres away from major markets. It is obvious to anyone who has had the pleasure of visiting Mauritius that it has major potential as a tourist destination. Some considerations pertinent to this strategy are obvious. Mauritius is a relatively small island with a fragile ecology and environment, especially in areas likely to attract tourist investment. Additionally, apart from the South African market, Mauritius is a long way from sources of tourists who are likely to spend significant amounts of money on beach holidays. Yip Wang Wing explained that an analysis of this situation had led to the adoption of what seems to be a very sensible national policy in respect of tourism. The official policy calls for ‘low-impact’, ‘high-end’ tourism, meaning that the ecological/environmental impact of tourist sites will be low and the tourists visiting Mauritius are likely to spend generously while in the country.

Yip Wang Wing explained the investment strategy along the following lines.

Where the government approves a significant investment in the tourism sector, accelerated investment and amortization allowances form an important part of the package from the start. Approved investors in the sector can amortize the cost of their investment in hotel facilities over just four years and in the case of new investments, 25% of the investment is allowed as a special credit.

In addition to making certain that the right investors put the desired levels of investment into tourism in Mauritius, governmental authorities also concern themselves with the standard of service in approved high-end hotels. Measures are in place to ensure that qualified hotel schools and hotel management certification requirements are met in the sector.

These efforts appear to be paying handsome dividends. Tourism is the third-largest source of foreign exchange earnings for the country and accounts for around 8% of total employment. Mauritius’ international airport has registered a growth in passenger traffic of around 8% a year in recent years.

Dealing with distance: the transport sector

The efforts being made by Mauritius to position itself as an economic hub are complicated by serious logistics competition from Johannesburg and Durban, in South Africa. In order to keep the harbour of Port Louis in the market as an effective player, the government and private sector have worked hard to keep down costs. The Mauritius Marine Authority (MMA) has expanded and modernized the port facilities in recent years and periodically studies new ways of cutting costs. A recent study, referred to as the ‘dwell time for cargo’ study, focused on how to remove identified bottlenecks and move vessels in and out of the harbour in as short a period as possible. The MMA periodically revises port tariffs to reflect market conditions. A programme designed to increase the handling level to twenty-five ‘twenty-foot equivalent units’ (TEUs) per hour by 2005 is contributing to an improvement in labour productivity in the port.

The sugar sector: making the most of a changing environment

Historically, sugar has been very important for Mauritius, and there can be no doubt that the country could not have reached its current level of economic development were it not for the many years of preferential sales of sugar to the European Community under special arrangements. Although Mauritius has a more diversified domestic economy than many other developing countries that are also reliant on sugar exports, sugar remains especially important for Mauritius both because it is the largest single beneficiary of EC preferential purchases and because the island is ill-suited to the cultivation of alternative agricultural crops.

The interviews for this case study were conducted prior to the outcome of the recent EC sugar subsidies dispute, but those interviewed were nevertheless already expecting major change to the long-standing regime and considering how to make the best of the situation through the transition. Humbert gave an overview of how the sugar industry was adapting. The overall area of land under sugar cane cultivation was diminishing, in part motivated by a restructuring plan that would allow for more profitable land use, in some circumstances potentially contributing to the industry’s modernization and also cutting one-third of the workforce in the industry. At the same time, an important part of the strategy called for modernizing and preparing the industry for the future

Financial services

Recognizing that rising income levels and a more well-educated populace would create a demand for more employment in white-collar services industries, the government and the private sector have collaborated very effectively to create an environment in Mauritius which has allowed the financial services sector to prosper and become a major and growing part of the island’s economy. The concept and supporting legislation for offshore banking were introduced in 1991, supplemented by lower tax rates for particular types of bank. In mid-2004 there were twenty-two authorized banks operating in the country, ten under a category-1 licence and twelve under a category-2 licence.

Lessons for others

Many of those interviewed by the author commented that there is in Mauritius today a large level of tolerance prevailing among the populace, notwithstanding the many different religious and ethnic groups present on the island. The first comment from Rajpati, the executive director of the Mauritius Sugar Authority, was that in Mauritius there is a well-established and functioning collaboration between the public and private sectors and that the Mauritian people are accustomed to ‘pulling together’ for the common good.

On the international trade front that is so vital to the country’s well-being, Mauritians are well aware that they have benefited from special preferences and circumstances over the past thirty years, but they are also very conscious that the landscape is changing and that these special features of their international trade cannot be counted on for the future. Their reaction has been to preserve what they can (by, for example, acting to cut costs in sugar production while developing new niche markets for speciality sugars) and, more importantly, experiment with new ideas for the country’s future economic development.

Question 1: Mauritian people are accustomed to ___ for the common good.

 a. Fasination

 b. pulling together

 c. Both a & b

 d. None of the above

Question 2. Mauritius both because it is the ___single beneficiary of EC preferential purchases

 a. largest

 b. Smallest

 c. Medium

 d. only

Question 3. Mauritius has a __ diversified domestic economy than many other developing countries

 a. less

 b. more

 c. high

 d. new

Question 4. MMA stands for ____

 a. Merger Manipulation Agency

 b. Mauritius Marine Agency

 c. Mauritius Marine Authority

 d. none of the above

Question 5. Overall area of land under sugar cane cultivation was __

 a. Developing

 b. Progressive

 c. Both a & b

 d. diminishing

Question 6. Rising income levels and a more well-educated populace would create a demand for more employment in _____services industries

 a. Yellow collar

 b. Blue collar

 c. white-collar

 d. Brown collar

Question 7. The concept and supporting legislation for offshore banking were introduced in __

 a. 1991

 b. 1995

 c. 1989

 d. 1994

Question 8. The MMA periodically revises port ____ to reflect market conditions.

 a. Non – Tariffs

 b. Duties

 c. tariffs

 d. all of the above

Question 9. ___remains especially important for Mauritius

 a. Tea

 b. Tobacco

 c. Tuna

 d. sugar

Question 10. ____ focused on how to remove identified bottlenecks and move vessels in and out of the harbour in as short a period as possible.

 a. dwell time for cargo

 b. Technology

 c. Government

 d. Both b & c

10 on 10

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3rd Module Assessment

Case Study

Malawi is a land-locked country occupying the southern part of the Rift Valley in east Africa. It is bordered by Zambia to the west, Mozambique to the south and east and Tanzania to the north. In 2001, the estimated population in Malawi was 11 million (World Bank 2003). This relatively small sub-Saharan African country is one of the poorest in the world, with GDP per capita of US$163 in 2001 and over half of the poor population living in the rural area.

Malawi is an open economy, but trade openness has not fostered economic growth, as is indicated by the declining figures for economic growth (from 6% in 1990 to -1% in 2001). Merchandise trade has declined significantly over time, with exports decreasing from US$442 million in 1999 to US$310 million in 2001, and imports from US$698 million to US$550 million in the same period (World Bank 2003). Tobacco, tea, sugar and coffee account for 90% of merchandise exports, with tobacco as the main export. There have been some efforts to diversify to non-traditional products such as fruit and vegetables and spices. On the import side, the main imports are vehicles and parts, petroleum fuels, machinery, boilers and parts, electrical machinery, fertilizer, wheat flour, pharmaceuticals, iron and steel.

Agriculture contributes a little more than a third (34%) to Malawi’s GDP, while the manufacturing and service sectors account for 18% and 48% respectively (World Bank 2003). Most of the activities in the service sector are non-tradable. The importance of agriculture cannot be stressed enough: in addition to being the leading export earner, approximately half of Malawi’s citizens who are in paid employment work in the agricultural sector and 85% of the population are supported by it (SADC 2001).

Malawi has removed most of its non-tariff barriers. However, a few import licences and bans for environmental, health, safety and security reasons still exist. The Ministry of Agriculture provides phytosanitary regulations, and the Ministry of Commerce and Industry issues licences for wild animals and other import licences in general. Approximately 29% of all product lines continue to face non-tariff measures (UNCTAD 2001). In the case of live fish, for example, trout face a tariff equivalent of 100%. Imports of this product line require a licence from the Ministry of Commerce and Industry. Import of live animals faces non-tariff measures of 50%. In 2001, Malawi introduced import licences on sugar and import bans on dairy produce and vegetable cooking oil. Even though sanitary and phytosanitary requirements are applied, they are not used to curtail imports. Malawi, like other developing countries, is in the process of preparing new anti-dumping measures and introducing countervailing measures (MG and IAWG 2003). Looking at exports, Malawi is a relatively open country. Since the late-1990s, all trade taxes and quotas on exports have been eliminated (WTO 2002). Export surrender remains only on tobacco, tea and sugar. Export licences are required for a few commodities such as fuel and maize for environmental protection and food security reasons. Tea and raw tobacco are also subject to export licences.

In general, Malawi faces severe trade and economic problems, including declining commodity prices, weak infrastructure, lack of technology, high cost of inputs, lack of access to financing, weak institutional and human capacity, high external debt — all of these have a major impact on trade performance.

The local and external players and their roles

Prior to 1994, Malawi was a one-party state and the government handled trade issues. In recent years, with the introduction of the multi-party system, the new governing structure has made tremendous efforts to include the private sector and non-government organizations in having a say in trade issues. Who are the main local stakeholders? The main department responsible for trade and industry policy is the Ministry of Commerce and Industry. Even though trade issues have taken centre stage in the domestic area, it is disconcerting that the Poverty Reduction Strategy (PRS) does not have a sector-specific plan for trade, meaning that when resources are allocated trade does not feature as a major priority in the development agenda. The good news is that sector-specific trade issues have been addressed in the Malawi economic growth strategy, and part of the strategy will be incorporated in the revised PRS. Other government ministries involved in trade issues include the Ministry of Agriculture, Irrigation and Food Security, which has the main task of formulating agricultural policies and the Ministry of Finance and Economic Planning, the overseer of the overall government budget as well as expenditure and revenue measures; the Malawi Revenue Authority is responsible for tax and tariff administration. The Ministry of Foreign Affairs, the Copyright Society (under the Ministry of Sports and Culture) and the Patents Office (under the Ministry of Justice) also play an important role in trade matters.

Challenges faced and the outcome

This section presents the views and challenges faced by some key stakeholders. To start with, the Ministry of Agriculture, Irrigation and Food Security, one of the key stakeholders, considering that the country is an agriculture-based economy, recognizes the importance of Malawi’s participation in the WTO. However for Malawi to benefit from the WTO process, Mr Lungu, a senior ministry official, argued that the country has to overcome some of the major domestic bottlenecks because ‘if developed countries were to grant Malawi free access to their market, supply-side constraints would hinder the country from enjoying significant gains from the full access’The challenge for Malawi, as an exporter of mainly agricultural products and venturing into exporting more processed products, is that it lacks trained manpower and equipment to address these non-tariff barriers and to comply with WTO commitments. This point was also reiterated by Dr Daudi’s son at the Malawi Bureau of Standards (MBS), the designated enquiry point for the Agreement on TBT and for food safety aspects of the SPS Measures.

Lessons for others (the players’ views)

From Malawi’s experience, lessons can be drawn on how to bring trade into development; how countries may effectively utilize technical assistance; the use of the safeguard mechanism and countervailing measures as liberalization prevails; how to address some of the constraints beyond tariffs and other border measures; and how to handle the issue of preference erosion.

Other lessons that Malawi could provide to other LDCs are to extend tariff bindings beyond agriculture to the manufacturing sector; increase programmes to enhance the participation of the private sector and other stakeholders so that supply-side constraints are addressed; and most importantly, to make sure that countries have missions at the WTO in Geneva.

Question 1: Agriculture contributes to Malawi’s GDP

 a. 34%

 b. 23%

 c. 42%

 d. 78%

Question 2. Export surrender remains only ____on tea and sugar

 a. Oil

 b. tobacco

 c. both a & b

 d. only b

Question 3. Malawi’s experience lessons can be drawn on how to bring trade into _____

 a. Cuture

 b. development

 c. country

 d. Streamline

Question 4. MBS stands for ____

 a. More Brake Somt

 b. More Bureau Standard

 c. Malawi Bureau of Standards

 d. Malawai Bench Standard

Question 5. Ministry of Finance and Economic Planning is the overseer of the overall____ budget

 a. National

 b. Public

 c. Both a & b

 d. Both a & b

Question 6. PRS stands for ____

 a. Poverty Reduction Strategy

 b. Poverty Residual Strategy

 c. Project Reduction Strategy

 d. Project Reduction standard

Question 7. The challenge for Malawi, as an exporter of mainly agricultural products and venturing into exporting ____ processed products

 a. more

 b. less

 c. both a & b

 d. Only a

Question 8. The main department responsible for trade and industry policy is the ___

 a. Ministry of Transport

 b. Ministry of Commerce

 c. Ministry of Commerce and Industry

 d. Ministry of technology

Question 9. the Ministry of Agriculture, Irrigation and ___ , one of the key stakeholders, considering that the country is an agriculture-based economy,

 a. Plantation

 b. Food Security

 c. both a & b

 d. none of the above

Question 10. The Ministry of Foreign Affairs, the Copyright Society (under the Ministry of Sports and Culture) and the Patents Office (under the Ministry of Justice) play an important role in ___.

 a. Economy

 b. Trade

 c. Business

 d. trade matters

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4th Module Assessment

Case Study

Indonesia’s Shrimp Exports: Meeting the Challenge of Quality Standards

Among Indonesia’s fishery products, shrimps contribute the largest foreign exchange earnings. The total value of shrimp exports in 2002, for example, was US$840 million, accounting for about 50% of the total value of fishery exports. However, shrimp exports have been declining during 2000-3. In 2000, Indonesia exported 144,035 tons (US$1,003 million) of shrimp, but this declined to 127, 334 tons in 2001 and 122,050 tons in 2002, or around US$940 million and US$840 million, respectively (Central Bureau of Statistics 2003). As an archipelagic country, Indonesia has 17,508 islands and 81,000 km of coastline which provide an excellent resource for brackish-water shrimp farming to support the growth of shrimp exports.

Japan is the largest export market for Indonesian shrimp, followed by the European Union (EU) and the United States. From the total export amount (122,050 tons) in 2002, 60% was shipped to Japan, 16.5% to the United States and 11.5% to the EU. Indonesia’s shrimp exports to Japan were, on average, 53,000 tons per year, or about 30% of Japan’s total shrimp imports. Meanwhile, Indonesia’s share of (frozen) shrimp exports to the United States is only 5-6%, which is much lower than that of Thailand (31%), Ecuador (20%) and Mexico (13%). Other export competing countries are Bangladesh, China, India, the Philippines, Taiwan and some Latin American countries.

The shrimp business in Indonesia is now under serious challenge, both internally and externally. Internally, the shrimp business faces many problems, especially in the production (farming) phase, such as disease infestation, shortage of shrimp fry, shrimp feed and medicine, regional planning and infrastructure, and farmer empowerment. Externally, the current flooding of relatively ‘cheap’ imported shrimp into Indonesia has had a detrimental effect on the profitability of businesses. Some of them went bankrupt and a large number have been in financial difficulties. Depressed world prices had begun in 2002, when the US government enacted an anti-dumping measure against China, Thailand, Vietnam, Brazil and Ecuador. This low price will potentially reduce incentives for doing business, reduce the quality of Indonesian shrimp and eventually reduce Indonesia’s competitiveness in the world market.

The European Union market

The September 2001 EU regulation obliging all imported shrimp to be free from chloramphenicol was discussed intensively during the second meeting of the ASEAN Fishery Federation (AFA) in Bangkok (4-6 November 2003). AFA member countries revealed their concern about the potential adverse effects of such a regulation. To mitigate the immediate adverse effects, AFA has proposed to the EU the gradual implementation of a zero chloramphenicol content over five years, namely 3 parts per billion (ppb) for the first three years, 1.5 ppb for the remaining two years and finally zero ppb. Some analysts and traders raised their objection to this regulation, pointing out that chloramphenicol is naturally produced by Streptomyces venezuela in the soil and in plankton which is eventually fed to the shrimps. A zero content of chloramphenicol in shrimp may therefore be impossible.

The US market

The US Shrimp Trade Action Committee, an ad hoc committee of the Southern Shrimps Association (SSA), sent an anti-dumping petition to the Department of Commerce and the International Trade Commission dated 31 December 2003 (Bisnis Indonesia, 2 January 2004). It sought anti-dumping action against six shrimp exporting countries, namely Brazil, China, Ecuador, India, Thailand and Vietnam, claiming that these six countries practised unfair trading which harmed the US shrimp grower. Indonesia was, fortunately, not included in this anti-dumping action.

There are two implications of the US action that need to be considered. First, although Indonesia was not included in the anti-dumping action, this measure should be considered as a sign of a future threat to the Indonesian shrimp business and exporters. The US government may decide to take action against Indonesia in future, particularly if Indonesia is found to be re-exporting imported shrimps from China, Thailand and Vietnam. There are signs that some ‘rent seeking’ traders may be undertaking ‘transshipment’ of imported shrimps from these three countries to the main export destination, including the United States. Indonesia’s shrimp imports from China, Thailand and Vietnam have been increasing recently, as a result of the US anti-dumping action against these countries (Kompas, 10 July 2004).

Second, this anti-dumping measure will obviously open a window of opportunity for Indonesia to increase its shrimp exports (and its share) to the United States. High tariffs on Chinese and Vietnamese shrimp imports will make Indonesian shrimps more competitive in the US market. The question, however, is whether Indonesia is able to take advantage of this opportunity. Since the United States imposed anti-dumping duties on Thailand, China and other main exporters, Indonesian exports of shrimp to the United States have increased significantly, from 15,253.5 tonnes in January-August 2003 to 26,679.3 tonnes in January-August 2004, or by about 75% (Putro 2004). The increase has been mainly associated with cultivated shrimps.

The players and their roles

Responses to chloramphenicol contamination

There are two choices for shrimp growers in response to the chloramphenicol problem: the first is using synthetic chloramphenicol that would increase shrimp production and result in shrimp that were ‘free’ from salmonella, but contaminated with chloramphenicol. Second, by abandoning the use of chloramphenicol, growers could produce chloramphenicol (mostly) free shrimp, but would probably reduce their shrimp production due to salmonella infestation. The second option, if chosen, would not free shrimp growers from the quality problem, as the EU also requires salmonella-free (non-contaminated) shrimps. Needless to say, shrimp growers in Indonesia are thus facing a dilemma. For developing countries such as Indonesia, producing salmonella-free as well as chloramphenicol-free shrimps appears to be a difficult, if not impossible, goal to attain at the moment. A more sensible and fairer solution would be for the EU governments to help developing country exporters to comply with such standards. Facilitation through trade, such as technical and financial assistance, can be set up bilaterally or, though WTO fora, multilaterally.

Natural chloramphenicol can easily be distinguished from its synthetic counterpart by a special instrument introduced by the EU. The question is whether this device can be cheaply accessed by typical small-scale Indonesia shrimp growers. The EU should also be willing to bear part, if not all, of the pre- and post-inspection costs regarding quality standard inspection procedures. It is a challenge not only to the Indonesian government but to all world leaders to promote freer and fairer trade in line with the Doha Agenda of the WTO.

Responses and Action to Cheap Imported Shrimp

The world market price of white shrimp is expected to drop due to a peak harvest in many shrimp-producing countries. China, for example, will likely produce more than 350,000 tons of white shrimps in 2005, while Vietnam and Thailand will each produce around 250,000 tons. If shrimp imports from these countries are not controlled, the domestic price of shrimp in Indonesia will certainly be depressed, and shrimp growers will suffer large losses.

Indonesia’s shrimp imports from China, Thailand and Vietnam increased in the period June-August 2004, as a result of the US anti-dumping policy towards these countries. The imported shrimps eventually depressed Indonesia’s domestic prices, since some of them are marketed domestically. At the same time unit production costs have been reported as increasing (to more than Rp 20,000 per kg) in line with an increase in the prices of feed and shrimp fry.

The shrimp market needs to become more diversified in terms of both product and market in order to counter cheap shrimp imports. This calls for a high level of technical assistance from both the government and international organizations (such as the FAO) in order to increase the value added of the product, such as quick-frozen, peeled, butterfly-cut shrimp, and cooked products. Industry development through technical assistance can be implemented by offering simple, low-cost technologies for value adding and by matching buyers and sellers to facilitate market diversification. Indonesia can also promote a locally specific or national quality brand (seal) the better to compete in the international market.

Lessons for others

Indonesia’s shrimp business has been facing serious constraints and challenges, only some of which have been partially tackled. The most critical challenges are related to quality standards, including freedom from antibiotic contamination, imposed by developed country importers, with which the Indonesian shrimp growers lack the capacity to comply. Other problems are the low productivity and high cost of production of domestic shrimps. This last problem creates difficulties in managing trade policy against cheap imported shrimps from major shrimp exporters such as China, Thailand and Vietnam.

The Indonesian government has recently tightened the conditions of issuance of import quality and health certificates in order to avoid the possibility of shrimp transshipment to the United States via Singapore. This initiative is a response to the increasing trend of transshipment using Indonesia’s export certificates, and has been found to be very effective in controlling transshipments and in avoiding Indonesia being involved in possible circumventions through transshipments. In addition to imposing a temporary import ban, Indonesia has also prepared an instrument for the management of the importation of shrimps. In order to stabilize domestic prices and to support domestic shrimp growers, shrimp importers are obliged to absorb domestically produced shrimps according to an import-absorption ratio. This instrument is expected to be effective in guaranteeing that farmers receive reasonable farm-gate prices for their shrimps during the peak harvest period.

Question 1. In order to stabilize domestic prices and to support domestic shrimp growers, shrimp importers are obliged to absorb domestically produced shrimps according to an _______ratio.

 a. Import-Export

 b. Export-Absorption

 c. Both a & b

 d. import-absorption

Question 2. Indonesia’s fishery products, shrimps contribute the largest___ earnings.

 a. Dinars

 b. Euros

 c. Dollars

 d. foreign exchange

Question 3. It is a challenge not only to the Indonesian government but to all world leaders to promote freer and fairer trade in line with the Doha Agenda of the ___.

 a. WTF

 b. WTO

 c. GATT

 d. ARS

Question 4. The current flooding of relatively ‘cheap’ imported shrimp into Indonesia has had a detrimental effect on the ________of businesses.

 a. Loss

 b. profitability

 c. Both a & b

 d. none of the above

Question 5. The imported shrimps eventually depressed Indonesia’s ____

 a. domestic prices

 b. National Price

 c. International Price

 d. all of the above

Question 6. The Indonesian government has recently tightened the conditions of issuance of import quality and ____in order to avoid the possibility of shrimp transshipment to the United States via Singapore.

 a. quantity

 b. health certificates

 c. Both a & b

 d. only b

Question 7. The shrimp market needs to become more diversified in terms of both product and market in order to counter cheap shrimp ___

 a. imports

 b. export

 c. Both a & b

 d. only a

Question 8. The US government may decide to take action against Indonesia in future, particularly if Indonesia is found to be re-exporting imported shrimps from China, Thailand and____ .

 a. Hongkong

 b. Japan

 c. Japan (Vietnam)

 d. Thailand

Question 9. This initiative is a response to the increasing trend of transshipment using Indonesia’s__ certificates

 a. import

 b. Foreign

 c. export

 d. Both a & c

Question 10. ___ is the largest export market for Indonesian shrimp,

 a. Japan

 b. Indonesia

 c. Vietnam

 d. Hongkong

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5th Module Assessment

Case Study

This case study of Fiji explores the way in which its government and people are preparing to deal with the expected end of preferential trading relationships, and is based largely on interviews conducted in Fiji over several days in August 2004. In March 1997 the WTO Secretariat published its report of Fiji’s first review under the Trade Policy Review Mechanism (TPRM)

Fiji’s economy depends heavily on sugar, tourism and clothing. The need to lessen the dependence on the sugar industry may become more urgent as Fiji’s preferential status in its sugar export markets is eroded in the long term. Similarly, the clothing sector, also facing an erosion of preferential access, could require efficiency gains to remain competitive. Diversification of the economy will, however, require attention to the problem of shortages of professional and technical personnel that have resulted from the high rates of emigration over the past decade.

The local and external players and their roles

Fiji’s political and economic relations with the countries affording it preferences for its exported goods — mainly Australia, New Zealand and the European Union (EU) — have long been key to the islands’ prospects for success. As a sign that Fiji’s relations with the EU are more significant than its need to participate in the WTO, Fiji maintains an embassy in Brussels that — as a part-time responsibility — looks after developments in Geneva. Decisions made in Canberra, Brussels and Wellington are critically important to policy-makers in Suva. This is a tough position to be in, and one would expect that it would encourage Fijians to co-operate with each other as a way of promoting a common cause.

The government and the state-owned sugar company have traditionally played a central role in Fiji’s economic development. The government’s Native Land Trust Board and the Fijians it represents is another central actor. Foreign investors are also important, particularly in the garment sector, where they dominate the ownership of the industry. The government and private-sector outside investors should be working together.

Challenges faced and the outcomes

Fiji’s trade and economic prospects are heavily dependent on developments in a few key economic sectors. The challenges faced in these sectors, current policies and likely prospects are explored below.

Sugar

The sugar sector of the global economy is undoubtedly one of the most distorted, given the plethora of production and export subsidies and extremely restrictive access barriers complicating sales to the world’s major sugar-consuming markets. Tragically, sugar is also a commodity that many developing countries have come to depend upon as a mainstay of their local economy and as a principal source of export earnings.

The sugar industry has benefited significantly over the years from access to the EU’s preferential trade regime for sugar. Under the arrangement, the EU pays prices substantially above world market price levels for imports of sugar from specified ACP(5) countries — up to three times the world price —with about half of the preferential import quota allocated to Mauritius and the rest divided among sixteen other ACP suppliers.

Within the EU, changes are being debated to sugar policy that, if implemented, would drastically cut the price paid for preferential sugar imports from ACP countries. The scheme, as it has existed up to now, is collapsing in part under the weight of dramatically increased imports of sugar into the EU from least developed countries under the ‘Everything But Arms’ (EBA) preference arrangement. None could have anticipated nor imagined how quickly EBA sugar suppliers could ramp up their production.

Looking at the current situation in Fiji’s sugar industry, an outside observer could be tempted to reach the conclusion that an unconscious decision has been made to abandon the industry even before the end of the EU’s preference scheme. A critical problem is that of land tenure. Some 87% of the land in Fiji is owned by ethnic Fijian extended families and managed by the Native Land Trust Board (NLTB), and most of the farmland devoted to sugar cultivation was leased, mainly to Indo-Fijians, for thirty-year periods under the provisions of the Agriculture Landlord and Tenants Act of 1976. Those leases, the bulk of which have evidently expired over the past three to four years, are not being renewed. The Indo-Fijians are leaving farms and the ethnic Fijians are evidently not taking up sugar farming in their place. Consequently, sugar production has fallen dramatically as land is taken out of production.

The garment sector

The garment-producing sector is the most important industrial sector in Fiji today and can generally trace its origins to a combination of domestic incentives, the existence of the global scheme of allocated trade for textiles and apparel under the GATT’s Multifibre Arrangement and the WTO successor arrangement, and special preferential trading arrangements put in place by Australia and New Zealand under the South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA). Most of Fiji’s garment factories are foreign-owned and many depend upon preferential access for their continued profitability. In the 1990s the production and export of garments grew rapidly, but in recent years the industry has been hit by three factors that could well threaten its long-term viability.

A first major problem concerns the impending end of quota arrangements under the WTO’s Agreement on Textiles and Clothing (ATC). Faced with the potential closure of many foreign-owned plants that were established in the country solely to take advantage of Fiji’s quota in developed country markets, the government in Suva has had to consider its position in the WTO.

Alternative opportunities for the future

Naturally enough, Fiji’s economic and trade prospects for the future are not limited to sugar and garment production; a number of other alternatives present themselves. In recent years, mining — mainly for gold — has accounted for as much as 3% of GDP, but a combination of technical difficulties in production and wide swings in the world price for gold have undermined the sector’s viability. Fiji is the location of the world’s largest mature mahogany plantation and the country is poised to benefit from the harvesting of this renewable resource. Exploitation of the mahogany plantation has reportedly been delayed by political infighting over how the revenue from the timber should be shared. The author was told by more than one interviewee that tensions over this question contributed to the impetus for the 2000 coup.

Lessons for others: Fiji’s approach to loss of preferences

Many people would argue that in the world of 2004 the sugar industry is not the industry to pursue as a means of making money. Many of them would also argue that the best course of action for a country in Fiji’s circumstances would be to get out of the industry. Such comments ignore the fact that sugar continues to be a mainstay of the Fijian economy and the country’s most important employer.

The outlook is far more optimistic for the garment sector. While it is true that both the government and industry’s first reaction to the end of preferences has been to seek a further extension of special trading arrangements (both in Australia through SPARTECA and in the WTO through association with the Istanbul Consensus group), there are nevertheless reasons to think that Mark Halabe’s vision of Fiji as a cost-competitive niche supplier of quality garments to the Australian market is a real possibility. But that industry needs to remain focused and to take advantage of the time remaining for preferential trade to undertake needed training programmes and investment in technologies contributing to efficiency gains. The Fijian government will likely need to co-operate as well. From the interviews conducted by the author, it seems that many of the garment producers now in Fiji would probably leave if the government implemented its rumoured plans to end the tax-free factory scheme.

Fiji’s failure to deal effectively with skilled labour shortages that were already apparent in 1996 when the WTO Secretariat conducted its trade policy review must be viewed as a serious concern.

Question 1: ATC stands for _____

 a. Air Traffic control

 b. All Transport Control

 c. Aeronautics Theme Count

 d. Agreement on Textiles and Clothing

Question 2. Fiji’s economy depends heavily on sugar,____ and clothing.

 a. Tea

 b. Technology

 c. Rice

 d. tourism

Question 3. Fiji’s failure to deal effectively with ___ shortages that were already apparent in 1996

 a. Unskilled labour

 b. Competetion

 c. skilled labour

 d. Both a & c

Question 4. it seems that many of the garment producers now in Fiji would probably leave if the government implemented its rumoured plans to end the ____factory scheme

 a. tax-free

 b. Tax-imposed

 c. both a & b

 d. None of the above

Question 5. mining mainly for gold has accounted for as much as__ of GDP

 a. 4.60%

 b. 2%

 c. 1%

 d. 3%

Question 6. Most of Fiji’s garment factories are___ and many depend upon preferential access for their continued profitability

 a. foreign-owned

 b. Costly

 c. Old

 d. None of the above

Question 7. SPARTECA stands for ____

 a. Ideology

 b. South Pacific Regional Trade and Economic Co-operation Agreement

 c. both a & b

 d. Only b

Question 8. TPRM stands for ____

 a. Trade Premium Review Mechanism

 b. Trunk Policy Review Method

 c. Trade Policy Review Mechanism

 d. Both a & c

Question 9. ___of the land in Fiji is owned by ethnic Fijian extended families

 a. 45%

 b. 89%

 c. 87%

 d. 98%

Question 10. ____vision of Fiji as a cost-competitive niche supplier of quality garments to the Australian market is a real possibility

 a. Mark zoon

 b. Mark Halabe’s

 c. Hemaann jihg

 d. All of the above

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Assignment 2

Case Study

Thailand: Conciliating a Dispute on Tuna Exports to the EC

Tuna is arguably one of the most well-known and abundant of fish, found in large quantities at supermarkets and convenience stores around the world. It is such a popular sight in its canned form that one may have even dissociated it from its origins as a fish, until reminded of the amusing slogan-cum-brand, ‘chicken of the sea’. As such, it is safe to say that tuna enjoys as much popularity among consumers as the humble and ubiquitous chicken.

On the production side, easy accessibility and popularity translates into big business, thriving markets and fierce competition. For producers of canned tuna, the fish is their livelihood, an important source of income and an industry of serious economic significance, contributing as it does to the national balance of payments, the employment rate and, subsequently, a productive and healthy social climate.

This case study illustrates the manner in which Thailand raised the issue and challenged the EC tariff within the framework of the Dispute Settlement Understanding (DSU) provided for in the WTO Agreement. There are three major stages to the DSU: consultation between the concerned parties, adjudication by Panels and, if necessary, the Appellate Body, and implementation of the ruling. However, it is not always necessary for every case to follow this trajectory and to be taken to Panels. In fact, the preferred path is for members to settle the dispute between themselves, through consultations.

To this end, the DSU provides good offices, conciliation and mediation which may be requested by members if consultations fail to produce an acceptable solution.

The players

The countries concerned here are Thailand and the Philippines on the one hand and the European Community on the other. The Philippines, as a fellow ASEAN and WTO member facing similar difficulties, joined with Thailand in this landmark attempt to prove that preferential tariffs had long been impairing their economic interests, and to seek appropriate redress or compensation from the EC. For the purposes of this case study, however, the focus will remain on Thailand and its actions, although the term ‘complainants’ will be used to refer collectively to Thailand and the Philippines when necessary.

Challenges and the outcome

The initial challenge faced by Thailand was, indeed, how to persuade the EC to enter into discussions on the matter. On 2 March 2000 the EC requested a waiver of its MFN obligations with regard to the ACP Agreement. In the eighteen months following the request until the adoption of this waiver, Thailand had on numerous occasions expressed its concerns relating to the implementation of the ACP Agreement and the negative effects that it would have on their canned tuna exports. They received no response.

At the Doha Ministerial Conference, however, a give-and-take situation presented itself. The EC-ACP Agreement could not be extended without the consensus of all WTO members in approving the adoption of the requested waiver. Realizing that Thailand would not concede, the EC agreed to hold consultations with Thailand and the Philippines (the complainants) to examine their differences. In the end, Thailand agreed to concede on the waiver, on condition that their case be taken up in an appropriate forum, with the aim of resolving the conflict of interest.

Lessons

This is a good example of how developing country members were able to use their WTO rights to secure more equitable treatment from a developed country trading partner. Once the positive resolution had been reached, EU Trade Commissioner Pascal Lamy travelled to Bangkok to inform Thailand’s Minister of Commerce, Adisai Bhodharamik, an indication of continued good relations between the two trading partners. Indeed, Chanintr emphasized that, although the tariff situation was of great importance to its canned tuna industry and national interests, Thailand made a conscious effort to maintain good relations with the EC throughout the proceedings.

Question 1: DSU provides good offices, conciliation and___ which may be requested by members if consultations fail to produce an acceptable solutio

 a. Support

 b. ventilation

 c. mediation

 d. none of the above

Question 2. DSU stands for ___

 a. Delhi Safety Unit

 b. Dispute Settlement Understanding

 c. Distance Safe Zone

 d. Dispute Settlement Unit

Question 3. EU Trade Commissioner ___

 a. Assrohm

 b. Kyle monn

 c. kim cheggs

 d. Pascal Lamy

Question 4. On 2 March ___ the EC requested a waiver of its MFN obligations with regard to the ACP Agreement.

 a. 2008

 b. 2000

 c. 2006

 d. 1989

Question 5. The EC-ACP Agreement could not be extended without the consensus of all ___ members

 a. WTO

 b. UNESCO

 c. Both a & b

 d. all of the above

Question 6. The ____as a fellow ASEAN and WTO member facing similar difficulties joined with Thailand

 a. Hongkong

 b. Malaysia

 c. Both a & b

 d. Philippines

Question 7. There are three major stages to the DSU: consultation between the concerned parties, ______and the Appellate Body, and implementation of the ruling

 a. Boad of conciliation

 b. Expert panel

 c. adjudication by Panels

 d. both b & c

Question 8. Tuna enjoys as much popularity among consumers as the humble and ubiquitous ____

 a. Fish

 b. chicken

 c. Both a & b

 d. all of the above

Question 9. ___is arguably one of the most well-known and abundant of fish, found in large quantities at supermarkets and convenience stores around the world

 a. Tuna

 b. Junkyard

 c. dolphin

 d. octopus

Question 10. ____agreed to concede on the waiver, on condition that their case be taken up in an appropriate forum, with the aim of resolving the conflict of interest.

 a. Europe

 b. Bangkok

c. Thailand

 d. Pataya

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International Economics & Policy (EDL 312)-Semester III

International Economics & Policy (EDL 312)-Semester III

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1st Module Assessment

After a decade since the end of civil unrest, Angola economy started an intense reconstruction process, boosted by booming economy based on oil exports and diamonds. During this on-going phase, the Angolan economy has increasingly become an important player in Southern Africa international trade, with imports as a critical part of the economy. Thus, controls on imports needed tightening to secure duties and taxes, previously lost.

The government launched a massive customs modernization program, including radical legal changes which could impose large penalties to non-compliant economic operators. Part of this challenge laid in communicating new obligations to importers with appropriate dissemination.

Since January 2002, Bureau Veritas has been contracted to conduct Pre-Shipment Inspections (PSI) for the Angolan Government. The main objective was to tighten customs controls to increase revenues from duties and taxes on goods entering Angola. Bureau Veritas implemented a dedicated structure in Angola with 60 employees in the capital Luanda and nearly 30 additional employees in 5 provinces: Cabinda and Soyo in the North, Lobito in the South, Namibe further South and Santa Clara at the border with Namibia.

Bureau Veritas built up a comprehensive database relating to import certificates issued which it, continuously shares with customs authorities as well as other offices in Angola. In parallel, Bureau Veritas became responsible for communicating to both importers and exporters all new regulations established by Angolan Authorities.

Seminars and workshops were held to raise the understanding of the new obligations, not only in Angola but also in some of its key trade partner nations: Portugal, South Africa, and Brazil. Bureau Veritas approach is to treat importers as clients, supporting their needs to understand all new regulations and increase awareness to avoid penalties and delays.

Bureau Veritas worldwide network has been greatly appreciated by the client; the network structure was adapted to suit Angola´s needs. Customs officials have received necessary training and Bureau Veritas continuously shares information to support controls.

The Angolan Customs authorities report excellent results after the implementation of their modernization program. From revenue receipts of $200 million on imports in 2002, the figure rose to $3.797 billion in 2010, a remarkable improvement of nearly 1800% in 7 years. Tighter legal, and customs controls have led to greater confidence in trading with the country. Correct revenues are being paid and it is widely recognised that they are contributing to the financial health of the nation’s economy.

The speed of processing imports also improved, dropping from an average of 40 days to 10-15 days currently. Close communication with importers and exporters reduced misinterpretation of legal obligations. Angola also benefits from detailed reporting of inspection certificates, a comprehensive and updated valuation database of imported goods, as well as online access to documents related to imports subject to PSI. Permanent communication between Customs officials and Bureau Veritas proved to be beneficial for this partnership

Question 1: Agola economy started reconstruction process boosted by booming economy based on __

 a. daimond

 b. Oil exports & diamond

 c. gold

 d. Bronze

Question 2. Bureau Veritas approach is to treat importers as clients, to understand all new regulations and increase awareness to avoid ___

 a. penalties

 b. Tax

 c. Both a & b

 d. penalties and delays

Question 3. Bureau Veritas Has been contracted to conduct__ for angloan government

 a. Pre-shipment inspections

 b. Shipment

 c. both a & b

 d. none of the above

Question 4. Bureau Veritas implemented a dedicated structure in Angola with _______employees in the capital Luanda

 a. 20

 b. 30

 c. 40

 d. 60

Question 5. Speed of import processing dropped from average 40 to ___

 a. 20-30 days

 b. 12-15 days

 c. 10-25 days

 d. 10-15 days

Question 6. The government launched massive____ which could impose penalties on non-compliant economic operators

 a. Schemes

 b. Rules

 c. Customs modernization programs

 d. Regulations

Question 7. The main objective of the government was to increase ____ from duties and taxes from goods entering angola

 a. Profit

 b. Sales

 c. Revenues

 d. none of the above

Question 8. ___ became important player in south african International trade.

 a. Australia

 b. New zealand

 c. Angolan Economy

 d. All of the above

Question 9. ____ and customs controls have led to greater confidence in trading within the country

 a. Tighter Legal

 b. legal

 c. both a & b

 d. all of the above

Question 10. ____ became responsible for communicating to both importers and exporters all new regulations established by Angolan Authorities.

 a. Norway

 b. Bureau Veritas

 c. Government

 d. none of the above

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2nd Module Assessment

After periods of civil disturbance, the Côte d’Ivoire government needed to reinforce the country’s economy. One way was to modernize customs control. The Ministry of Finance wanted to encourage international trade, while also making sure that correct import duties and taxes are paid. To achieve these goals, the government focused on the country’s sea ports, especially its main port in Abidjan. To attract trade, it was important to make the ports more efficient and secure. New customs and security systems were needed to maximize revenues and also to prevent illegal trade.

The government decided to implement a scanner for inspecting imported goods inside containers at the port of Abidjan. To install and operate the scanner, Bureau Veritas (through its subsidiary dedicated to facilitating trade, Bivac) was chosen because of its strong technical expertise. The government invested in the most modern scanner available. There are only two others like it in the world: one on the UK side of the Channel Tunnel, the other at the port of Marseille. It is bigger than other scanners, and can be used to inspect two 40-foot containers at the same time. Up to 30 containers can be checked every hour. The scanner is extremely sensitive. For example, trained staff can look at the color x-ray image and see the difference between a new and a used car tire. Another example: they can count exactly how many computers are inside a container, then compare with the number of computers declared on transport documents. If extra tax or duty needs to be paid, it can be decided almost instantly. As a result, illegal or undeclared items can be found quickly and easily. The Bureau Veritas team works closely with Customs officials. A certificate is given to each container that passes the scanning. Customs can then authorize the container. About 50 Bureau Veritas staff are based at the Port of Abidjan, with two teams of 6 people who are trained to analyze the images.

The new scanner began operating in early 2006. There are many advantages. Imported goods are now being cleared by Customs more quickly. The port of Abidjan is able to serve more customers in less time. It is building a reputation for being more modern, secure and efficient. The systems are now in place to increase revenues from import duties and taxes. Information about containers and the goods they carry is shared with Customs in a quick, efficient way. Bureau Veritas is working in close partnership with the Customs Department to provide a reliable and effective service.

Question 1. A certificate is given to each container that passes the ____

 a. Drawing

 b. Creating

 c. scanning

 d. None of the above

Question 2. After periods of civil disturbance, the government needed to reinforce the country’s ____

 a. Technology

 b. Growth

 c. economy

 d. none of the above

Question 3. It is bigger than other scanners, and can be used to inspect two _____ at the same time

 a. 50-foot containers

 b. 40-foot containers

 c. 20-foot containers

 d. 10-foot containers

Question 4. New customs and security systems were needed to maximize revenues and also to prevent ____

 a. Illegal trade

 b. Loss

 c. Dealys

 d. Both a & c

Question 5. The government decided to implement a ____ for inspecting imported goods inside container

 a. Device

 b. scanner

 c. Technique

 d. Tool

Question 6. The new scanner began operating in early ___

 a. 2008

 b. 2006

 c. 1987

 d. 2005

Question 7. The port of Abidjan is able to serve ____ customers in less time

 a. Less

 b. 28

 c. 34

 d. more

Question 8. There are only two others like (scanners)it in the world: one on the UK side of the Channel Tunnel, the other at the port of ____

 a. Germany

 b. Port Blair

 c. Both a & b

 d. Marseille

Question 9. To achieve these goals the government focused on the country’s sea ports, especially its main port in _____

 a. Australia

 b. Sweden

 c. Both a & b

 d. Abidjan

Question 10. Trained staff can look at the color ___ image and see the difference between a new and a used car tire

 a. z- ray

 b. x-ray

 c. Blurr

 d. all of the above

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3rd Module Assessment

The Central African Republic wished to implement a program to manage the sustainable harvesting of its forests and natural resources and ensure efficient and accurate collection of export duties on derived wood products. The diversity and scope of the Congo Basin’s ecosystems constitute one of the world’s premier forest resources and are subject to intense economic pressure. Since 2005, the Government has been focusing on strengthening all actions undertaken to promote wood products exports (logs and sawn timber), while enforcing clearly established rules and regulations for the industry, and has sought to bring all forest concessions under durable and responsible management (end 2011).

Bureau Veritas and its subsidiary BIVAC RCA, working closely with authorities (Ministries of Finance, Commerce, Water and Forests, Hunting and Fishing), have developed a verification program for exported forest products guaranteeing the collection of export duties.

The programme comprises:

1) Inspection, identification and tagging of all logs and sawn wood for export in compliance with international rules

2) Implementation of an accurate and reliable duties collection system for all wood product exports

3) Set-up of an audit trail, from the production location all the way to the port of shipment via the primary border crossings into Cameroon

4) Training local BIVAC RCA inspectors and agents of the administration.

By 2014, all wood from the Central African Republic slated for shipment to the EU must have a license guaranteeing the legality and traceability of exported wood products.

Since 2005 wood products for export are identified, quantified, inspected and traced from Central African Republic to the point of shipment. At the end of 2011, the state signed onto the Forest Law Enforcement Government and Trade (FLEGT) through voluntary partnership agreements with the European Union. Bureau Veritas and its subsidiary BIVAC RCA have a direct impact on the FLEGT process by: ensuring inspection and traceability of products produced through sustainable development, ensuring recognition in terms of ethics, professionalism and transparency with regard to all actors in the wood industry (public and private sector), and guaranteeing optimized duty collection.

Question 1. All wood from the Central African Republic slated for shipment to the EU must have a _____

 a. Permission

 b. license

 c. Authority

 d. None of the above

Question 2. At the end of 2011, the state signed onto the _____ through voluntary partnership agreements with the European Union

 a. Treaty

 b. Policy

 c. Forest Law Enforcement Government and Trade (FLEGT)

 d. both a & b

Question 3. Bureau Veritas and its subsidiary BIVAC RCA have a direct impact on the ______ process

 a. Economy

 b. FLEGT

 c. Growth

 d. All of the above

Question 4. Bureau Veritas focussed on ____

 a. Inspection

 b. Traceability of products produced through sustainable development

 c. Ensuring recognition in terms of ethics

 d. All of the above

Question 5. Bureau Veritas has a subsidiary named ____

 a. Angolan

 b. Ban thang

 c. BIVAC RCA

 d. Abdijain

Question 6. Government has been focusing on strengthening all actions undertaken to promote _____ exports

 a. wood products

 b. Glass

 c. Bronze

 d. Brass

Question 7. Implementation of an accurate and reliable duties collection system for all wood product exports is looked after by ___

 a. Bureau Veritas

 b. BIVAC RCA

 c. Both a & b

 d. Government

Question 8. The diversity and scope of the Congo Basin’s ecosystems constitute one of the world’s premier ____

 a. Water resources

 b. wildlife

 c. Both a & b

 d. forest resources

Question 9. verification program for exported forest products comprises – Inspection, _____of all logs and sawn wood for export in compliance with international rules

 a. Identification

 b. scrutny

 c. Tagging

 d. identification and tagging

Question 10. _____wished to implement a program to manage the sustainable harvesting of its forests

 a. U.S

 b. Central African Republic

 c. New zealand

 d. All of the above

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4th Module Assessment

The Company Infinity Air was founded in 1977 by Jimmy Wu, the child of immigrants from China. The company, a manufacturer and distributor of new and refurbished aircraft parts for the commercial aerospace industry, has sold $63 million in products and services to customers in 60 countries. The export of parts alone accounts for more than half of total worldwide sales. Five aircraft manufacturers, including Boeing, account for 80 percent of Infinity Air’s repairs and spare parts. Aircraft serviced are mainly Boeing’s 737-600-900 series, 767 twin-aisle, 747-400, and 777 aircraft. Today, the company employs 115 people and operates out of a 160,000-square-foot facility in southern California, with two additional locations in Seattle and Miami. Because the business is global, Wu has plenty of lower-cost competitors, and he can’t compete on a dollar-for-dollar basis with low-wage countries in Asia. His higher costs coupled with fluctuations in the business cycle were constant worries. Wu says that Infinity Air competes on innovation and business process. “Because of these processes,” he says, “we perform the service in less time and have a strong reputation for reliability and technical support—that’s the key to our international success.” For example, Infinity uses technology to manage customers’ procurement and repair. “We constantly try to be imaginative in everything we do—to make the best products, deliver the best service.” Wu said he also relies on free trade agreements to give him a competitive edge, though they are not a substitute for creativity and innovation. While Korea has always been a good market for Infinity Air, it’s getting even better now with the U.S.- Korea Free Trade Agreement. “It put a spring in the step of our business there. Korea is a huge market for us, and with the trade agreement in place, the market just got a whole lot bigger. We’ve already seen a spike in sales, with new orders coming from the Korean government for maintenance on regional jets, helicopters

Question 1. Company employs ______ people

 a. 123

 b. 345

 c. 567

 d. 115

Question 2. company operates out in southern California, with two additional locations in _____

 a. Seattle

 b. Miami

 c. both a & b

 d. none of the above

Question 3. Infinity Air competes on innovation and ___

 a. Creativity

 b. business process

 c. organizations

 d. all of the above

Question 4. Infinity Air do not substitute for Creativity and __

 a. technology

 b. Labor

 c. Innovation

 d. Capital

Question 5. Infinity Air has plenty of ____ competitors

 a. High cost

 b. Higher cost

 c. Medium cost

 d. Lower cost

Question 6. Infinity air is getting new orders coming from ___ for maintenance on regional jets & helicopter.

 a. US government

 b. Angolan government

 c. Korean government

 d. none of the above

Question 7. Infinity air was a manufacturer and distributor of new and refurnished ___

 a. Screws

 b. Nuts

 c. aircraft parts

 d. Both a & b

Question 8. Jimmy Wu was known as ___

 a. Innovator

 b. the child of immigrants from China

 c. technocrat

 d. none of the above

Question 9. The Company Infinity Air was founded in ____

 a. 1977

 b. 1987

 c. 2003

 d. 1978

Question 10. The export of parts of aircrafts alone accounts for ___ than half of total worldwide sales

 a. less

 b. very less

 c. both a & b

 d. more

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5th Module Assessment

Zeigler Brothers began in 1935 by selling livestock feed to farmers near Gettysburg, Pennsylvania. Brothers Ty and Leroy ran the business until Leroy’s son, Tom, took over and changed direction to focus on research and development of specialty animal foods and aquatic diets. Today, the company has two manufacturing facilities in Pennsylvania and two in Mexico, supplies 300 different products, and sells to 50 countries. Zeigler Brothers is a 2013 recipient of the President’s “E” Award for Exports. Chris Stock is the international sales manager. Most of the challenges faced by the company are in the form of helping customers deal with localized issues such as diseases that affect the fish species being farmed. Other concerns include how to find and perform due diligence of prospective customers and to make sure we understand the environmental regulations in the countries in which it does business. Zeigler had a fire about 6 years ago that devastated one of its production facilities. According to Stock, “The fire actually helped us to become more efficient, to make the most of what we have, and to modernize some things as well. We made the most out of what was a terrible situation and really didn’t skip a beat. Our customers are very loyal. And they helped see us through. And it’s amazing how far the company has come since that fire not so long ago.” Zeigler needed to grow, and to do that, it opted to expand its exports, which grew rapidly during the past 5 years and now represent a bit more than 50 percent of total sales. Zeigler now exports to 40–50 different countries every year. Zeigler focuses on markets that could be classified as having more risks than others, such as Nigeria and Ghana in West Africa, and Vietnam, the Philippines, Thailand, and Indonesia in Southeast Asia. India and China are also included. Said Stock, “Africa is on the cusp, I think. A lot of people see the opportunity, so it’s a great time to get in early, because it’s a huge emerging middle class that’s developing there with spending power. They need things more than any other part of the world. They Chris Stock with customers in Vietnam Success Story: Zeigler Brothers 43 have a lack of access to some of the higher-tech products and things that the United States can offer.” Another solution for Zeigler is the U.S. Commercial Service, which Stock calls “a reliable go-to kind of hub.” “In general, we come to them when we have export regulatory issues and we need somebody inside the government to guide us. A big thing about exporting is knowing that you don’t know it all and you’re always going to need support. The government has helped bring us into new markets. We went on a trade mission to Ghana when we were getting our Africa business warmed up and met people there that are clients now and important partners.” Stock believes the company is better as a result of its exporting efforts. “It challenges us. We are able to take opportunities and things we learn in one country and apply them elsewhere. So we’re always learning and one of the great parts about our job is we’re connecting people throughout the world and bringing ideas from one place to the other, whether or not they directly impact our product. We’re a facilitator and our customers see that. And I think it’s a very strong point when they get to know us is that we’re connected throughout the world and bringing solutions from one corner to the next.” One concrete example is making our products easier to use. Stock said: “In Southeast Asia, we were struggling with language barriers. We’ve been very ingrained in Latin America, very comfortable working with bilingual Spanish products and clients. But as we enter the Southeast Asian market we encounter the diversity of languages. Also because we’re in agriculture, one of the end-users of our products may have limited education or ability to read—so our products can be technical in nature, and how do we overcome these hurdles? And so we’ve begun developing and incorporating visual aids, videos, icons, logos, things that will help them understand how to use the product, what it’s designated for. And we’re able to take that and apply it elsewhere, because it is a universal need, but it’s being driven by a specific market area force at the moment.” Perhaps the biggest lesson is that exporting is a “no-brainer.” Stock said: “You should be exporting. If you’re not, start learning about it, talk to other exporters and just go for it. I think the key things to exporting are persistence and patience. You have to realize that when you get in this, it may not be immediate sales, it may take years, but you have to have the long-term vision. If you’re willing to go through a couple of ups and downs, it can pay off in dividends. If you don’t enter the export market, you’re limiting your sales in a big way, no doubt about it.”

Question 1. Challenges faced by the company are in the form of helping _____ with localized issues

 a. customers deal

 b. Consumers

 c. Needy

 d. None of the above

Question 2. exporting is a ___

 a. Game

 b. Gamble

 c. Experience

d. no-brainer

Question 3. Exports go through a couple of up and down but it can pay off in ___

 a. Installments

 b. some time

 c. Dividends

 d. specific time bound

Question 4. key things to exporting are ____ and patience.

 a. Capital

 b. International relations

 c. dividends

 d. persistence

Question 5. Zeigler Brothers is a 2013 recipient of the ____ for Exports

 a. Prestige award

 b. President’s “E” Award

 c. Innovator award

 d. None of the above

Question 6. Zeigler focuses on markets that could be classified as having ___ risks than others

 a. Less

 b. Medium

 c. more

 d. all of the above

Question 7. Zeigler had a fire about 6 years ago that devastated one of its ____ facilities

 a. Manufacturing

 b. production

 c. Technical

 d. Both a & b

Question 8. Zeigler is the _____

 a. Owner

 b. Competitor

 c. U.S. Commercial Service

 d. All of the above

Question 9. Zeigler needed to grow, and to do that, it opted to expand its exports, which grew rapidly now represent a bit more than _____ of total sales

 a. 40%

 b. 50%

 c. 30%

 d. 23%

Question 10. Zeigler now exports to ___ different countries every year.

 a. 40-50

 b. 23- 56

 c. 34-89

 d. 20-56

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Assignment 2

In October 2016, Shenzhen-based networking and telecommunications equipment and services company Huawei Technologies Ltd. (Huawei) unveiled its 14-port and 3-D Hexa-beam antennas to address the challenges associated with the 4.5G and 5G era at the 5th Annual Global Antenna and Active Antenna Unit Forum held in Paris. Commenting on the launch, Zhang Jiayi, president of Huawei’s antenna business unit, said, “Huawei focuses on satisfying the requirements of operators in the MBB (mobile broadband) era.”

Founded in 1987 in Shenzhen by Ren Zhengfei (Ren), a former military engineer in the People’s Liberation Army (PLA) – the unified organization of the armed forces of China, Huawei started as a sales agent for a Hong Kong-based company selling private branch exchange (PBX) switches. Soon, the company innovated and started selling its own PBX switches. Having established its domination over the Chinese telecommunications market, the company entered the global markets of Russia and Africa in 1996 and later mature markets such as the US and Europe.

The origin of Huawei Technologies Ltd. (Huawei) dated back to 1987 when Ren Zhengfei (Ren), a former military engineer in the People’s Liberation Army (PLA), founded the company in Shenzhen with the aim of making it the backbone of China’s communications industry.

The company started as a sales agent for a Hong Kong company selling private branch exchange (PBX) switches with an initial investment of US$ 3400. By 1990, it had acquired enough resources to open its first research laboratory. In the same year, i.e. 1990, the company made its own PBX and started selling the switches to hotel networks at prices lower than those of imported devices

HUAWEI’S INTERNATIONALIZATION STRATEGY

In the mid-1990s, the Chinese domestic telecommunications networking equipment market was dominated by giant international telecom equipment companies. Their dominance led to Huawei having a relatively weaker position in China. Ren believed that the Chinese telecommunications market was the largest and among the most open markets in the world attracting global telecommunication giants to the country. As a result, he felt, “The best food has all been eaten up by the global giants and what we can do is to have those leftovers.” This prompted Huawei to consider entering international markets. Commenting on its international expansion, Ren, said, “We were forced to go into the international market for our very survival.”

CHALLENGES IN THE GLOBAL TELECOM MARKETS

Though Huawei achieved huge success in several global markets, the US was a different story altogether. Despite bidding several times since the company first entered America, Huawei failed to win a single big contract from top-tier carriers such as AT&T, T-Mobile, and Verizon. The US telecom companies had had long relationships with home-grown suppliers such as Lucent, Motorola, and Cisco. Moreover, the US telecom majors felt that while the telecom equipment manufactured by Huawei was fine for emerging markets, it was not reliable or suitable for the 24/7 service required by networks in the US. Though by 2011, Huawei had developed some of the most innovative and fastest equipment in the telecom industry, it continued to face resistance in the US….

While Huawei was making several efforts to crack the global telecom markets, in July 2015, Malcolm Turnbull, Communications Minister, Australia, stated that amidst security threats, telecom companies in Australia had been barred from using equipment from Huawei and ZTE. This meant that Huawei would lose its existing business in Australia since it provided equipment for consumer devices and backend networks for Vodafone and Optus. There could also be more trouble in store for Huawei with the Pentagon and the US military announcing plans in October 2015 to ban the use of Huawei equipment.

In November 2016, when the US telecom market announced its plans to build the nation’s 5G wireless network, Huawei was also gearing up to roll out its 5G wireless network by 2020. Though Huawei had earlier stated that it had given up on the US market, Ren hinted that the company had not given up on the country permanently and that it planned to make a “glorious” return to the US. However, Huawei stated that it would not focus on the US market currently but would concentrate on other global markets. According to Ken Hu (Hu), Huawei’s CEO-in-rotation, “For our 5G strategy, we currently focus on markets like China and Japan among others. In the US right now, we’re not making significant progress and we don’t have big plans for that market.” ….

Question 1: 5th Annual Global Antenna and Active Antenna Unit Forum was held in ____.

 a. London

 b. sweden

 c. Paris

 d. Hongkong

Question 2. Chinese domestic telecommunications networking equipment market was dominated by giant ____ telecom equipment companies.

 a. National

 b. State

 c. international

 d. Regional

Question 3. Huawei started as a sales agent for a Hong Kong-based company selling ____ switches.

 a. Multiple

 b. Complex

 c. Both a & b

 d. private branch exchange (PBX)

Question 4. Huawei Technologies Ltd. (Huawei) is Shenzhen-based networking , _____and services company

 a. cable

 b. telecommunications equipment

 c. Television

 d. Internet

Question 5. Huwaei started selling the switches to ____ at prices lower than those of imported devices

 a. 5g

 b. hotel networks

 c. Cable

 d. all of the above

Question 6. Ren Zhengfei (Ren), a former military engineer in the People’s Liberation Army (PLA), founded the company in Shenzhen with the aim of making it the backbone of_______.

 a. Economy

 b. China’s communications Industry

 c. Telecom industry

 d. None of the above

Question 7. Telecom companies in Australia had been barred from using equipment from Huawei and ______

 a. Hongkong

 b. ZTE

 c. US

 d. Sweden

Question 8. US telecom majors felt that while the telecom equipment manufactured by Huawei was fine but was not suitable for the ______service required by networks in the US.

 a. Regular

 b. night

 c. both a & b

 d. 24/7

Question 9. US telecom market announced its plans to build the nation’s ___ wireless network

 a. 2G

 b. 3G

 c. 4G

 d. 5G

Question 10. ____ the president of Huawei’s antenna business unit.

 a. Zhang Jiayi

 b. Shan ghai

 c. Jimm see chnn

 d. Both b & c

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International Trade Finance (EDL 311)-Semester III

International Trade Finance (EDL 311)-Semester III

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1st Module Assessment

Wal-Mart, the largest retailer in the world, with over 7,800 stores, has been working steadily to improve sustainability. From installing green roofs to rolling out a more efficient trucking fleet, the company has moved forward internally, but now it is bringing its suppliers along.

Wal-Mart has been pushing sustainability since adopting the strategy in 2005, establishing goals of being 100% fueled by renewable energy, producing zero waste and selling products that will sustain the environment.

So how does that happen? In one famous example, the company began working with Unilever plc in 2005 to sell concentrated laundry detergent in a 32-ounce container (equivalent to 100 ounces under a previous formulation). Consumers got a more powerful detergent in a smaller package. Three years after rollout, the new container had saved 80 million pounds of plastic resin, 430 million gallons of water and 125 million pounds of cardboard, according to a company fact sheet. More importantly, it became an industry standard, prompting other packaged goods companies to switch to concentrated detergent as well.

Wal-Mart’s zero waste initiative is also moving forward. The company, which is aiming to eliminate all its landfill waste by 2025, was able to reduce waste by 57% between 2008 and 2009. It did so by improving inventory management, increasing donations and ramping up recycling (including 25 billion pounds of cardboard).

Now it is striving to push these criteria down into the supply chain on a three-stage path. First, it wants suppliers to rate their products on sustainability criteria. Second, it wants to gather data on product life cycles. Third, it is creating a sustainability index that will increase transparency for the consumer.

The first initiative, rolled out earlier this year, involves a questionnaire sent to more than 100,000 suppliers. It polls them on four categories: their energy and greenhouse gas emissions, waste and quality initiatives, “responsibly sourced” materials and ethical production.

Products are also being measured through their life cycles. Collaborating with academics, retailers, NGOs, suppliers and government in a consortium, Wal-Mart’s goal is to build a global database of product information. As environmental business consultant Joel Makower wrote on his blog, http://makower.typepad.com, “the consortium’s mandate is to focus on how to evaluate products, which Wal-Mart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores.”

That data will be used to develop an index consumers can use to evaluate products, though it’s still unclear how that information will be measured and presented. Nor is there a timeline for rolling out such an index.

Impact: Wal-Mart wants its sustainability index to be open to all, becoming a standard to measure and communicate the green credentials of a product and thus becoming “a tool for sustainable consumption.” In the process, the exercise of measurement itself may reap rewards in more efficient production, less waste and lower emissions — all of which are also cost-saving measures.

Question 1. Initially walmart has collaborated with ___

 a. Kroger

 b. Unilever Plc

 c. Costco

 d. Kroc

Question 2. Sustanability index will be used by ___ to evaluate products

 a. Customers

 b. Employees

 c. consumers

 d. CEO’s

Question 3. walmart also focusses on ___measures

 a. cost saving

 b. Quality

 c. Both a & b

 d. None of the above

Question 4. Walmart has ___ stores all over the world

 a. 8200

 b. 6789

 c. 45637

 d. 7800

Question 5. Walmart is 100% fuled by ___

 a. World Bank

 b. Stakeholders

 c. Renewable energy

 d. Both a & c

Question 6. walmart is aiming to eliminate all its landfill waste by improving ___

 a. capital involvement

 b. Inventory management

 c. Techniques

 d. Labor

Question 7. walmart is working to increase its _____

 a. sales

 b. Revenue

 c. Profit

 d. sustanability index

Question 8. Walmart works for ____ initiative

 a. zero waste

 b. Green

 c. Child health

 d. Effeciency

Question 9. _ can also be used to eliminate landfill waste

 a. Recycling

 b. Resuing

 c. Both a & b

 d. All of the above

Question 10. ___ is the largest retailer in the world

 a. Kroger

 b. walmart

 c. Costco

 d. The home depot

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2nd Module Assessment

Case Study

Given its business of mining over 5 million tons of rock a day, Rio Tinto has a big footprint. The mines are expensive, take decades to fully develop and are not portable if something goes wrong. To reduce the political and economic risk and thus ensure steady returns, Rio Tinto has sought to win the backing of local communities, governments and the societies in which it operates.

About a decade ago, Rio Tinto came up with the concept of working within communities on outreach and social and economic development. At the time, the company was developing a mine in Madagascar that was a source of contention with NGOs, which were worried about threats to biodiversity and the local community. Ninety percent of the island had already been cleared by farming, grazing and charcoal production; the mine was situated in one of the island’s last pristine regions. The challenge was to create an operation “respectful to the environment, respectful of our employees, that is seen to be sustainable,” said CEO Tom Albanese.

A plan was developed to protect the environment and create economic opportunities in the communities surrounding the project, setting up standards and goals for the company to meet. These in turn aligned with broader company policies on environmental stewardship, social well-being, governance and economic prosperity.

Putting this strategy to work, Rio Tinto created a long list of measures, including:

• Policies to protect biodiversity and water quality around mine locations

• Employment for aboriginal peoples living near its mines

• Training programs to shift employees from manual labor to skilled positions

• Plans for the day when mining would be done, seeking to prevent “ghost towns”

• Goals for greenhouse gas emissions and energy use

Impact: Through these coordinated initiatives, Rio Tinto has obtained what it calls a “social license to operate.” The company felt an urgency because it recognized a global brand risk if it operated without such a license. Rio Tinto also helped form the International Council on Mining & Metals, which encourages sustainable practices across the mining sector.

Question 1. Planning was done to prevent ___

 a. Chaos

 b. Financial loss

 c. Loopholes

 d. ghost towns

Question 2. Policies were framed to check and protect ___ around mines

 a. water quality

 b. Plants

 c. Residents

 d. Space

Question 3. Rio came up with the concept of working with communities on ___

 a. Economic development

 b. socio & economic development

 c. Technological Development

 d. All of the above

Question 4. Rio tinto has a business of ____

 a. Food chains

 b. Garments

 c. Both a & b

 d. mining

Question 5. Rio tinto with his way of working achieved ____

 a. social license to operate

 b. Success

 c. Market share

 d. all of the above

Question 6. Strategy of working also included ___ for people residing near mines

 a. Protection

 b. employment

 c. Both a & b

 d. None of the above

Question 7. The company plan was based on various ___

 a. environment policies

 b. Government rules

 c. Both a & b

 d. None of the above

Question 8. Training programs were developed to shift employees from manual labor to ___

 a. Machines

 b. Technology

 c. skilled positions

 d. Both a & c

Question 9. working without license can lead to ___

 a. Spoil of image

 b. Legal actions

 c. global brand risk

 d. Financial loss

Question 10. ___ was a threat to business of minning

 a. Legal procedures

 b. Biodiversity

 c. Water quality

 d. Government land

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3rd Module Assessment

Case study

McDonald has been a well-known and valuable brand for over half a century. The company’s mission and vision is striving to be the world’s best quick service restaurant and formalizing their beliefs into “People Vision and People Promise.” “Quality, Service, Cleanliness and Value (Q.S.C. and V) also became the company’s motto. The company’s first McDonald store was built in 1940 by the original McDonald brothers, Dick and Mac. Later in 1954, Ray Kroc became the first official franchisee appointed by Dick and Mac McDonald in San Bernardino, California. Soon after, Mr. Kroc opened his first restaurant in Des Plaines, Illinois, and the McDonald’s corporation was created.

The new franchise began to grow rapidly as a result of its success. It wasn’t long before the 100th McDonald’s restaurant opened in Chicago in 1961. Less than ten years after the opening of Ray Kroc’s restaurant the company began to expand all over the United States. Ray Kroc bought all rights to the McDonald’s concept from the McDonald’s brothers for “2.7 million in 1961.”

McDonald’s continued to have enormous growth during the 1960’s. In 1963 alone, McDonald’s sold their one billionth hamburgers, opened their 500th restaurant, “Ronald McDonald” made his big debut, and McDonald’s net income exceeded $1 million. In 1966 McDonald’s was first listed on the New York Stock Exchange, and in 1967 McDonald’s went global. The company kept expanding with the introduction of the “Big Mac” and the opening of its 1,000th restaurant, which was where it all started- in Des Plaines, Illinois.

”Billions served,” indeed. McDonald’s is the world’s #1 fast-food company by sales, with more than 30,000 of its flagship restaurants serving burgers and fries in more than 100 countries” . Today, “McDonald’s operates over 31,000 restaurants worldwide, employing more than 1.5 million people.” In terms of countries, it operates in more than 119 countries on six continents. 70% of the locations are run by franchises while the corporation owns the other 30%. The Boston Market and Chipotle Mexican Grill fast-casual chains are also owned by McDonald’s.

McDonald’s is in the fast-food business, and nowadays, there is huge competition for that.

The following is a list of companies that are in the same business as McDonald’s and qualify as major competitors:

Burger King

Subway

Yum

Wendy’s

In & Out

One strategy McDonald’s focuses on is a differentiation strategy, partly combining it with the innovation strategy. By creating unique brand products, (chicken McNuggets, Big Mac, McFlurry) McDonald’s is setting self apart from its competitors. The innovation strategy is used by creating new and unique products (chicken tenders, Newman’s own salads, as well as specific products catered to specific region in the world), special celebrity endorsements (athletes, actors/actresses), partnerships/sponsorships (Music, Olympics, special movie toys), charities (Ronald McDonald House), games/promotions (monopoly game, special movie toys), which allow McDonald’s to develop their unique corporate image that sets them apart from their rivals. Another important role in staying competitive is McDonald’s online presence. The website (www.McDonald’s.com) is great opportunity to connect with the customers and stay competitive. Through the website, the company shows company facts, product information (nutrition facts), and links to the charity website, as well as games promotions (monopoly).

Through franchising, McDonald’s is able to reach nearly every corner of the globe. In addition, by using an alliance strategy, they are able to set up operations in Wal-Mart’s and sports stadiums and other firms which help support the industry.

The strategy the company is using to maintain or improve its competitive position is lowest total cost, expanded menu, having more than 30,000 stores, Hamburger University, celebrity endorsements, partnerships/sponsorships in music and Olympics, and Ronald McDonald Charity/Corporate responsibility.

The company has a record of industry leadership in community involvement, environmental protection, diversity, opportunity, and working with their suppliers to improve their practices. By having these programs the company is doing a very good job in building a relationship with the community

Question 1. First Mc donald’s store was built in ___

 a. 1956

 b. 1978

 c. 1940

 d. 1941

Question 2. Identify the major competitior’s of mc donald’s

 a. Burger king

 b. subway

 c. wendy’s

 d. All of the above

Question 3. Mc donald’s focusses on ___

 a. Diffusion Startegy

 b. differentiation strategy

 c. Both a & b

 d. None of the above

Question 4. MC donald’s motto includes___

 a. Q, S, C & V

 b. Quality

 c. Passion

 d. Employees

Question 5. Mc Donald’s went __ in 1967

 a. Local

 b. Global

 c. US

 d. Bankrupt

Question 6. Mc Donald’s work on the belief of ____

 a. People

 b. People vision and people promise

 c. Vision

 d. Mission

Question 7. ray kroc bought all the rights to Mc Donald’s concept for ____

 a. 3.4 million in 1986

 b. 5.4 billion in 1978

 c. 2.7 billion in 1961

 d. 2.6 billion in 1967

Question 8. Strategy used by company to maintain its competition involves __

 a. Lowest total cost

 b. expanded menu

 c. having more than 30,000 stores

 d. All of the above

Question 9. __ of Mc Donald’s locations are run by franchisee

 a. 78%

 b. 56%

 c. 67%

 d. 70%

Question 10. __ was the first official franchisee appointed by Mc donald’s

 a. Tom

 b. Wendy’s

 c. Subway

 d. Ray Kroc

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4th Module Assessment

Case Study

When a Dutch global coatings company decided to pursue a major U.K. competitor, the business world watched closely. The $17 billion acquisition brought together two giants in the coatings sector to create a global industry leader. The new company would comprise 72,000 employees, leading brands, innovative technologies, and complementary geographic footprints. It would dominate in 46 countries and enjoy a market presence in many others. Nevertheless there was some skepticism in the financial community about whether the merger would be successful. The management team needed to act swiftly to deliver results.

Despite their combined global presence, the two companies had limited geographic overlap outside of Europe. As a result, delivering the promised synergy targets of $390 million would be challenging, even more so given the timing of the acquisition: There were already warning signs of an impending global recession. For support in bringing about a speedy, best-in-class merger, senior executives called in A.T. Kearney.

We worked side by side with integration leaders to execute the global merger. Our work spanned the entire integration, from planning and execution to value capture and design of the leadership structure for each business unit (BU) and function. We decided to establish a light but robust integration management office (IMO) to stay small and flexible enough to coordinate our efforts quickly, while retaining the global depth to operate in all time zones.

Combining two different corporate cultures is almost always a struggle. We mapped both cultures to identify potential road blocks to the integration so that the team could address them immediately. The mapping exercise also allowed us to highlight and promote similarities between the two cultures, which was useful for building and maintaining momentum throughout the integration. Constant communication was pivotal to keeping all internal and external stakeholders informed. Therefore, even when important decisions were not ready for release, we kept communications flowing by talking about progress, people, and next steps.

Determining synergy targets can be tricky as it often requires overcoming opposition at the local level. Joint value-capture teams helped us find the balance. We also involved the CFO early in the synergy-review process to validate the numbers before the IMO leaders presented them to the market or baked them into any financial plans.

We worked with the integration team to assign all BU and functional leadership positions and their teams within 90 days following the merger, moving the best people from both organizations into key positions. The merger was an opportunity for the combined company to move beyond what either organization could achieve individually. Together with the integration team, we created an “aspirational” organizational structure and governance model that would ensure lasting advantage.

“The process was seamless,” said a company executive in describing the Day 1 integration. Project teams executed successfully and were able to deliver and track synergies according to plan. After Day 1, IMO leaders stretched select targets to deliver even more synergies, and savings ultimately surpassed the $390 million target. Perhaps most important, the integration was complete within the target 12-month period without a negative impact on revenues or customer relationship.

Question 1. Best people from both the organization were moved to __

 a. Top positions

 b. Key positions

 c. Lower level

 d. Middle level

Question 2. Both the companies despite of geographic overlap promised synergy targets of ___

 a. $34 million

 b. $390 million

 c. $236 million

 d. $21 Miliiom

Question 3. Determining sunergy targets involves ___ at local level

 a. Involvement

 b. People

 c. Both a & b

 d. overcoming opposition

Question 4. Integration of both the companies was backed up by _____

 a. CEO

 b. mapping of organizational culture

 c. Organizational Goals

 d. Employees

Question 5. Mapping the culture of both the companies helped in highlighting & promoting the ___

 a. similarities

 b. Dissimilarities

 c. Both a & b

 d. none of the above

Question 6. Risk means uncertainity concerning occurrence of __

 a. Gain

 b. Fire

 c. Loss

 d. Gamble

Question 7. With the help of integrated teams ___ organizational structure was created

 a. Flat

 b. Hierarchial

 c. Autocratic

 d. Aspirational

Question 8. __ is the opportunity for the company to move beyond what either organization could achieve individually

 a. Merger

 b. Take over

 c. Acquisition

 d. All of the above

Question 9. ___ acquisition brought together two giants in the coating sector to create a global industry leader

 a. $34 billion

 b. $67 million

 c. $17 billion

 d. $21 Million

Question 10. ___ was pivotal in keeping both internal & external stakeholders informed

 a. Coordination

 b. Planning

 c. Constant communication

 d. Directing

 

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5th Module Assessment

Case Study

In March 1999, a $ 3 billion stock deal was announced between luxury goods major Gucci N V and the Pinault-Printemps-Redoute (PPR) group of France.

The news of PPR acquiring a 40% stake in Gucci came as a surprise for Bernard Arnault (Arnault), Chairman of the Moet Hennessy Louis Vuitton (LVMH) group, who had been trying to acquire Gucci through open market stock acquisitions. Gucci announced that it would issue more shares if LVMH tried to further increase its stake in the group. Gucci President Domenico De Sole (De Sole) said that he had the support of Gucci staff, suppliers and independent shareholders to keep LVMH off the board. Earlier, Gucci had approved an employee stock option scheme (ESOP) to counter LVMH’s acquisition tactics. Not only did LVMH remain powerless in Gucci despite spending $ 1.4 billion, but its share prices also began sliding on the Paris stock market.

LVMH charged that the sole purpose of Gucci’s move was to deprive LVMH of its voting rights. The same day PPR announced its deal with Gucci, it paid $ 1 billion for Sanofi Beaute, the French owner of brands like Yves Saint Laurent cosmetics and perfumes. This was another setback for LVMH as Arnault had been trying to acquire Sanofi.

As a result of these deals, overnight the Gucci/PPR combination became a major competitor for LVMH. LVMH now made a full takeover bid for Gucci at $ 81 a share, $ 6 more than what PPR had paid. At the same time, it dragged Gucci to the court to annul the deal with PPR and replace its board with an independent overseer. The Gucci-LVMH battle took the global fashion industry by surprise. More so, because in 1994, it was Arnault himself, who had turned down an offer to buy Gucci for $ 400 million. However, in just five years the same man had spent $ 1.4 billion in building up a 34% stake in Gucci. A media report said, “How a $ 400 million reject became a highly desirable $ 8 billion company is one of the greatest comeback stories in the fashion business.”

Gucci’s history goes back to 1923, when Gucci Guccio started selling expensive leather goods in Florence, Italy. By 2001, the Gucci Group had emerged as one of the world’s leading multi-brand luxury goods companies.

The company designed, produced and distributed high-quality personal luxury goods, including ready to wear garments, handbags, luggage, small leather goods, shoes, timepieces, jewellery, ties and scarves, perfume, cosmetics and skincare products. Some of its important brands were Gucci, Yves Saint Laurent, Sergio Rossi and Boucheron The group directly operated stores in major markets throughout the world and also sold their products through franchise stores, duty-free boutiques and leading department and specialty stores. De Sole had joined Gucci in 1982 and quickly moved up the ranks, becoming the President of Gucci US. In the early 1980s, around 50% of the company’s stock was owned by an Arab company, Investcorp.

During the 1970s and 1980s, the Gucci label was seen on almost every imaginable product: scotch, leatherwear, key chains, watches, T-shirts, etc. Also, the company was spending more than $ 4 million a year to combat a flood of fake Gucci merchandise.

In 1990, Gucci hired Tom Ford (Ford), an actor-model with a degree in interior architecture and some experience in fashion design for its designing needs. By 1993, Gucci was on the verge of bankruptcy. In 1994, it was reported that the company was offered to Arnault for $ 400 million, but he backed off at the last minute. Investcorp then bought the remaining 50% stake in a desperate effort to recoup its investment. De Sole and Ford then began working towards canceling Gucci’s numerous licensing agreements and went on to build its image as a premier luxury brand. Though initially De Sole had reservations regarding Ford’s competence, over the years, Ford emerged as the single most important factor behind Gucci’s success…

LVMH had begun stalking Gucci since the beginning of January 1999 by acquiring more than 5% of its shares. By the end of January 1999, LVMH’s stake in Gucci had increased to 34%.

Question 1: Arnauld refused to buy Gucci at ____

 a. $14 billion

 b. $400 million

 c. $396 Billion

 d. $218 Million

Question 2. By 1993 Gucci was on verge of __

 a. Extension

 b. Expansion

 c. Bankruptcy

 d. Emersion

Question 3. Gucci group has emerged as world’s leading _____ goods companies

 a. Jwellery

 b. multi-brand luxury

 c. Handbags

 d. Perfumes

Question 4. Gucci had approved ____ to counter LVMH’s acquisition tactics

 a. ESOP

 b. RTYU

 c. EOOP

 d. PDSP

Question 5. Gucci was spending more than $4 million a year to combat a flood of ______

 a. New brands

 b. Change in customer preferences

 c. Change in lifestyle

 d. fake gucci merchandise

Question 6. In early 1980’s Gucci’s 50% stock was owned by Arab company___

 a. Emirates NBD

 b. Al-Rahiji

 c. Etisalat

 d. Investcorp

Question 7. In ___ Gucci Guccio started selling expensive leather goods in Italy

 a. 1976

 b. 1989

 c. 1932

 d. 1923

Question 8. Single most important factor behind Gucci’s success is___

 a. Tom Ford

 b. Tom Cruise

 c. Arnauld

 d. Emirates NBD

Question 9. ___ combination became major competitor for LVMH

 a. Gucci

 b. PPr

 c. Gucci/PPR

 d. None of the above

Question 10. ____ was trying to acquire Gucci through open stock market acquisition

 a. MVN group

 b. LVMH group

 c. QSCV group

 d. LMVH group

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Assignment 2

Case Study

The World Bank’s core mission is to reduce global poverty and encourage healthy economies. That’s why they depend on their peoples’ own ‘grass roots’ marketing to educate others about the cause.But being a global entity can present some major communication challenges. World Bank’s 15,000 employees span across 188 countries in 174 offices, organically creating language, culture and information silos in every corner of the globe. Brand assets were disorganized, and versioning requests and costs were out of control. The existing marketing asset management platform simply wasn’t sophisticated enough to keep up. They needed a multi-cultural, multi-lingual environment where all offices could access, localize and distribute the latest marketing materials using a new solution that was fast, flexible and web accessible.

Why they chose MarcomCentral

MarcomCentral centralized and automated the access, creation and delivery of World Bank’s static, personalized and variable data marketing assets, all within a cloud environment. Users can customize and order brochures, ebooks, letterhead, invitations, calendars, holiday cards and much more. For example, one of the most basic pieces – business cards – became the epitome of the system’s efficiency, saving them 25% in creative resources and justifying the investment in the system alone. Plus, the system tracks and reports metrics on client data, product orders, frequency of orders – all information the communications team uses to determine what materials are most effective for each audience. MarcomCentral also tackled the language barrier, thanks to the innovative multi-lingual functionality that came standard within the platform. Users now have free access to translation services for everything from traditional Romance languages to Unicode and double-byte fonts.

Result :

It used to take between 15-18 minutes to create a marketing asset for the shopping cart. Now it takes as little as 30 seconds using features like single sign-on and active directory integrations. Tens of thousands of assets are stored within their MarcomCentral solution, including video. Updates are seamless and behind-the-scenes. One functionality has been the biggest win for the marketing team and the field with 300 plus orders per month – the production of customizable business cards. Perhaps the biggest compliment is that the system was so incredibly easy to use that it was instantly adopted by teams across the organization.

Question 1: First country who has received loan from World Bank is ___

 a. France

 b. United Kingdom

 c. Spain

 d. Russia

Question 2. Goals of World Bank includes

 a. Promotion of foreign investment

 b. Promotion of international trade

 c. Facilitation of investment capital

 d. All of the above

Question 3. International Financial Institution “World Bank” was founded in ___

 a. October, 1948

 b. April, 1949

 c. May, 1945

 d. July, 1944

Question 4. Marcom central was equipped with ___ functionality

 a. Multi-purpose

 b. Financing

 c. Technical

 d. muti-lingual

Question 5. World Bank depends upon their peoples own _____ to educate others about the cause

 a. Ideas

 b. Innovation

 c. grass root marketing

 d. Funds

Question 6. World Bank has made up of ___

 a. International Development Association

 b. Multilateral Investment Gurantee Agency

 c. International Finance Corporation

 d. All of the above

Question 7. World bank has ___ employees across the globe

 a. 1000

 b. 15000

 c. 289000

 d. 56349

Question 8. World Bank is a recognised member of ___

 a. United Nations Development Council

 b. United Nations Development Group

 c. United Nations security Council

 d. United Nations General assembly

Question 9. World Bank’s core mission is to reduce __

 a. Inflation

 b. Global Poverty

 c. Formal Procedures

 d. Research

Question 10. ___ helped in automating the world bank’s static environment

 a. HSBC

 b. United Nations Development Group

 c. Data management

 d. Marcom Central

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