#**3rd Semester**

#Business Ethics & Global Business Environment

#Unit 1

#Business Environment and its constituents




Business Environment

Nature of Business Environment

Constituents of Business Environment

Internal Environment

- Has direct impact on business
- Can be controlled
- Factors include personnel, physical facilities, marketing, etc.
  * Value system
  * Mission, vision and objectives
  * Management structure and nature
  * Internal power relationships
  * Human resource
  * Company image and brand equity
  * Physical assets and facilities
  * Research and development
  * Financial resources
  * Marketing resources

External Environment

- Factors outside a firm
- Cannot be controlled

Micro (Operating) Factors

  * Suppliers
  * Customers
  * Market intermediaries
  * Competitors
  * Public

Macro (General) Factors

  * Economic
  * Political
  * Legal
  * Environmental
  * Socio-cultural
  * Technological
  * Natural
  * Demographic
  * International / Global

#Political system and its influence in business

#**Political System**

#**Political factors affecting business (GDP-FP)**

#**Political Institutions**




#**Political System**

Types (LAT)




Other Types

#**Influence on Business - (FOOD PPIG)**

Foreign Policy

Other Country Relations

Opposition Party Views

Defense and Military Policy

Political Ideology

Political Stability

International Business/MNCs Policies

Government Control and Restrictions

#Corporate Social Responsibility

Corporate Social Responsibility

It may be defined as the intelligent and objective concern for the welfare of the society.

Shareholders or Owners

Employees and Workers






Society or Community

#Environmental Pollution and Control


Introduction of contaminants into the natural environment that causes adverse change


Types of Pollution and its control

Air Pollution

Land Pollution

Water Pollution

Noise Pollution

Thermal Pollution

Marine Pollution

Nuclear Pollution

#Unit 2

#Corporate Governance

#Ethical issues in cross-cultural business

#Theories and Sources of Business ethics



Consequentialist (Teleological - end or purpose)

Non-consequentialist (Deontological)

#Factors Influencing Business Ethics


Value Forming Institutions

Organizational Goals

Work and Career


Peers and Colleagues

Professional Codes

#Various stakeholders and their influence

#Types of Stakeholders



#Types of Structures of boards

#Unit 3



#Advantages of International Business

#Advantages of IB (SEEM)

#Changing nature of Indian and International business

#Indian Business (SELF-CMMP)

#International Business (CLIFT_GD)

#International Business Environment

#Factor affecting IBE (SELECT-P)


#Components of Global trade and investment

#International trade theory

#International Trade Theories

Classical Theory


Absolute Advantage Theory

Comparative Advantage Theory

Factor Proportion Theory

Modern Theory

International Product Life Cycle Theory

New Trade Theory

Opportunity Cost Theory

National Competitive Advantage Theory

International Trade Theories

Classical Theory


Absolute Advantage Theory

Comparative Advantage Theory

Heckscher Ohlin (Factor Proportions) Theory


Land + Labor + Capital
Country A = 60 + 10 + 30
Country B = 50 + 40 + 10
==> Country A exports = Land and Labor intensive products
==> Country B exports = Capital intensive products

#Modern Theory

Product Life Cycle Theory

New Trade Theory

Internal Economies of Scale

- Big firm = Big economy of scale = lower prices = sell more = monopoly
- Intra-industry Trade Index of i (pdt cat.) = |Xi – Mi|/(Xi + Mi)

External Economies of Scale

- Small firm in many countries = Large firm in total = More market capture = ensures dominance

Opportunity Cost Theory

National Competitive Advantage - Diamond Model



#**Principles of WTO (TFPPE)**

Trade without discrimination

Freer trade - gradually, through negotiation

Predictability - through binding and transparency

Promoting fair competition

Encouraging development and economic reform

#**Structure of WTO**

Ministerial Conference (MC)

- Meet every 2 years
- Policy and strategy making body
- Top decision making body 

General Council (GC)

- Executive body
- All members are representatives in GC

Dispute Settlement Body (DSB)

- Councils
  - Trade in Goods
  - Trade in Services
  - Trade related aspects of Intellectual Property Rights (IPR)

Trade Policy Review Body (TPRB)

- Committees
  - Trade and Development
  - Balance of Payments
  - Budget, Finance and Administration

Management Bodies

Director General (DG)

Secretariat of the WTO

#**Role and Functions of WTO (EGGS-TH)**

#**Impact of WTO**

Positive Impact

+ Promotes peace within nations
+ Disputes handled constructively
+ Based on rules
+ Free trade
+ Increased quality and choice of products
+ Increased income (Per Capita Income)
+ Stimulates economic growth
+ Increased efficiency
+ No lobbying
+ Good governance

Negative Impacts

- Not democratic
- Not transparent
- Focus on profit
- No focus on labor or human rights
- Increases inequality
- Hurts poor, small countries in favor of rich powerful nations
- No local level decision-making for countries

#Major Regional Groups

#European Union (EU)

#North American Free Trade Agreement (NAFTA)

#Association of South East Asian Nations (ASEAN)

#South Asian Association for Regional Cooperation (SAARC)

#South Asian Free Trade Area (SAFTA)

#Unit 4



#**Reasons for FDI**




#**Factors affecting FDI (BFF-STEM)**

#**Strategies for FDI (CREMEF)**

#**FDI in the World**

#**FDI in India**

Positive Effects

Negative Effects

#Foreign Exchange Market

#**Foreign Exchange Market**

#**Characteristics** (GIV-TEMP)


Transfer function

Credit function

Hedging function

#**Major FOREX Instruments**

Spot Market

Forward Market

Future Market

Option Market


#Global Monetary System



#Unit 5

#Export and Import




#Promises and pitfalls of exporting

#Export Financing

Pre-shipment finance

Post-shipment finance

#Import Financing

#Promises and Pitfalls of Exporting

Promises / Benefits

Pitfalls / Limitations

#Counter-trade (BBCC-COST)




#Counter Purchase

#Clearing Agreement

#Off-set Trading

Direct offset

Indirect offset

#Switch Trading


#IB entry modes


Manufacturing without FDI

Manufacturing with FDI


Indirect (DEPT)


#Manufacturing Without FDI (LF-CTM)

#Manufacturing With FDI (JAM-SAW)

#Strategic alliances

#Strategic Alliances


Basis of direction of alliances

Basis of extent and timescale of collaboration


#Selecting Entry Modes

#Factors affecting selection

External Factors

Internal Factors

#Management Information System

#Unit 1

#Elements of System

#Elements of System









#Roles of IS

#Roles of IS

Support Business Processes and Operations

Supports Business Decision-Making

Supports Strategies for Competitive Advantage

#Elements / Components of MIS

#Elements of MIS






#Types of IS

#Operational Support System

#Management Support System



#Executive Information System (EIS)
• An executive information system (EIS) is a decision support system (DSS) used to assist senior executives in the decision-making process.
• It is also called as Executive Support System (ESS).
• It is commonly considered a specialized form of decision support system (DSS).
• It does this by providing easy access to important data needed to achieve strategic goals in an organization.
• An EIS normally features graphical displays on an easy-to-use interface.
• Executive information systems can be used in many different types of organizations to monitor enterprise performance as well as to identify opportunities and problems.
• It uses information based on intelligence.
o Market intelligence
o Investment intelligence
o Technology intelligence

Information Sources

• External databases
• Technology reports like patent records etc.
• Technical reports from consultants
• Market reports
• Confidential information about competitors
• Speculative information like market conditions
• Government policies
• Financial reports and information

Features of Executive Information System

Advantages of ESS

• Easy for upper level executive to use
• Ability to analyze trends
• Augmentation of managers’ leadership capabilities
• Enhance personal thinking and decision making
• Contribution to strategic control flexibility
• Enhance organizational competitiveness in the market place
• Instruments of change
• Increased executive time horizons.
• Better reporting system
• Improved mental model of business executive
• Help improve consensus building and communication
• Improve office automation
• Reduce time for finding information
• Early identification of company performance
• Detail examination of critical success factor
• Time management
• Increased communication capacity and quality

Disadvantage of ESS

• High implementation costs
• System may become slow, large, and hard to manage
• Need good internal processes for data management
• Functions are limited
• Hard to quantify benefits
• Executive may encounter information overload
• Difficult to keep current data
• May lead to less reliable and insecure data
• Excessive cost for small company
• System dependent


#Decision Support System (DSS)
• Decision support systems are interactive software-based systems intended to help managers in decision making by accessing large volume of information generated from various related information systems involved in organizational business processes, like, office automation system, transaction processing system etc.
• It uses the summary information, exceptions, patterns and trends using the analytical models.
• Decision Support System helps in decision making but does not always give a decision itself.
• The decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions.
• Typical information gathered by a DSS may include:

Types of Decisions

Programmed Decisions

Programmed decisions are basically automated processes, general routine work, where
• These decisions have been taken several times.
• These decisions follow some guidelines or rules.

Non-programmed Decisions

Non-programmed decisions occur in unusual and non-addressed situations, so
• It would be a new decision.
• There will not be any rules to follow.
• These decisions are made based on available information.
• These decisions are based on the manger’s discretion, instinct, perception and judgment.


DSS applications are used in many diverse fields, including
• Medical diagnosis
• Credit loan verification
• Evaluating bids on engineering projects
• Business and business management
• Agricultural production at the farm and policy levels
• Forest management
• Railroad (for evaluation of defective rails)

Characteristics of a DSS

• Support for decision makers in semi structured and unstructured problems.
• Support for managers at various managerial levels, ranging from top executive to line managers.
• Support for individuals and groups. Less structured problems often requires the involvement of several individuals from different departments and organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles
• DSSs are adaptive over time.

Benefits of DSS

• Improves efficiency and speed of decision making activities.
• Increases the control, competitiveness and capability of futuristic decision making of the organization.
• Facilitates interpersonal communication.
• Encourages learning or training.
• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for an unusual decision.
• Helps automate managerial processes.


#Management Information System (MIS)
• Management Information System, ‘MIS’ is a planned system of collecting, storing and disseminating data in the form of information needed to carry out the functions of management.
• A Management Information System (MIS) is a broadly used and applied term for a three-resource system required for effective organization management.
• MIS is sometimes referred to as “IT management” (information technology management) or “information services” (IS).
• The three components in MIS
o System suggests integration and holistic view.
o Information stands for processed data.
o Management is the ultimate user, the decision makers.


Management covers the planning, control, and administration of the operations of a concern. The top management handles planning; the middle management concentrates on controlling; and the lower management is concerned with actual administration.


Information, in MIS, means the processed data that helps the management in planning, controlling and operations. Data means all the facts arising out of the operations of the concern. Data is processed i.e. recorded, summarized, compared and finally presented to the management in the form of MIS report.


Data is processed into information with the help of a system. A system is made up of inputs, processing, output and feedback or control.

Scope of MIS

Objectives of MIS

Capturing Data

Capturing contextual data, or operational information that will contribute in decision making from various internal and external sources of organization

Processing Data

The captured data is processed into information needed for planning, organizing, coordinating, directing and controlling functionalities at strategic, tactical and operational level. Processing data means:
• making calculations with the data
• sorting data
• classifying data and
• summarizing data

Information Storage

Information or processed data need to be stored for future use.

Information Retrieval

The system should be able to retrieve this information from the storage as and when required by various users.

Information Propagation

Information or the finished product of the MIS should be circulated to its users periodically using the organizational network.

Characteristics of MIS:

• It should be based on a long-term planning.
• It should provide a holistic view of the dynamics and structure of the organization.
• It should work as a complete and comprehensive system covering all interconnecting sub-systems within the organization.
• It should be planned in a top-down way, as the decision makers or the management should actively take part and provide clear direction at the development stage of the MIS.
• It should be based on need of strategic, operational and tactical information of managers of an organization.
• It should also take care of exceptional situations by reporting such situations.
• It should be able to make forecasts and estimates, and generate advanced information, thus providing a competitive advantage. Decision makers can take actions on the basis of such predictions.
• It should create linkage between all sub-systems within the organization, so that the decision makers can take the right decision based on integrated view.
• It should allow easy flow of information through various sub-systems, thus avoiding redundancy and duplicity of data. It should simplify the operations with as much practicability as possible.
• Although the MIS is an integrated, complete system, it should be made in such a flexible way that it could be easily split into smaller sub-systems as and when required.
• A central database is the backbone of a well-built MIS.


#Transaction Processing System
• A transaction process system (TPS) is an information processing system for business transactions involving the collection, modification and retrieval of all transaction data.
• Characteristics of a TPS include performance, reliability and consistency.
• TPS is also known as transaction processing or real-time processing.

Functional Areas

Transaction processing systems provide three functional areas:

System runtime functions

Transaction processing systems provide an execution environment that ensures the integrity, availability, and security of data. It also ensures fast response time and high transaction throughput.

System administration functions

Transaction processing systems provide administrative support that lets users configure, monitor, and manage their transaction systems.

Application development functions

Transaction processing systems provide functions for use in custom business applications, including functions to access data, to perform inter-computer communications, and to design and manage the user interface.

Types of transaction processing

Batch transaction processing

This is information that is gathered and stored but not processed immediately i.e. the processing of an invoice or cheques in a banking system.

Real time transaction processing

This is a transaction which is processed immediately and the operator has access to on-line database i.e. withdrawal from a bank account, Library loans.


• Carrying out the day-to-day transactions of the organization on a regular basis.
• Collecting, processing, editing, updating, storing the data, and generating the required reports or documents.
• Supplying the necessary information to the organization, which would enable proper functioning of the business.
• Providing reports and documents which would help in making timely decisions.
• Supplying data to other information systems.

#Unit 2


#Functional Information System

Production / Operations


Human Resource Management




#Unit 3


#Types of Decisions

Based on Structure

Based on Goals

Based on Time

Based on Management

Based on Conditions

#Models of Decision-Making

Classical Model

Administrative Model

Herbert Simon Model

#Herbert Simon Model




#Process of Decision-Making


#Components of DSS

Data Management Sub-system

Knowledge Management Sub-system

User Interface Sub-system

Model Management Sub-system

#Functions / Activities of DSS





#Approaches of Developing DSS

Rapid Prototyping

End-User Development

Systems Development Life Cycle



Air Traffic Control






#Artificial Intelligence



• It refers to computers with the ability to mimic or duplicate the functions of the human brain.
• It is field of study that deals with making a computer that thinks like a human, to be able to learn and to have new ideas.


The people, procedures, hardware, software, data, and knowledge needed to develop computer systems and machines that demonstrate the characteristics of intelligence.


• Intelligent behavior
• Learn from experience
• Apply knowledge acquired from experience
• Handle complex situations
• Solve problems when important information is missing
• Determine what is important
• React quickly and correctly to a new situation
• Understand visual images
• Process and manipulate symbols
• Be creative and imaginative
• Use heuristics


AI is used in the following,
• Computer Science
• Finance
• Hospitals and Medicine
• Heavy Industry
• Online and telephone customer service
• Transportation
• Telecommunications maintenance
• Toys and games
• Music
• Aviation
• News, publishing and writing
• National defense


• Unknown patterns/relationships in sales data
• Customer buying habits
• Complex problem-solving and decision-support techniques in real-time business applications.
• AI techniques are spread across functions ranging from finance management to forecasting and product.


• Credit authorization screening
• Mortgage risk assessment
• Project management and bidding strategy
• Financial and economic forecasting
• Risk rating of exchange-traded, fixed income investments
• Detection of regularities in security price movements
• Prediction of default and bankruptcy
• Security/and or Asset Portfolio Management


• Computerized neural networks
• Customer relationship management (CRM)
• High-tech data mining can give companies a precise view of how particular segments of the customer base react to a product or service.
• Buying patterns, analytics could help companies react much more quickly to the marketplace.


• Use of neural networks and fuzzy logic in Human Resource Information System (HRIS).
• Fuzzy neural network, to construct a new model for evaluation of managerial talent, and accordingly to develop a decision support system in human resource selection.


• Can take on stressful and complex work that humans may struggle/cannot do
• Can complete task faster than a human can most likely
• To discover unexplored things, i.e. outer space
• Less errors and defects
• Function is infinite
• Easier spreading of knowledge
• Decisions are based on facts rather than emotions


• Lacks the “human touch”
• Has the ability to replace human jobs
• Over reliance on AI can lead to problems due to errors when no solution is available
• Can malfunction and do the opposite of what they are programmed to do
• Can be misused leading to mass scale destruction
• May corrupt younger generation
• Lack of creativity in responses
• Inability to explain the logic and reasoning behind a certain decision
• Lack of common sense in reasoning can also cause major problems
• It is considered as ethically wrong


Cognitive Science


Natural Interface


#Neural Networks



• Neural networks are used for solving complex, poorly understood problems for which large amounts of data have been collected.
• They find patterns and relationships in massive amounts of data that would be too complicated and difficult for a human being to analyze.
• Neural networks discover this knowledge by using hardware and software that parallel the processing patterns of the biological or human brain.


Neural Network types can be classified based on following attributes:
• Connection Type
o Static (feed forward)
o Dynamic (feedback)
• Topology
o Single layer
o Multilayer
o Recurrent
• Learning Methods
o Supervised
o Unsupervised
o Reinforcement


Neuron consists of three basic components.
• Weights
• Thresholds
• Activation function


• The input layer
o Introduces input values into the network
o No activation function or other processing
• The hidden layer
o Perform classification of features
o Two hidden layers are sufficient to solve any problem
o Features imply more layers may be better
• The output layer
o Functionally just like the hidden layers
o Outputs are passed on to the world outside the neural network.


• A neural network can perform tasks that a linear program cannot.
• When an element of the neural network fails, it can continue without any problem by their parallel nature.
• A neural network learns and does not need to be reprogrammed.
• It can be implemented in any application.
• It can be implemented without any problem.


• The neural network needs training to operate.
• The architecture of a neural network is different from the architecture of microprocessors therefore needs to be emulated.
• Requires high processing time for large neural networks.


Neural networks, with their remarkable ability to derive meaning from complicated or imprecise data, can be used to extract patterns and detect trends that are too complex to be noticed by either humans or other computer techniques. A trained neural network can be thought of as an “expert” in the category of information it has been given to analyze. This expert can then be used to provide projections given new situations of interest and answer “what if” questions.


• Character Recognition - The idea of character recognition has become very important as handheld devices like the Palm Pilot are becoming increasingly popular. Neural networks can be used to recognize handwritten characters.
• Image Compression - Neural networks can receive and process vast amounts of information at once, making them useful in image compression. With the Internet explosion and more sites using more images on their sites, using neural networks for image compression is worth a look.
• Stock Market Prediction - The day-to-day business of the stock market is extremely complicated. Many factors weigh in whether a given stock will go up or down on any given day. Since neural networks can examine a lot of information quickly and sort it all out, they can be used to predict stock prices.
• Traveling Salesman’s Problem - Interestingly enough, neural networks can solve the traveling salesman problem, but only to a certain degree of approximation.
• Medicine, Electronic Nose, Security, and Loan Applications - These are some applications that are in their proof-of-concept stage, with the acceptation of a neural network that will decide whether or not to grant a loan, something that has already been used more successfully than many humans.
• Miscellaneous Applications - These are some very interesting (although at times a little absurd) applications of neural networks.


• Neural networks are suitable for predicting time series mainly because of learning only from examples, without any need to add additional information that can bring more confusion than prediction effect.
• Neural networks are able to generalize and are resistant to noise.
• It is generally not possible to determine exactly what a neural network learned and it is also hard to estimate possible prediction error.



Knowledge subsystem (Base + Acquisition + Refining)


Inference Engine

Explanation subsystem

Blackboard (Workspace)

#Unit 4

#IT Management

#IT management

#Business/IT planning process

Customer value (Innovative approaches) —> Business strategies and models —> IT strategy and architecture —> Application development and deployment —> Complementary Business/IT strategy (CEO/CIO)

#3 Major components of planning process

#Managing IS functions (AI-TOUCH)




#Functions of IRM

#IRM Dimensions (RTDFS)

#IS Architecture (ISA)




#Functions/Services of EDI (ATC)

#Components of EDI





#Scope of SCM (FD-PICS)

#SCM Model

#SCM Framework

#Components of SCM

#Unit 5

#Computer Crimes

#Computer Crimes

#Security Tools

#Security Tools

#Other Measures

#Societal challenges for IT


#Ethics for IT

#Ethics for IT

Business Ethics

Technology Ethics



IS Controls

Procedural control

Facility Control

#Online Risks

#Online Risks

DoS Attacks

-Single DoS
-DDOS (Distributed Denial of Service)


Computer Hijacking