Running head: LESSON 3 ASSIGNMENT 1

LESSON 3 ASSIGNMENT T 14

Components of the Multinational EnvironmentSubmitted by: Bikram prajapati Kings collegeInternational American UniversityBUS 590: Business strategyKirshna khanal / Giang Biscan

7, 30, 2014

Nepal is landlocked countrylies in Southern Asia, between China and India. It covers total area of 147,181 sq. km. it is also known as country of Himalayan. Kathmandu is the capital city of Nepal. Nepal is divided into five development region, fourteen zones and seventy-five districts. It is land where Gautam Buddha was born and Mount Everest, the world's highest mountain peak lies in NepalGovernment laws, regulation and policies of Nepal:Nepal's new government has unveiled the country's first full budget in three year of $US 6.4 billion budget with spending on policies to improve power supplies and infrastructure and increase agriculture. "The objective of this budget is to take the country towards high economic growth, free it from poverty, and build social and infrastructural foundations for long-term development," (Austrailia Network News, 2014) it represent 19 percent increase then previous year.Monetary and fiscal policy:The target of economic growth and inflation rate were not achieved, monetary as well as financial indicators, balance of payments (BOP) and revenue collection remained quite encouraging in the year 2012/2013. The monetary policy for 2013/14 has been formulated based on the analysis of domestic economic outlook as well as changes in international economic situation. The monetary policy for 2013/14 has been formulated to support the economic growth of 5.5 percent by making arrangement of providing adequate credit along with containing inflation at 8 percent, and maintaining foreign exchange reserves sufficient to cover the imports of goods and services at least for 8 months to support economic growth the bank rate, one of the policy rates, is kept unchanged at 8 percent.The total population in Nepal was last recorded at 27.8 million people in 2013 and is reported by the World Bank. The inflation rate in Nepal was recorded at 9.47 percent in April of 2014. Inflation Rate in Nepal averaged 8.38. The Gross Domestic Product (GDP) in Nepal was worth 19.29 billion US dollars in 2013. The GDP value of Nepal represents 0.03 percent of the world economy.The Gross Domestic Product per capita in Nepal was last recorded at 409.04 US dollars in 2013. The Nepalese Rupee decreased to 96.20 in July from 96.28 in June of 2014. The exchange rate of Nepalese currency with the US dollar witnessed some volatility because of a fluctuation of Indian currency with the US dollar.. The benchmark interest rate in Nepal was last recorded at 8 percent. Unemployment Rate in Nepal decreased to 3 percent in 2008 from 8.80 percent in 2001.The overall BOP recorded a surplus of Rs. 52.69 billion during eleven months of 2012/13 compared to a surplus of Rs. 115.76 billion during the same period of the previous year. BOP surplus during last two consecutive years and the resulting accumulation of foreign exchange reserve helped to maintain external stability. Nepal recorded a trade deficit of 57106.70 Million NPR in March of 2014. In the context of possible risk to external stability emerging from rising trade deficit and volatility of remittance inflows, monetary management will be handled cautiously to control unwanted monetary expansion.According to the Department of Industry (DoI), the country acquired the FDI commitment of Rs. 17,265 million during the review period. China occupied the first position to pour the FDI in highest number of industries (55 industries) followed by India (15), USA (15), South Korea (12) and Japan (9). Bipin Rajbhandari, director of the foreign investment section of DoI informed that the increment in FDI this year was due to increased number of projects in energy sector. (Khanal, 2014). It indicates that foreign are more interested towards the development of Nepal and it is positive sign for Nepal to establish public partnership program.The Minimum Wage Determination Committee has recommended the new wage structure to the government for its final approval. For industrial workers will get a minimum monthly salary of Rs 8,000 a basic salary of Rs 5,100 a month and dearness allowance of Rs 2,900. Earlier, the basic salary was Rs 3,550, while the dearness allowance was 2,650. (Thapa, 2013)Trade policy:No Licenses is required for exports and import of any products other than banned or quantitatively restricted items. Nepal has adopted General Agreement on Tariff and Trade (GATT) valuation system. Principle of lower rate of customs duty on the import of raw materials compared to finished goods is in use. The foreign company can do import and export business easily. There are different fee for different good that is import form various country/region. Export is generally free of duty and No licensees required for exports of any product other than banned or quantitatively restricted items. Exports in Nepal decreased to 7225.40 Million NPR in March of 2014 from 8009.10 Million NPR in February of 2014 and Imports in Nepal decreased to 64332.10 Million NPR in March of 2014 from 65160 Million NPR in February of 2014. Some of banned items are conserved wildlife articles, national treasurer, and other animal transaction. Some goods are also banned to import like used in production of arms and ammunition, Guns and cartridges, Arms and ammunitions, and other explosives, and nay beef product. It motivates the business man to do business. Every company in Nepal must register in VAT office to operate Value Added Tax is collected at every (manufacturing, distribution, wholesale and retail) stage of selling goods and services. The VAT level is 13%. But Nepal government makes free of tax in some good like agriculture goods, educational goods, health service etc.

Political factor: In Nepal CAElection2013 was held on 19 November 2013. Constitution of Nepal is multi-party system. In the CA election there are 121 political party present among them the most powerful three political party are: NepalCommunistParty (CPN UML), UnifiedNepal CommunistParty (Maoist) and NepaliCongress Party(NCP). There are 601 parliament member in constitution. Nepal transited to become a republic in 2008, expectations emerged that the new democracy would bring era of peace, stability, and development, whereas now it is struggling with sickening democracy. There is no stability in political situation of Nepal. Every party are contingent in their own problem, and government are changing so frequently. It doesnt helping in foreign investment. A number of factors such as lack of foresights, narrow visions, and petty politics have made the political parties almost defunct to execute the critical role that the history of Nepal has offered to them. Growing lack of trust and cooperation among these political parties has been putting off the process of institutionalizing the nascent republican system and economic development at all. Experience so far has showed that these political parties unit only when they are in opposition, but they bicker when they are in power (Shrestha, n.d.). Political instability is a feature of transition that exactly Nepal facing today. Nepali congress party: Nepali Congressis a democratic political party of Nepal. It is also one of larget parties of Nepal, who ruled the government several years. It is a party with long history. Nepali Congress emerges largest party in parliament. Nepali congress won 196 seat in recent election. The leader of Nepali congress Sushil Koiralia is present prime minister of Nepal. The president of Nepal is Ram Baran Yadav since 2008The objective of Nepali congress is: establishment of democratic socialism through the protection and promotion of nationalismTheCommunist Party of Nepal (Unified MarxistLeninist), also known asCPNUML,CPN (UML), is one of the largest communistinNepal. Khadga Prasad Sharma Olicommonly known asKP Oliis the current chairman of Communist Party of Nepal. The Communist Party of Nepal (Unified Marxist-Leninist) won a combined total of 175 seats.The Communist Party of Nepal-Maoist (CPN-M) was formed in 1995 following a split in the Communist Party of Nepal-Unity Centre. CPN-M is ledaing by Pushpa Kamal Dahal. The United Communist Party of Nepal (Maoist), which was the largest in the previous parliament, won 80 seats. Their philosophy is Political power grows out of the barrel of a gun

Commercial laws Most commercial laws of Nepal are based on the common law system so as the legal system of Nepal. Commercial laws were mainly introduced in the 1930s, during Second World War. Later on 2005 (Ashwin 23, 2062 BS), Companies Ordinance, 2005 had been introduced to repeal forthwith the legislation relating to companies in order to bring dynamism in the economic development of the country by promoting investments in the industrial, commercial and business sectors through the process of economic liberalization, and further simplify and make more convenient and transparent the processes of establishing, managing and administering companies[5]. It contained 21 chapters and 188 Sections and addressed almost all provisions comprising to the objectives mentioned in the preamble. It was a new Nepalese company laws legal framework. The Company Act, 2063 has been promulgated on 2006 (Kartik 24, 2063 BS)[6]for obtaining the main purposes. It is the prevailing law of the country. This Act has comprised almost all contemporary aspects of modern business. Therefore, it can be said that the country has come to the age of modern legal framework.

Courts system in NepalThe Constitution provides three tiers of Court which include the Supreme Court of the Kingdom of Nepal, the Court of Appeal and the District Courts. District Court is the Court of first instance upon which Court of Appeal hear appeal. In addition to these regular courts there is provision in constitution to establish special types of courts or tribunals for the purpose of hearing special types of cases by the law. According to these provision there are four Revenue Tribunals, one Administrative Court, one Labor Court and one special court are functioning under the respective laws. These institutions are under the judicial control of the Supreme Court.

Intellectual property lawNepalis a member of the Paris Convention for the protection of Industrial Property as of 2001; hence an applicant can claim priority of up to six months as per the convention. Due to the lack of awareness and skilled workforce Nepal are behind to make file to protect intellectual property right. Just one patent was registered in the fiscal year 2069/70 and two in 2068/69. There are some few patent are register in Nepal by foreign company. Because of due to lack of clear laws and a separate regulatory body for regulation of all kinds of intellectual property rights.Economic performanceBecause of political instability, unfavorable monsoon, a shortage of chemical fertilizers, and the delay in introducing a full budget GDP growth remain to 3.6% in FY 2013 (ended 15 July 2013). Agricultural output growth is 1.3%, 6% on improvements in wholesale and retail trade and in hotels and restaurants. Industry investment is not growing so much because of electricity shortages, labor disputes, and political uncertainty soured the investment climate. The inflation rate in Nepal was recorded at 9.47 percent in April of 2014. The overall budget balance turned from deficits in recent years to a surplus equal to 0.4% of GDP. Exports declined by 2.9% as demand slowed and supply side constraints hurt competitiveness. Merchandise imports grew by 10.9%largely because reliance on imports to meet domestic demand continued to intensify despite the weakening of Nepalese rupee, and demand for petroleum products rosepushing the trade deficit up to 27.1% of GDP. Growth of remittance inflows eased to 11.3% after the large 26.6% expansion in the previous year, yet remittances still amounted to 25.6% of GDP. The overall balance of payments surplus moderated to $786.5 million, and foreign exchange reserves increased to $5.6 billion, equivalent to 9.3 months of imports of goods and services.Economic prospectsThe successful second Constituent Assembly election in November 2013, the successful political transition to a new government has boosted business and investor confidence. Taking into account the favorable monsoon, more rapid growth of remittance inflows, and the timely introduction of a full budgetand assuming political stabilityGDP is projected to grow by 4.5% in FY 2014, The balance of payments is expected to remain strong in FY2014. Exports are projected to increase by 3.0%, reflecting improving external demand and the gain in cost competitiveness owing to currency depreciation. Imports are projected to grow by 15% on the back of an upturn in domestic demand. The financial sector is stabilizing after the earlier excessive credit expansion and the subsequent break in the real estate boom in FY2011. Policy challengetaming high inflation Average inflation has surpassed 9% in each of the past 5 years except for FY2012, when it was only slightly less. Inflation at 12.6% in FY2009 Inflation in Nepal tends to move in tandem with inflation in India, which is Nepals largest trading partner and with whose currency. Nepal has pegged its rupee. According to a study by the International Monetary Fund, inflation in India and international oil price movements account for about one-third of the variability in Nepals inflation. Other factors that have driven inflation in recent years are weak currency, wage pressures, and supply-side constraints. The depreciation of the Nepalese rupee against the currencies of its trade partners has inflated costs not only for final goods but also for imported raw materials and intermediate goods. Furthermore, 161 products, mostly industrial raw materials, are imported from India in exchange for US dollars. Supply-side constraints such as power outages, transportation bottlenecks, and market price distortions imposed by middlemen and syndicates have also played major roles in keeping inflation high.

Business system and structure Nepal in developing country and Nepal started way of industrialization, and commercialization. In Nepal highly 'top down' approach of planning is commonly practice. Decision making is highly centralized in public enterprises and private enterprises because of political appointment in that area. Business organization usually adopt functional organization structure. The authority are mostly lies on top management level and there is only public enterprises who practice participative approach.Nepal economy is an agricultural economy. Most of the people are depend in the agriculture and government are motivating public through different policy and program. In recent years, the country's efforts to expand into manufacturing industries and other technological sectors have achieved much progress. The other main economic activities are manufacturing, trade and tourism. The main sources of foreign currency earnings are merchandise export, services, tourism and remittances.

Nepalese Chambers of Commerce and Industry (FNCCI) is an umbrella organization of the Nepalese private sector. FNCCI is the member of the various international organizations. Following are the main services being provided by FNCCI:It regulate and represent entire business community of the country in national and international forums. It promote foreign investment in Nepal and more focus on exports. It facilitate expertise and makes participation on national and international trade fairs. The main responsibility if to promote business relationship and to provide necessary information. It Conduct regular basis, trainings, workshops, seminars on chamber management, publication, information exchange, documentation, industrial relation, productivity, entrepreneurship, quality management, environment etc.

Business ethic in NepalThough over 100 business companies have made a commitment towards the Business Code of Conduct (CoC) which was introduced by the National Business Initiative (NBI) last week in the Capital, implementation of such a self-abiding code will not be an easy task.The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the Birjung Chamber of Commerce and Industry (BCCI), Hotel Association Nepal (HAN), Nepal Gas Dealers Association (NGDA), and Nepal Association of Foreign Employment Agencies (NAFEA) are some of the leading business associations that have endorsed the CoC. A recently conducted survey of Kathmandu-based companies entitled Ethical Business Practice in Nepal by NBI has found only 7 per cent of the companies following business ethics, while 41 per cent of the sample were found weak in this. Likewise, 52 per cent of the sample was found to have attempted to implement the CoC and partially following it (Ghimire, n.d.). There are doubts as to whether companies will duly follow the provisions stated in the CoC at a time when there are allegations upon some of them that they are flouting the business laws of the country. Some member companies of the associations that endorsed the CoC have come under the governments scanner for their unscrupulous deeds. In Nepal business ethics are being very hot topic and regulator are regulating timely to the business houses and they are punishing who violating the business ethics.

Marketing institutions Marketing institutionscan be considered to embrace a wide range of organizations, including associations of farmers, traders, and others in the value chain, as well as cooperatives and government marketing agencies. There are number of distributor and Retailers Company for each industry. Around the country there are so many retailers that business make happen. According to American Marketing Association, Advertising is any form of non-personal presentation and promotion of ideas, goods and services usually paid for by an identified sponsor. There are number of electronica and non-electronic form of advertisement media. We can advertise through daily newspaper or through online page. Every business company have their own pages where they can promote their business. Some of Advertisement agency are: Bust of Marketing and Pvt.Ltd.,Trikon Advertising Service. Okash Pvt. Ltd, Gorkhapatra Corporation, Kantipur Publication etc.There are number of marketing agency in Nepal some of marketing agency are: Footprints Nepal is leading Media Monitoring and Market Research Company in Nepal, creative and marketing research center, hawk Everest research org pvt. Ltd, center for business promotionThere is media policy 2012 in Nepal to control the advertisement and marketing practice. The broadcasting institutions are not allowed to broadcast any advertisement with thematters such as, Matters adversely affecting political parties, Material of vulgar type, Materials with object tooust the elected government by using violent force, Matters of such a nature so as to createunusual fear and terror in the general public; Matters contrary to the non-aligned foreign policy ofNepal, Materials misinterpreting disregarding, insulting and devaluating any tribe, language, religion and culture

Manager in Nepal Manger characteristics: manager is responsible for making long term planning and executing the strategies and evaluate and monitor the project. The manager has the authority to change the work assignments of team members and manager action has a great influence in the success of company. In Nepal some manager are more responsible and some are only manager they dont do duty of their. Recently the manager of year is announced, he is Mr. Narrotam Acharya, principal of kings college. Some of the characteristics that good manager hold in Nepal are:Self-motivation: they love what they are doing and they are self-motivate to do.Integrity and trust: only few manager hold these characteristics.Optimism: manger need to be believe on themselves and Nepali manager have these characteristics. They also motivate their employee.Confidence: most of the private enterprises manager hold these characteristics. They clear their own mission and vision and confident on their ability and education.Collaboration: now days most of the manager collaborate with their employee and other business manager for mutual benefit.Organizational hierarchy: manager are changing their culture and system of their organization and most of the manger now believing in flat organization hierarchy system.Other characteristic the manger hold is team player, customer service, helpful active listening and great communication. It is not hold by all the company but only few manger has this characteristics.To be a manger there is no any educational barrier in Nepal. We can be manager if our ancestry hold the business. Such that to be manger in family business there is any requirement but there are certain criteria that need to full fill to be manager they are:A bachelor's or master degree in business administration or another applicable major may qualify you for management positions with various types of businesses, like marketing firms, financial institutions, retail stores, and manufacturers. Experience count a lot and training plays significant role to be a manager.

Type of company in NepalCurrently, three types of companies can be established in Nepal according to the Companies Act 2006 (2063 B.S.). They are:- Private limited company - requires only one shareholder or promoter Public limited company - requires at least seven shareholders and promoters Non-profit company - requires at least five members

Development Cooperation Policy, 2014The objectives of this policy will be as follows: a) To contribute in the achievement of development goals b) With a vision of transforming Nepal from Least Developed Country to Developing Country by 2022.c) To make and try to Best Value for Money,

Ministry of finance

MOF are responsible to formulate of periodic plans, to do economic analysis, monetary formulation and analysis, revenue policy, foreign exchange and control, develop international economy relationship. Wok on budget, responsibility of handling economic affairs of the country, responsibility of negotiating and concluding agreements with donors even though any formal procedures and mechanism to mobilize foreign aid in a coordinated manner.

Foreign investment in Nepal is regulated and administered by the Foreign Investment and Technology Transfer Act and Industrial Enterprises Act. The Department of Industries (DOI) is the sole agency for administration and implementation of the Foreign Investment and Technology Transfer Act in Nepal.Nepal is open to all prospective foreign investors: individual or institutional. Nepal formulate different policy regarding FI and they are motivating foreign to invest more in Nepal. Nepal is trying to maintain sustain economy and political stability in Nepal encouraging foreign to do business in Nepal. In the current situation most of the foreign investor are willing to invest in energy sector and hydropower.

FI can be made in any industry in the following forms:1. Investment in shares (equity);2. Reinvestment of the earnings derived from equity;3. Investment made in the form of loans or loan facilities; and4. Investment in kinds, e.g. machineries and equipmentForeign investors are permitted to own up to 100% equity share in any industries except the following some industry like cottage industry, film industries, bank notes and coins, fisheries, bee keeping, tourism, consultancy service real estate business etc.

Social and culture parametersTheculture ofNepalis rich and unique. Nepal has a host of ethnicities present as well. The various temples, churches, monasteries and other religious buildings are on the every corner of Nepal. Nepal has about thirty-six different ethnic groups and multiple religions and languages. They have their own culture and language.. As a result, Nepal can boast of a multi-ethnic population that also houses a host of different cultures that are shared by its inhabitants. It also has different religions present, most significantly Hinduism and Buddhism, but minorities of Muslims and Christians are present as well.There are 125 caste/ethnic groups reported in the census 2011. Similarly, there are 123 languages spoken as mother language with Nepali as the largest (44.6 percent) followed by Maithali (11.7 percent) and Bhojpuri (6.0 percent).Nepal is richest in the festival. dashain and tihar is most famous and long festival that we celebrate with fullness of joy. Other festival are Buddha jayanti, bisket jatra( new year festival), Guru purnima, Christmas, maha shivrati etc.

Education systemNepal followed the three-tier eighteen-year education system, allocating ten years to school education, two years each for intermediate and four years for bachelor program, and two to the Masters program at the university.School Education (a) Primary Level (b) Middle School/Lower Secondary Level (S.L.C.) (c) High School/ Secondary Level (d) 10+2/ Higher Secondary LevelHigher Education (a) Bachelor's/Undergraduate Level (b) Master's Level/Graduate/Degree Level (c) Post Graduate, M. Phil. Level (d) Ph.D. Doctoral Level According to Central Bureau of Statistics releases National Census Report 2011 shows Overall literacy rate (for population aged 5 years and above) has increased from 54.1 percent in 2001 to 65.9 percent in 2011. The male literacy rate is 75.1 percent in comparison to female which is 57.4 percent. There are various factor involving, Nepal is not improving so fast in the education level despite of various program and foreign aid help. Its because result of socio culture factor and poverty in Nepal.Socio-culture factor plays an important role in the process of demand of the product. Depending upon social norms and value people demand the product. Depending upon the time the social attitude changes and business must understand it and must take opportunity to grow themself. Cultural factor of county, place affect the acceptance of the product. some of social culture factor are population growth rate and age profile, Population health, education and social mobility, Population employment patterns, job market freedom and attitudes to work, Press attitudes, public opinion, social attitudes and social (Healthknowledge, 2010). All the norms and values must consider in strategic planning to motivate to individual to work. The organization must create their own culture and system.Nepal has experienced progress in economic, social and human development over the last decade. Social change has huge impact in the society and individual. Social change is the significant alteration of social structures. It changes how people live, hoe people behave and how people percept the condition. It changes the whole structure of society. It has some advantage and some disadvantage. With rapid hanging in the social structure it changes the people culture how they spoke, how they think. It changes the language it force to change the religious. Some of people changes their caste to make enrollment in the society. It changing the social norms and value .most of the people following western trend and forgetting own identity.

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