(a) (i) What is the rationale behind liberalization strategies adopted by the New Industrial Policy? (6 marks) (ii) "The term…

(a)(i) Rationale for liberalisation in the New Industrial Policy, 1991

The 1991 balance-of-payments crisis and slow growth under the licence-permit system showed that controls had bred inefficiency, high costs and poor technology. The policy therefore abolished industrial licensing for most industries, diluted MRTP limits on large firms, cut the list of industries reserved for the public sector, allowed automatic approval of foreign technology agreements and FDI up to 51% in priority industries, and opened the economy to competition. The aim was greater efficiency, scale, investment and global competitiveness.

(a)(ii) Globalisation in the Indian economy

Globalisation means growing integration of trade, capital, technology and labour markets. For India it began with the 1991 reforms and WTO membership. Trade as a share of GDP has roughly tripled since 1991, FDI and portfolio flows rose, the IT and business-services export sector grew, MNCs entered many markets, and foreign exchange reserves strengthened. It also brought import competition, wider inequality in some regions, and exposure to global shocks such as 2008 and Covid-19, which has led India to pair openness with self-reliance policies.

(a)(iii) Initiatives of the Indian Chamber of Commerce (ICC)

Founded in Kolkata in 1925, the ICC puts business views before the government, issues certificates of origin for exporters, runs a Council of Arbitration for commercial disputes, organises trade fairs, seminars and buyer-seller meets, sends and receives business delegations, and signs links with foreign chambers. It also supports MSMEs through information, training and networking. Together these promote domestic and international trade.

(b)(i) Four cultural predispositions of MNCs

Perlmutter's EPRG framework:

1. Ethnocentric: home-country practices and home-country managers are preferred everywhere.
2. Polycentric: each host country is run by locals according to local practices.
3. Regiocentric: staffing and policy are planned region by region.
4. Geocentric: the best people and practices are used worldwide regardless of nationality.

(b)(ii) Hofstede's cultural dimensions and international managers

Hofstede compared national cultures on power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance and, later, long-term orientation and indulgence. The scores give managers a map of how people accept hierarchy, how they value group or personal goals, how they treat competition, risk and rules, and how far they plan ahead.

Uses: choosing leadership and decision style (participative in low power-distance cultures, directive in high); designing motivation and pay (team rewards in collectivist cultures); framing communication and negotiation; adapting HR and performance appraisal; and anticipating culture clash in joint ventures. India scores high on power distance and collectivism, which affects how Indian teams respond to delegation.

Limits: national averages hide individual and regional variation, the data are dated, and culture is more than five dimensions. Managers should use the model as a starting guide, not a stereotype.

(c)(i) Linkages between primary and support activities

Primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities are procurement, technology development, human resource management and firm infrastructure. Linkages: procurement determines the quality and cost of inbound material; technology sets operations efficiency; HR supports every primary activity; infrastructure provides finance and planning. Within primary activities, operations and outbound logistics link through delivery schedules, and sales feedback shapes production and service. Better coordination across these links creates cost or differentiation advantages.

(c)(ii) Conducting value chain analysis

Steps: identify the firm's primary and support activities; assign costs, assets and revenues to each; find cost and value drivers; study linkages; benchmark each activity against competitors; and decide where to cut cost, add value or outsource.

Example: Zara controls design, fabric sourcing, small-batch manufacture and distribution closely, so lead time is short and stock is low. Its analysis showed speed as the source of advantage, and the firm kept those activities in-house.

(c)(iii) "Strategy follows structure, structure supports strategy"

Chandler's classic finding was the opposite: structure follows strategy, because diversification led firms to adopt multidivisional structures. The statement is therefore only partly valid. Yet structure does shape strategy: existing hierarchy, information flow and managerial perceptions limit what strategies a firm will notice and consider, and a rigid structure can block change. The relationship is reciprocal. Strategy should drive structure in the long run, but in the short run structure constrains options. Fit between the two, adjusted to the environment, matters most.