Test Papers / Previous Question Papers of IGNOU MS3 Economic and Social Environment June 2007

MANAGEMENT PROGRAMME
Term-End Examination

MS3(S): ECONOMIC AND SOCIAL ENVIRONMENT

June 2007

Time: 3 hours
Maximum Marks: 100
(Weightage 70%)

Note : (i) There are two Sections A and B.
(ii) Attempt ony three questions from Section A, carrying 20 marks each.
(iii) Section B is compulsary and carries 40 marks.

SECTION A

1. Discuss the Macro Environmental Variables surrounding the business. Write a detailed note on the Socio-Cultural Environment surrounding the business ?

2. (a) Briefly explain the major objectives of the public sector.

(b) "Private sector is preferable to public sector. " Do you agree ? Justify your answer.

3. (a) Discuss the main provisions of MRTP Act. How has it been modified in the recent context ?

(b) Which Act governs the foreign investment in India ?

4. What are the policy measures that helped trade policy to have undergone fundamental shifts to correct the anti-export bias ? Analyse.

5. Examine the impact of economic reforms on growth rate of GDP, FDI, and Poverty.

SECTION B

6. Read the following case and answer the questions given at the end.

Privatization of Airports and Airline Industry Privatization of airports could lead to better operations and lower costs of aircraft carriers. All the airports were fully owned by the Government in India till recently. Under the new public-private partnership scheme, more and more airports have been set up in semi-urban India. The Cochin International Airport was a project that was inaugurated in L999, involving a partnership between the Government and the people (mainly NRIs), which functions outside the domain of the Airports Authority of India. It has led to one of the most efficient airports in the country and mainly serves the huge expatriate population traveling to and from Kerala.

The company has made profit and broken even, paying a dividend to its shareholders. This could be an ideal showcase project for future investments in the airport sector.

The state-owned domestic and international carriers, the Indian Airlines and the Air India dominated the airline market till recently in India The air ticket prices were Not affordable to ordinary citizens. Although the government had plans to divest its stake in Air India and Indian Airlines initially, it did not happen due to opposition from media and politicians. However, giving into the pressure of liberalization, private airlines were allowed to operate in domestic routes as a first step. Due to the new entrants like Jet Airways, the state-owned airlines started losing their market share as they lacked technology upgradation and product offerings. Ministry of Civil Aviation in India has already adopted many schemes for the growth and expansion of air transport. They have made new aviation policy, which incorporated the construction of private sector airports, reconstruction of public sector airports and purchase of new aircraft, which help the carriers to compete with the private players. The policy would also accommodate to provide additional slots for foreign airlines at Indian airports and attract foreign direct investment (FDI).

The Indian government has opened up their skies to the private Indian aircraft, which helps them to offer their services internationally. As part of this policy, some of the private airlines, including Air Sahara , are able to run international flights. This 'open skies policy' and the entry of low cost carriers, have brought about a boom like never before for the airline industry.

In general, the airline industry has absolutely no control over some of the biggest expense heads including fixed costs (in terms of leases and taxes) and variable costs (fuel and landing charges). Aviation Turbine Fuel (ATF) constitutes close to 40% of an airline's operating cost in India. This is almost twice that of airlines in the West. The reason for high price of ATF in India is the huge customs and excise duty levied on the fuel. Aviation turbine fuel is currently a monopoly of IOC (lndian Oil Corporation), BPCL (Bharat Petroleum Corporation Ltd.), and HPCL (Hindustan Petroleum Corporation Ltd.). The govemment plans to allow private players to supply ATF, so that the competition in the market will help to reduce cost. Although India boasts of more than 400 airports, just 62 of them are in active use, and Mumbai and Delhi airports alone account for over 40% of the total air traffic in India. Traffic is growing both on major routes (between metros) and feeder routes (between smaller cities) within the country. The facilities at Indian airports are woefully short. The poor infrastructure at Indian airports, including less space for parking bays, maintenance hanger, check-in counter space etc., is really pathetic. Two of the principles of low-cost flying-quick turnarounds and increased aircraft utilization are very difficult to implement in India because of the poor airport infrastructure.

According to Ernst & Young industrial consultants, India needs $10 billion (Rs. 44,000 crore) in investments to upgrade their airports.

Here comes the importance of privatisation and liberalisation. Privatisation helps more and more airports to spring up in India, which ultimately leads to better facilities at airports. It helps to bring up more and more low-cost private airlines into this highly competitive field. Reduction of import duties imposed, will help these airlines much, in lowering their fare also.

According to Consultancy Centre for Asia-Pacific Aviation (CAPA), domestic passenger traffic could grow at a much faster rate in the coming years. By 2010, there could be 60 million Indians travelling by air, resulting in an industry that's Rs. 30,000 crores or $2 billion big, according to CAPA. Air Deccan, a private Indian airline, was able to draw more and more public attention by the introduction of their low-cost domestic airlines. Vijay Mallaya's 'Kingfisher Airlines', Nusli Wadia's (Bombay Dyeing) 'Go Airline', 'Spice Jet', 'Royal Airways', 'Air India Express'.... thus goes the long list of low-cost airlines. Most of the private airlines offer differentiated products and competitive fares on first-come-first-serve basis, which has also worked as a source for inspiration to public sector airlines like Indian Airlines to reduce their prices.

Questions

(a) Discuss the business environment in the Airline industry.

(b) How do you feel the competition among Airlines operators can help the customers or travelers ? Do you feel such a competition is good or bad ? Explain your answer with suitable examples.

Testpapers of related examinations conducted by IGNOU

The following is a partial list of Testpapers of similar / related courses to Economic and Social Environment offered by IGNOU

Note: The above courses are picked automatically by the website for indicative purpose only. However, students are requested to check with the University for the similarity of the course or for any other information in regard to the course.