IGNOU MCO 04 Free Solved Assignment 2021-22- Helpfirst

MCO 04


Q 1. What is the concept of Business environment? Explain the emerging scenario of business environment in India.

Ans. Definition of Business Environment is sum or collection of all internal and external factors such as employees, customers needs and expectations, supply and demand, management, clients, suppliers, owners, activities by government, innovation in technology, social trends, market trends, economic changes, etc.

These factors affect the function of the company and how a company works directly or indirectly. Sum of these factors influences the companies or business organisations environment and situation.

Business environment helps in identifying business opportunities, tapping useful resources, assists in planning, and improves the overall performance, growth, and profitability of the business.

There are various types of Business Environment like Micro Environment and Macro Environment.MCO 04 Free Solved Assignment

Business Environment is the most important aspect of any business. The forces which constitute the business environment are its suppliers, competitors, media, government, customers, economic conditions, investors and multiple other institutions working externally.

So let us start with the introduction to business environment and learn its importance.

Forms of Business Organizations:

Forms of the business organization depend on the criteria like the nature of the business, size of operations and on many more things.

Here let us take a look at the various forms of business organisation and some important points about business ownership, Scales of Business We always keep hearing things small business, large business, MNCs on a regular basis.

These terms are nothing but a way to define the scales of business. Here in this chapter, we will study about different small-scale, medium-scale, etc.

Also, we will focus on the factors used to distinguish the scale of one industry from the other. Let us study more about scales of business in detail.

Emerging Trends in Business:

Like in any other industry, business industries to witness various changes in the fashion of it’s working MCO 04 Free Solved Assignment

Business Functions :

The term ‘Business Functions’ encompasses a lot more than one may think. From the resources to the management of the resources, all comes under the study of business functions.

A business can be established, but to successfully sustain a business, the business needs resources like finance, for which it has to depend on financial institutions.

Acceptance of social norms, for which it has to depend on society. Proper market conditions, for which it has to depend on the market.

The sale of products/services, for which it has to depend on the customers. The labour, for which it has to depend on society.

Then there are natural resources and raw material, for which it has to depend on Nature. Also, the legal support of the government, for which it has to depend on the government.

There are many factors and dimensions that affect Business Environment. These factors are many different components of a single concept called Business Environment.

These factors which business depends upon aren’t standstill, they are very dynamic and ever-changing. MCO 04 Free Solved Assignment

For example, trends, the trend of fidget spinners gave the biggest big push the silicone mold industry has ever received.

MCO 04 Free Solved Assignment

Q 2. “The scope and coverage of labour legislation are very wide and overlapping.” Elucidate the statement with a brief overview of labour legislation in India.

Ans. The scope and coverage of labour legislation happen to be very wide and overlapping. The earliest legislation, the Factories Act, dates back to 1881 which is mainly related to the conditions of employment of children.

It was amended in 1891,1911, and 1934 by adding with more comprehensive clauses, and finally more radial changes were introduced in the Act passed in 1948.

The number of enacments relating to labour multiplied over time and this trend continued after independence.

Classified on the basis of their focus on particular aspect of workers’ interest, the various laws may be discussed as MCO 04 Free Solved Assignment

a)Laws relating to factories and specific industries for health, safety and welfare of workers,

b)Laws relating to wages and bonus,

c) Relating to social security, and

d) Laws relating to trade unions and industrial relations

Laws relating to factories and specific industries :

All manufacturing establishments in India are required to provide for health, safety and welfare of worlters under the factories Act, 1948.

This Act also covers aspects like working hours, leave with pay, and employment of young persons. Then, there are laws which relate to specific industries to talte care of their peculiar needs.

The Mines Act, 1952, for example; requires the mine owners to provide for drinking water, conservancy and first aid for employees as also creches in mines employing women.

Additional facilities such as an ambulance room under the charge of a qualified medical practitioner for every mine employing 500 or more persons, a shelter for taking food and rest by employees where a mine employs 150 persons or more, or a canteen, where there are 250 or employees are also to be provided. MCO 04 Free Solved Assignment

Similarly, under the Plantations Labour Act, 1961, provision of drinking water, conservancy, medical facilities, canteen, crèche, recreational facilities, umbrellas, blankets and raincoats have been made obligatory in the case of plantation worlters, such as housing, educational and medical facilities.

The working and service conditions of dock workers are regulated by the Indian Dock Laborurers Act, 1934 and Dock Worlters (regulation of Employment Act, 1984.

The employees of transport undertakings have their working and service conditions regulated by specific laws like Indian Railways Act, 1930; Indian Merchant Shipping Act, 1973; Motor Vehicles Act, 1939; and Motor Transport.

Workers Act, 1961 which ensures provision of canteens, restrooms, uniform hours of work, leave rules and other service conditions.

For wage earners employed in shops, commercial establishments (including insurance and banking companies), restaurants, theatres, cinemas, etc. there are state laws which provide for rules relating to opening and closing hours, working hours, rest intervals, spread over, overtime rates and weekly holidays.

The Contract Labour and Regulation and Abolition) Act, 1970 governs the employment of workers by contractors for casual or seasonal work.

The provisions of the Act are aimed at abolishing the system of contract labour in perennial operations and regulating it in other cases. MCO 04 Free Solved Assignment

The service conditions of working journalists and employees of newspaper establishment are regulated as per the Working Journalists and Other Newspaper Employees (Conditions of Service) Miscellaneous Provisions Act, 1955.

Laws relating to wages and bonus :

mill, as well s employees under any local authority. Under the Payment of Bonus Act, 1965, employees have been made liable to pay bonus to persons employed in factories and every other establishment in which 20 or more persons are employed and drawing upto Rs. 3,500 per month.

Then, to avoid discrimination on the ground of sex, the Equal Remuneration Act An important legislation bearing on payment of wages is the Payment of Wages Act, 1936, which applies to employees in factories, industrial or other establishments and railways.

It covers all those workers who draw less than one thousand and six hundred rupees a month.

The main purpose of this Act is to ensure regular and timely payment of wages, to prevent unauthorized deductions being made from wages, and arbitrary fines being imposed on the employees. MCO 04 Free Solved Assignment

Another legislation, the Minimum Wages Act, 1948 enables the Central and State Government to fix minimum rates of wages payable to workers employed in selected ‘sweated industries’ like woolen, carpet making or shawl weaving establishment, rice mill, flour mill, dal mill, oil, 1976 provides for payment of equal remuneration of male and female workers for the same work or work of a similar nature.

It also seeks to prevent any discrimination in matters of employment, promotion, training and transfer.

Q 3. Distinguish between the following:

(a) Primary capital market and Secondary capital market

The word “market” can have many different meanings, but it is used most often as a catch-all term to denote both the primary market and the secondary market.

In fact, “primary market” and “secondary market” are both distinct terms, the primary market refers to the market where securities are created, while the secondary market is one in which they are traded among investors.

Knowing how the primary and secondary markets work is key to understanding how stocks, bonds, and other securities trade.

Without them, the capital markets would be much harder to navigate and much less profitable. We’ll help you understand how these markets work and how they relate to individual investors.MCO 04 Free Solved Assignment

. The primary market is where securities are created, while the secondary market is where those securities are traded by investors.

. In the primary market, companies sell new stocks and bonds to the public for the first time, such as with an initial public offering (IPO).

. The secondary market is basically the stock market and refers to the New York Stock Exchange, the Nasdaq, and other exchanges worldwide.

The primary market is where securities are created. It’s in this market that firms sell (float) new stocks and bonds to the public for the first time.

An initial public offering, or IPO, is an example of a primary market.

These trades provide an opportunity for investors to buy securities from the bank that did the initial underwriting for a particular stock. An IPO occurs when a private company issues stock to the public for the first time.

For example, company ABCWXYZ Inc. hires five underwriting firms to determine the financial details of its IPO.

The underwriters detail that the issue price of the stock will be $15. Investors can then buy the IPO at this price directly from the issuing company.

(b) Speculative Transaction and Investment transaction

Ans. In simple terms, investment involves purchasing an asset or security with the hope it will generate certain returns in the future.MCO 04 Free Solved Assignment

Speculation, on the other hand, involves an element of risk in a financial transaction and how sufficient profits can be earned from the same.

Investment is spread over a long time horizon, and the focus is on getting security and stable returns, whereas speculated activities are for activities for less than one year.

In speculation, the objective is to make quick returns and may compromise on the objective of security.

Investment involves the allocation of money towards the purchase of an asset, which is not to be consumed in the present but hoping it will generate stable income or is expected to appreciate in the future.

The term is used very widely since it impacts every individual in life who desire to establish their financial future.

The production of goods used as inputs for further producing other goods is also referred to as an Investment.

The scope is not necessarily limited to the world of finance and can be extended to personal lives as well. MCO 04 Free Solved Assignment

For instance, learning an additional language may prove to be a fruitful investment if one gets an opportunity that requires knowing an additional language.

(c) Budla system and Equity derivative

Ans.Budla was an indigenous carry-forward system invented on the Bombay Stock Exchange as a solution to the perpetual lack of liquidity in the secondary market.

Budla were banned by the Securities and Exchange Board of India (SEBI) in 1993, effective March 1994, amid complaints from foreign investors, with the expectation that it would be replaced by a futures-and-options exchange.

Such an exchange was not established and budla were legalized again in 1996 (with a carry-forward limit of Rs 200 million per broker) and banned again on 2 July 2001, following the introduction of futures contracts in 2000.


Budla trading involved buying stocks with borrowed money with the stock exchange acting as an intermediary at an interest rate determined by the demand for the underlying stock and a maturity not greater than 70 days.

Like a traditional futures contract, budla is a form of leverage; unlike futures, the broker–not the buyer or seller-is responsible for the maintenance of the marked-to-market
margin.MCO 04 Free Solved Assignment


The mechanism of budla finance can be explained with the following example: Suppose A wants to buy shares of a company but does not have enough money now.

If A values the shares more than their current price, A can do a budla transaction. Suppose there is a budla financier B who has enough money to purchase the shares, so on A’s request, B purchases the shares and gives the money to his broker.

The broker gives the money to exchange and the shares are transferred to B. But the exchange keeps the shares with itself on behalf of B. Now, say one month later, when A has enough money, he gives this money to B and takes the shares.

The money that A gives to B is slightly higher than the total value of the shares. This difference between the two values is the interest as budla finance is treated as a loan from B to A.

The rate of interest is decided by the exchange and it changes from time to time.

Q 4. Write short notes on the following:

(a) Nature of Indian Economic Planning

Ans. Economic planning in India aims at bringing about a rapid economic development in all sectors. The key sectors are agriculture, power, industry and transport.

Through development of the economy, the country aims at increasing national and per capita incomes. MCO 04 Free Solved Assignment

Thus, poverty will be removed and the standard of living will be improved. National income in the First Plan increased by 18 p.c. against the targeted growth rate of 11 p.c.

National income during the Second Plan period increased by 20 p.c. against the target of 21 p.c. On the other hand, per capita income grew at a rate of 2.1 p.c. per annum as against the contemplated rate of growth of 3.3 p.c.

The Third Plan sought to increase national income by 5.6 p.c. per annum. But the progress card of the Third Plan showed that national income increased by only 2.5 p.c. per annum. Per capita income during this time failed to rise.

The Fourth Plan aimed at achieving the growth rate of national income and per capita income by 5.7 p.c. per annum and 3 p.c. per annum, respectively.

In reality, the actual achievement of national income was merely 3.4 p.c., while per capita income rose by only 1.1. p.c. MCO 04 Free Solved Assignment

The Fifth Plan proposed a growth rate of 3.5 p.c. per annum, but later revised it to 4.37 p.c.

(b) Small Scale industries

Ans. Small Scale Industries (SSI) are those industries in which the manufacturing, production and rendering of services are done on a small or micro scale.

These industries make a one-time investment in machinery,plant, and equipment, but it does not exceed Rs.10 crore and annual turnover does not exceed Rs.50 crore.

Essentially the small scale industries are generally comprised of those industries which manufacture, produce and render services with the help of small machines and less manpower.

These enterprises must fall under the guidelines, set by the Government of India.

The SSI’s are the lifeline of the economy, especially in developing countries like India. These industries are generally labour-intensive, and hence they play an important role in the creation of employment. MCO 04 Free Solved Assignment

SSI’s are a crucial sector of the economy both from a financial and social point of view, as they help with the per capita income and resource utilisation in the economy.


SSI’s generally are under single ownership. So it can either be a sole proprietorship or sometimes a partnership


Generally, both the management and the control is with the owner/owners. Hence the owner is actively involved in the day-to-day activities of the business.

Labor Intensive:

SSI’s dependence on technology is pretty limited. Hence they tend to use labour and manpower for their production activities.

Flexibility:MCO 04 Free Solved Assignment

SSI’s are more adaptable to their changing business environment. So in case of amendments or unexpected developments, they are flexible enough to adapt and carry on, unlike large industries.

Limited Reach:

Small scale industries have a restricted zone of operations. Hence, they can meet their local and regional demand.

Resources utilisation:

They use local and readily available resources which helps the economy fully utilise natural resources with minimum wastage.

(c) Economic Reforms

Ans. Economic reforms in India refer to the neo-liberal policies introduced by the Narsimha Rao government in 1991 when India faced a severe economic crisis due to external debt.

This crisis happened largely due to inefficiency in economic management in the 1980s. The revenues that the government was generating were not enough to meet the expenses.

Hence, it had to make hefty borrowings from foreign banks to pay the debt. Hence, they were caught up in debt-trap.MCO 04 Free Solved Assignment

To curb this crisis, India approached the world bank and international monetary fund (IMF) for the loan and received $7 million to manage their crisis.

As a result of which, these international organizations expected India to open its door to trade with other countries by removing the strict restrictions hitherto present.

Hence India adopted the LPG (Liberalisation, Privatisation & Globalization) reforms under the Economic Reforms. Let us look at each one of them:

Liberalization: Liberalization was brought about with an idea that any regulations or restrictions that were imposed on free trade must loosen up its grip to allow trade.

It allowed opening up the economic borders for foreign investments and MNCS.

Several economic reforms that were imposed under Liberalization include expansion of production capacity, de-servicing producing areas, abolishing industrial licensing by the government, and freedom to import goods.MCO 04 Free Solved Assignment

Privatization: Privatization refers to giving more opportunities to the private sector in regulating different services and reducing the role of the public sector government-owned enterprises) in them.

With privatization, FDI (Foreign Direct Investment) was introduced in India giving healthy competition to the Indian goods and services.

MCO 04 Free Solved Assignment
MCO 04 Free Solved Assignment

Q 5. Comment on the following statements:

(a) India’s export is not more than the China for the year 2019-20.

Ans.India’s trade with China last year fell to the lowest since 2017, with the trade imbalance declining to a five-year low on the back of a slump in India’s imports from China.

Two-way trade in 2020 reached $87.6 billion, down by 5.6%, according to new figures from China’s General Administration of Customs (GAC).

India’s imports from China accounted for $66.7 billion, declining by 10.8% year-on-year and the lowest figure since 2016.MCO 04 Free Solved Assignment

India’s exports to China, however, rose to the highest figure on record, for the first time crossing the $20 billion-mark and growing 16% last year to $20.86 billion.

The trade deficit, a source of friction between India and China, declined to a five year-low of $45.8 billion, the lowest since 2015 While there was no immediate break-up of the data in 2020,

India’s biggest import in 2019 was electrical machinery and equipment, worth $20.17 billion.

Other major imports in 2019 were organic chemicals ($8.39 billion) and fertilisers ($1.67 billion), while India’s top exports were iron ore, organic chemicals, cotton and unfinished diamonds.

The past 12 months saw a surge in demand for iron ore in China with a slew of new infrastructure projects aimed at reviving growth after the COVID-19 slump. China’s total iron ore imports were up 9.5 per cent in 2020.

(b) Agricultural and allied products are not the India’s leading export products.

Ans. India occupies a leading position in global trade of agricultural products. However, its total agricultural export basket accounts for a little over 2.5 percent of world agricultural trade. MCO 04 Free Solved Assignment

The major export destinations were USA, Saudi Arabia, Iran, Nepal, and Bangladesh.

Among the key agriculture commodities exported from India were marine products, basmati rice, buffalo meat, spices, non-basmati rice, cotton raw, oil meals, sugar, castor oil and tea.

An analysis of the last six years of the share of top ten agricultural commodities in total value of agricultural export shows that the share of marine products in total agricultural export value has remained the largest over the period, the survey said.

“Its share in total agricultural export value increase.
India’s agrarian culture and varied regional climate have significantly contributed to the global food basket.

Indian curries, spices, snacks, and mangoes are known for their excellent quality across the globe. MCO 04 Free Solved Assignment

Globally, India leads the following food segments: The total agriculture commodities export was US$ 17.19 billion between March 2020 and February 2021.

During April 2020 and February 2021, grapes export amounted to US$ 182.21 million.
India exported pulses worth US$ 261.47 million and dairy products worth US$ 182.90 million from April 2020 and February 2021.

During April 2020 and February 2021, natural honey export amounted to US$ 79.33 million.

India is the largest milk producer in the world. Milk production in the country is expected to reach 330 million tonnes (MT) by 2024.

India has the world’s largest population of buffalos (109.8 million in 2020).
Agricultural Products Exported from India Highlights

During FY20 (till February 2020), India exported basmati rice worth US$ 3.88 billion, buffalo meat worth US$ 3.01 billion, non-basmati rice worth US$ 1.84 billion and other processed foods worth US$ 2.71 billion.

During FY21 (till February 2021), India exported basmati rice worth US$ 3.59 billion, non-basmati rice worth US$ 4.04 billion, and buffalo meat worth US$ 2.86 billion.

Indian agricultural/horticultural and processed foods are exported to more than 100 countries/regions, chief among them being the Middle East, Southeast Asia, SAARC countries, the EU, and the US.MCO 04 Free Solved Assignment

Recent Development Ministry of Commerce and Industry introduced Agriculture Export Policy, 2018 with an aim to double farmers’ income by 2022 by doubling agricultural exports from India and integrating Indian farmers and agricultural products in India to the global value chain.

The export of agriculture is targeted at US$ 60 billion by 2022.

In order to increase the exports of bamboo products, local artisans are supported by National Bamboo Mission

(c) Export promotion capital goods scheme does not facilitate import of capital goods in India.

Ans. EPCG Authorization holder may also source capital goods from a domestic manufacturer.

Such domestic manufacturer shall be eligible for deemed export benefit under FTP. EPCG Authorization holders can opt for Technological Upgradation of existing capital good imported under EPCG Authorization.MCO 04 Free Solved Assignment

Import of second hand capital goods is not permitted under the EPCG scheme.

To incentivize fast track companies to accelerate exports, there is a provision for early redemption and in cases where Authorization holder has fulfilled 75% or more of specific export obligation and 100% of Average Export Obligation till date,

if any, in half or less than half the original export obligation period specified, remaining export obligation shall be condoned.

Authorization holder is required to submit to RA concerned by 30th April of every year, report on fulfillment of export obligation.

The scheme allows one or more requests for grant of extension in export obligation period, on payment of composition fee equal to 2% of proportionate duty saved amount on unfulfilled export obligation or an enhancement in export obligation imposed to the extent of 10% of total export obligation imposed under authorization, as the case may be, at the choice of exporter, for each year of extension sought.

Such first extension in EO period can be for a maximum period of 2 years.

(d) Third party exports are not allowed in India..

Ans. Earlier, payment for exports was to be received from the overseas buyer named in the Export Declaration Form (EDF) and currency of such payment should be as per the final destination of the goods/services irrespective of residential status of the buyer.

Similarly, payments for import should be made to the original overseas seller of the goods and importer needs to satisfy that goods equivalent to remittance have been imported.

With a view to liberalize the procedure relating to payments for exports/imports and taking into account evolving international trade practices, Reserve Bank of India has incorporated third-party exports and third-party imports vide circular A.

A third party is someone who is not one of the main people involved in a business agreement or legal case, but who is involved in it in a minor role.

Any individual who does not have a direct connection with a legal transaction but who might be affected by it. MCO 04 Free Solved Assignment

A third-party beneficiary is an individual for whose benefit a contract is created even though that person is a stranger to both the agreement and the consideration.


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