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India’s Transformation After gaining independence from Britain in 1947, India adopted a democratic system of government. The economic system that developed in India after 1947 was a mixed economy characterized by a large number of state-owned enterprises, centralized planning, and subsidies. This system constrained the growth of the private sector. Private companies could expand only with government permission. It could take years to get permission to diversify into a new product. Much of heavy industry, such as auto, chemical, and steel production, was reserved for state-owned enterprises. Production quotas and high tariffs on imports also stunted the development of a healthy private sector, as did labor laws that made it difficult to fire employees. By the early 1990s, it was clear that this system was incapable of delivering the kind of economic progress that many Southeastern Asian nations had started to enjoy. In 1994, India’s economy was still smaller than Belgium’s, despite having a population of 950 million. Its GDP per capita was a paltry $310; less than half the population could read; only 6 million had access to telephones; only 14 percent had access to clean sanitation; the World Bank estimated that some 40 percent of the world’s desperately poor lived in India; and only 2.3 percent of the population had a household income in excess of $2,484. The lack of progress led the government to embark on an ambitious economic reform program. Starting in 1991, much of the industrial licensing system was dismantled, and several areas once closed to the private sector were opened, including electricity generation, parts of the oil industry, steelmaking, air transport, and some areas of the telecommunications industry. Investment by foreign enterprises— formerly allowed only grudgingly and subject to arbitrary ceilings, was suddenly welcomed. Approval was made automatic for foreign equity stakes of up to 51 percent in an Indian enterprise, and 100 percent foreign ownership was allowed under certain circumstances. Raw materials and many industrial goods could be freely imported and the maximum tariff that could be levied on imports was reduced from 400 percent to 65 percent. The top income tax rate was also reduced, and corporate tax fell from 57.5 percent to 46 percent in 1994, and then to 35 percent in 1997. The government also announced plans to start privatizing India’s state-owned businesses, some 40 percent of which were losing money in the early 1990s. Judged by some measures, the response to these economic reforms has been impressive. The economy expanded at an annual rate of about 6.3 percent from 1994 to 2004, and then accelerated to 9 percent per annum during 2005–2008. Foreign investment, a key indicator of how attractive foreign companies thought the Indian economy was, jumped from $150 million in 1991 to $36.7 billion in 2008. Some economic sectors have done particularly well, such as the information technology sector where India has emerged as a vibrant global center for software development with sales of $50 billion in 2007 (about 5.4 percent of GDP) up from just $150 million in 1990. In pharmaceuticals too, Indian companies are emerging as credible players on the global marketplace, primarily by selling low-cost, generic versions of drugs that have come off patent in the developed world. However, the country still has a long way to go. Attempts to further reduce import tariffs have been stalled by political opposition from employers, employees, and politicians, who fear that if barriers come down, a flood of inexpensive Chinese products will enter India. The privatization program continues to hit speed bumps—the latest in September 2003 when the Indian Supreme Court ruled that the government could not privatize two state-owned oil companies without explicit approval from the parliament. State owned firms still account for 38 percent of national output in the nonfarm sector, yet India’s private firms are 30–40 percent more productive than their state-owned enterprises. There has also been strong resistance to reforming many of India’s laws that make it difficult for private business to operate efficiently. For example, labor laws make it almost impossible for firms with more than 100 employees to fire workers, creating a disincentive for entrepreneurs to grow their enterprises beyond 100 employees. Other laws mandate that certain products can be manufactured only by small companies, effectively making it impossible for companies in these industries to attain the scale required to compete internationally.

Case Discussion Questions

A. What kind of economic system did India operate under during 1947 to 1990? What kind of system is it moving toward today? What are the impediments to completing this transformation?

B. How might widespread public ownership of businesses and extensive government regulations have impacted (1) the efficiency of state and private businesses, and (2) the rate of new business formation in India during the 1947–1990 time frame? How do you think these factors affected the rate of economic growth in India during this time frame?

C. How would privatization, deregulation, and the removal of barriers to foreign direct investment affect the efficiency of business, new business formation, and the rate of economic growth in India during the post-1990 time period?

D. India now has pockets of strengths in key high technology industries such as software and pharmaceuticals. Why do you think India is developing strength in these areas? How might success in these industries help to generate growth in the other sectors of the Indian economy?

E. Given what is now occurring in the Indian economy, do you think the country represents an attractive target for inward investment by foreign multinationals selling consumer products? Why?

 
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Google in China Google, the fast-growing Internet search engine company, was established with a clear mission in mind: to organize the world’s information and make it universally acceptable and useful. Google has built a highly profitable advertising business on the back of its search engine, which is by far the most widely used in the world. Under the pay-per-click business model, advertisers pay Google every time a user of its search engine clicks on one of the paid links typically listed on the right-hand side of Google’s results page. Google has long operated with the mantra “don’t be evil”! When this phrase was originally formulated, the central message was that Google should never compromise the integrity of its search results. For example, Google decided not to let commercial considerations bias its ranking. This is why paid links are not included in its main search results, but listed on the right hand side of the results page. The mantra “don’t be evil,” however, has become more than that at Google; it has become a central organizing principle of the company and an ethical touchstone by which managers judge all of its strategic decisions. Google’s mission and mantra raised hopes among human rights activists that the search engine would be an unstoppable tool for circumventing government censorship, democratizing information and allowing people in heavily censored societies to gain access to information that their governments were trying to suppress, including the largest country on earth, China. Google began a Chinese language service in 2000, although the service was operated from the United States. In 2002, the site was blocked by the Chinese authorities. Would-be users of Google’s search engine were directed to a Chinese rival. The blocking took Google’s managers totally by surprise. Reportedly, co-founder Sergey Brin immediately ordered half a dozen books on China and quickly read them in an effort to understand this vast country. Two weeks later, for reasons that have never been made clear, Google’s service was restored. Google said that it did not change anything about its service, but Chinese users soon found that they could not access politically sensitive sites that appeared in Google’s search results, suggesting that the government was censoring more aggressively. The Chinese government has essentially erected a giant firewall between the Internet in China and the rest of the world, allowing its censors to block sites outside of China that are deemed subversive. By late 2004, it was clear to Google that China was a strategically important market. To exploit the opportunities that China offered, however, the company realized that it would have to establish operations in China, including its own computer servers and a Chinese home page. Serving Chinese users from the United States was too slow, and the service was badly degraded by the censorship imposed. This created a dilemma for the company given the “don’t be evil” mantra. Once it established Chinese operations, it would be subject to Chinese regulations, including those censoring information. For perhaps 18 months, senior managers inside the company debated the pros and cons of entering China directly, as opposed to serving the market from its U.S. site. Ultimately, they decided that the opportunity was too large to ignore. With over 100 million users, and that number growing fast, China promised to become the largest Internet market in the world and a major source of advertising revenue for Google. Moreover, Google was at a competitive disadvantage relative to its U.S. rivals, Yahoo and Microsoft’s MSN, which had already established operations in China, and to China’s homegrown company, Baidu, which leads the market for Internet search in China (in 2006 Baidu had around 40 percent of the market for search in China, compared to Google’s 30 percent share). In mid-2005, Google established a direct sales presence in China. In January 2006, Google rolled out its Chinese home page, which is hosted on servers based in China and maintained by Chinese employees in Beijing and Shanghai. Upon launch, Google stated that its objective was to give Chinese users “the greatest amount of information possible.” It was immediately apparent that this was not the same as “access to all information.” In accordance with Chinese regulations, Google had decided to engage in self-censorship, excluding results on such politically sensitive topics as democratic reform, Taiwanese independence, the banned Falun Gong movement, and references to the notorious Tiananmen Square massacre of democratic protestors that occurred in 1989. Human rights activists quickly protested, arguing that Google had abandoned its principles in order to make greater profits. For its part, Google’s managers claimed that it was better to give Chinese users access to a limited amount of information than to none at all, or to serve the market from the United States and allow the government to continue proactively censoring its search results, which would result in a badly degraded service. Sergey Brin justified the Chinese decision by saying that “it will be better for Chinese Web users, because ultimately they will get more information, though not quite all of it.” Moreover, Google argued that it was the only search engine in China that let users know if search results had been censored (which is done by the inclusion of a bullet at the bottom of the page indicating censorship).

Case Discussion Questions

A. What philosophical principle did Google’s managers adopt when deciding that the benefits of operating in China outweighed the costs?

B. Do you think that Google should have entered China and engaged in self-censorship, given the company’s long-standing mantra “Don’t be evil”? Is it better to engage in self-censorship than have the government censor for you?

C. If all foreign search engine companies declined to invest directly in China due to concerns over censorship, what do you think the results would be? Who would benefit most from this action? Who would lose the most?

 
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GUIDELINES: Individual Personal Strategy Evaluation

Here is a guide to help you move ahead with your personal strategy evaluation. These steps are only basic recommendations and you should feel free to add your own elements to the undertaking to take it even further.

As a minimum, reflect on the following elements of who you are, where you want to be, and how you plan to get there in your life:

1. What are your values, vision, mission? Let your timeframe be between 5-10 years when addressing your vision. Consider at least 4 main aspects of your life in your visioning exercise. Feel free to include pictures/photos as a vision board can help with this exercise.

2. Conduct a self evaluation, including a comprehensive SWOT analysis and competencies analysis. Look back on your challenges and how those have provided competencies to help you create the life you are aiming to build. Also consider where you may still be falling short with those challenges and the competencies you still need to work on. You will find it helpful to consider the mindset, heartset, and actionset approach shared in class. Use additional approaches in addition, if you wish.

3. Using your self evaluation results, craft at least 5 proactive strategy elements that will align you with building the life you are targeting in your vision. Be very clear about your action plans (tasks/timelines/person responsible) for each strategy element.

 
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Many people leave college with substantial debt and we want your opinion on this issue. Should government address the problem? Why or why not? What specific policy (can mention only one or two) if any would you most favor and specifically why so? The articles and video below discuss the problem of student debt and some of the proposed solutions.

Before responding to this question, read the essays and watch the video posted below. Your post should demonstrate a good understanding of the topic. Be sure to use good English grammar and composition skills. Please remember that posts must contain at least 300 words and be divided into at least two or more paragraphs. Two sources must be specifically referred to within the actual post itself (not just listed an the end).

Jay Urwitz and Neal Urwitz, “The Candidates are Wrong. It’s a Mistake to Pay Off College Graduates’ Debts,” www.cnn.com/2019/07/03/perspectives/student-loan-debt-forgiveness-warren-sanders/index.html# (Links to an external site.)

Pew Research, “5 Facts about Student Loans,” www.pewresearch.org/fact-tank/2019/08/13/facts-about-student-loans/

 
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