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DRUCKERS VIEW ON MANAGEMENT

Peter F. Drucker ,an eminent economisthas addressed the economy, people,management, organization, in his bookManaging for the Future.

The man has accurate future vision, hepredicted that economy will bechallenged by financial stringencies andcredit crunches in the future.

The book says what executives need tomanage for tomorrow than yesterday.

So, therefore the book gives an ideaabout the future challenges of businessmanagement and market economy.

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ASPECTS OF

MARKET ECONOMY

STAGES FACTORS

GROWING DECLINING SUPPLY DEMAND

Producer Price

Consumer Price

DECLINING GROWING

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RECESSION

Many professional and experts around theworld believe that true economic recessioncan only be confirmed if GDP(GrossDomestic Product) growth is negative for two

or more consecutive quarters(6 months).

There is a marked difference betweenRECESSIONand DEPRESSIONLingeringrecession is called economic depression.

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Indicators to say a nation is in recession;

People buying less stuff.

Decrease in factory production

Growing unemployment

Slump in personal income

An unhealthy stock market

HOW TO KNOW RECESSION?

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HISTORY OF RECESSION

The US suffered its first recession in between 1797-

1800.it was called the panic of 1797.

The next recession occurred in the years between 1807-

1814 and was called Depression.

This recession marked the end of economic expansion

that had taken place after the war of 1812.

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RECESSION IN USA08

Alan Greenspan lowers interest rates to 1% on federal treasury notes,investors pass on such a low return, but the banks on wall street, nowhave a place to borrow from, with only 1% interest rate

Easy Credit. Easy Credit, was fueled by the US, and foreign capitalgrowth.

The Easy Credit allows more people to buy houses causing a HousingBoom, the increase of demand raises the prices of houses .

Almost everyone who wanted a house, now has one due to the easycredit. Wall Street became wealthy with all the cheap credit, and

decided they wanted more.

Investment Bankers, bought mortgages from Mortgage Lenders, andturned them into CDO's, which investors could invest in. The demandfor CDO's remains high.

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Investment Bankers, having huge success with the CDO's, want more.The Mortgage Lender, has no mortgages to sell to Investment bankers, sothey lower the loan standards.

Housing prices, which had been practically rising forever, began to fall.

The financial had not planned for housing prices to drop. A "safe"investment in a CDO was considered safe because it was backed byhouses of good increasing value. The fall of housing prices completely

overturned the system.

Panic, virtually stopped lending. Some, afraid they would not get theirmoney back, others could not afford it, after losing so much capital.

The lack of credit caused the mad selling of stocks, bankruptcies, cutoffs,

increased unemployment, lower spending, and less production.

The global economy shrinks, and there is less money to go around.

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RECESSION IN INDIAThe Indian markets also crashed taking a clue from recession in the

US and a global economic slowdown.

The Sensex crashed by nearly 13 per cent in just two trading sessions

in January. The markets bounced back after the US Fed cut interest

rates.

Indian companies have major outsourcing deals from the US. India's

exports to the US have also declined substantially over the years. .

The India economy is likely to lose between 1 to 2 percentage points in

GDP growth in the next fiscal year.

Between January 2001 and December 2002, the Dow Jones Industrial

Average went down by 22.7 per cent, while the Sensex fell by 14.6%.

Indian economy faces slowdown not recession

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EFFECT ON PRIVATE SECTORS Private companies are reluctant in starting new ventures and srarting new

projects.

INDUSTRIAL SECTOR-

Hospitality andAirlines are hit by the poor demand.Car Bike and Truck sales down.

Steel plants are cutting production.

IT AND REAL ESTATE-

Companies in IT industry have stopped hiring and projected lower manpower

need.

IT export growth is also slowering down.

REAL ESTATE, where building projects are half done all over the country

and in this tight liquidity situation developers find it difficult to raise finances.

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EFFECT ON PUBLIC SECTORS

The public sector in India has helped combat the economic recession in the country,

which badly affected the US and other developed and developing countries.

Those who had earlier opposed investments in public sector have probably realised the

importance of PSEs as an instrument for self-reliant economic growth.

The role of the public sector, is not limited to generation of profits. It is also responsible

for infrastructure development and meeting other social responsibilities such as

employment for weaker sections and physically challenged.

As seen in the private sector much of the job cuts due to global slowdown, its the public

sector undertaking (PSU) banks which gained much confidence due to job safety and

security

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RECESSIONuIS IT EVER LASTING??

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Fiscal Policies(By Govt.)

Monetary Policies(By RBI)

Government does not have direct control on Producers & the

Consumers behaviour.

Government has 2

policies

HOW TO RECOVER FROM RECESSION?

Government changes how

it (Govt) spends

and collects money,therebyinfluencing economy.

RBI manipulates

the available supply of

money in the country

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Tax cuts forbusinesses or

for individuals.

More money

available for

spending

More Spendingby Govt. to

create jobs .

Individuals get

salary and spend

money

Automaticfiscal policy;

Unemployment

Insurance

Some income to

unemployed

people to spend

Demandpicks

up;

Market

canrecover.

Fiscal Policies

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More money

available for bank

to give loans

More money

available for bank

to give loans

Reductionin reserve

ratio

Demandpicks

up;

Market

canrecover.

Monetary Policies

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Management by going outside.

Finding the information you need to do thejob.

Focus on effectiveness.

Building learning into the system.

FOUR MARKETING LESSONS FOR THE FUTURE-

PETER F.DRUCKER

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Due to decrease in interest rate in London Inter Bank,NRIshave invested $ 1.167 billion in the 1st 2 months of currentfiscal year against $452 million in the last year.

Companies related to infrastructure sector is booming.

Mutual funds have announced 20-60% dividend in their bidto encourage investors to retain money in existing schemes.

During recession, there was a huge bear in share market.Prices of shares came down , investments were stopped.But now investors are buying shares of reputed companies

for long term basis.

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Presented by:-

Payel Chakraborty, Samadrita Chatterjee,

Saswata Biswas, Rimi Poddar, Dipankar

Biswas, Saoni Chaudhuri, Ankita Pal

Saptarshi Nandi, Debokesh Mallick,

Apratim Sengupta