FISCAL POLICY

• Fiscal policy implies the activities related to the revenue and expenditure of the government.
• The aim of the fiscal policy is maintaining the stability of the macro economy.
• Government revenue is the income for a certain financial year of the economy and
  government expenditure is the total expenditure for a year spent on activities of economic
  growth and expenses on maintaining daily affairs.

Government revenue and expenditure can be categorized as follows:

THE IMPACT OF FISCAL POLICIES ON BUSINESS 

• Taxes charged by business are used for the development of Infrastructural facilities.
• Local industries are protected by some taxes on imports.
• Tax imposed on productions may cause price increases.

 

 

The government intervenes to carry out businesses for the welfare of the public
The government engages in business activities for the following reasons
• To control the unfavorable market situations in the private sector.
• To prevent monopolies
• To provide essential services to the public
• To minimize wastage of resources
• A State corporation is a business organization incorporated by a special or common act
owned completely or more of the ownership by the government and controlled by the board
of directors appointed by the government.
• Government Departments can be considered special institutions working under the
administrative regulations and financial regulations, directly controlled under a ministry and
often providing the services.
• Provincial councils, Municipal councils, Town councils and Pradeshiya Saba are also
engaged in business activities.
• All government sector businesses are known as public sector
• Privatization is one of the procedures introduced by the government to make the different
business in the public sector efficient.
• There are good and bad results in government sector businesses

• Information are very important as a resource in achieving the goals and objectives of the institution as well as to gain competitive advantages.
• The evolution of communication technology can be explained in accordance with the eras of economic and social development
  • Normadic Era
  • Agricultural Era
  • Industrial Era
  • Information Era

 Differences between data and information

Data	Information
The basic materials used as    inputs in data processing are data.	Outcome of data processing is    information.
Cannot be directly used in decision making.	Can be used in decision making.
Data are of no value until they    are in the form of data.	A value contains in information.
A raw material.	A finished product.

Data Processing 

Functions of data processing 

• Classifying
• Sorting
• Calculating
• Summarizing

Data processing technology 

• Manual System
• Semi – Manual system
• Electo Mechanical system
• Electronic data processing

Characteristics of a good information

• Relevancy
• Readily available
• Accuracy
• Descriptive
• Complete
• Ability to present through various media
• Reliable
• Ability to access at a lower cost
• Protected
• Ability to understand by the user
• Current and updated
• Flexible

Classification of Information

• According to the source
  • External
  • Internal
  • Primary
  • Secondary
• According to the nature
  • Quantitative
  • Qualititative
• According to the level of management
  • Tactical
  • Strategical
  • Operational
• In accordance with time
  • Past
  • Present
  • Future
• Based on probability
  • Definite
  • Probable
• In accordance with the production function
  • Financial
  • Production
  • Marketting
  • Human resources
• According to Collectiveness and Separatedness
  • Collective information
  • Seperated information

When a person owns a business organization, it is known as a sole proprietorship
The following characteristics can be seen in sole proprietorship.
• Management decisions are taken by the owner.
• Unlimited liability.
• No continuous existence.
• Registration is not compulsory.
• Profits and losses are borne by the owner.
• Risk is borne by the owner.
• No going concern.
• Accounting is not compulsory.
• Taxes are not paid in the name of the business, but taxes on the business income
should be paid by the owners under their private name.
Several advantages of sole trader businesses are given below.
• Can be started easily.
• All profits can be enjoyed by the owner.
• Decisions can be taken independently.
• Few rules and regulations.
• Confidentiality of business information.
• Can wind up easily.
• Several disadvantages of sole trader businesses are given below.
• Unlimited liability.
• Difficulties in raising capital.
• Incorrect decisions can be taken.
• No guarantee of continuous existence

Sole trader businesses should be registered at the divisional secretarial under the
Business Names Ordinance No. 6 of 1918, if it is carried out in an other name other than the
owners name.
The following procedure has to be followed when they are registered.
• Obtaining the application form, from the divisional secretary’s office where the business is
going to be located.
• The application form used to register a name of a sole trader business.
• The report of the “Grama Niladari” required for the registration of a business name.
• Submitting the Grama Niladari report and the completed application form to the
divisional secretary with the registration fees.
• Issuing of certificate of business name registration by the divisional secretary, taking the
above facts into consideration.

• The establishment administering the buying and selling of the shares of Listed companies
  is known as the Colombo Stock Exchange.
• Colombo Stock Exchange (CSE) is a company Limited by Guarantee.
• The authority of functioning as the share market in Sri Lanka has been granted to the
  Colombo Stock Exchange by Sri Lanka Securities and Exchange Commission.

Colombo Share Market 

• Primary market
• Secondary market

Importance of Colombo Share Market 

• Encouraging individuals and institutions for investments
• Investors can enjoy various benefits by investing through Colombo Share Market
• Companies get the opportunity to collect a large capital
• The government can collect required funds by selling government securities
• Ability to attract foreign investors to the country
• Creating a value for company shares
• Increasing the goodwill and the image of companies
• Creating a secondary market for company shares

 

 Conditions to be fulfilled by a company to be listed in the Main board 

• The stated capital of the company should be at least 100 million Rupees
• Profits should have been earned before tax continuously for at least three (03) previous years
• At least 25% of the shares to be listed should have been issued to the public

 Conditions to be fulfilled by a company to be listed in Dirisavi Board

• The stated capital of the company should not be less than 35 million rupees
• At least 10% of the shares to be listed should have been issued to the public

 Default Board

• The board in which the companies those violate or do not follow the conditions of listing, are entered is known as the Default Board.

 Securities exchanged in Colombo stock exchange 

• Ordinary shares
• Preference shares
• Share warrants
• Corporate Debentures
• Government Debt Securities

Benefits gained by investing in securities exchanged in the share market 

• Dividends
• Interests
• Capitalizing of reserves through issue of Bonus Shares
• Rights Issue
• Capital gains
• Splitting

Colombo Stock Exchange

• The membership of Colombo Stock Exchange is possessed by the Share Brokering
  Companies.
• Colombo Stock Exchange is controlled by nine directors
  • 05 directors are representing the Brokering Companies
  • 04 directors are nominated by the minister of finance of the Sri Lankan government
• The parties involved in the Colombo Stock Exchange can be shown as follows in
  a diagram:

• Realization and settlement of the transactions related to the shares exchanged in Colombo
  Stock Exchange are done by the Central Deposits System.
• This is a company limited by guarantees and it is fully possessed by the Colombo
  Stock Exchange.
• Securities and Exchange Commission of Sri Lanka has been established under a
  parliamentary act in order to supervise and formalize the activities of Colombo
  Stock Exchange.
• There are two methods of exchanging securities in Colombo Stock Exchange:
  • The Automated Trading System – (ATS)
  • The Debt Securities Trading System – (DEX)

 Price indices 

• All Share Price Index (ASPI)
• Milanka Price Index (MPI)
• Total Return Index (TRI)

 Importance of Share market indices 

• Ability to gain some knowledge about the performance of the economy
• Ability to gain a rough awareness about the functions of companies
• Ability to compare with share market conditions in other countries
• Ability to get support in investment decisions

• All the activities related to utilization of Human  Resources efficiently and effectively so as to ensure the employee satisfaction and development in order to achieve the objectives of an organization is known as Human Resource Management.

Specific features of Human Resource Management

• Vitality of human resource
• Ability to react
• Ability to control all other resources
• Ability to be trained
• Ability to work in teams

Common purpose of Human Resource Management

• Form and maintain a satisfied and appropriate labour force that could dedicate their maximum contribution towards the success of the organization.

 Specific objectives of Human Resource Management

• Improving the employee effectiveness
• Controling the cost of employees
• Employee development
• Fulfilling the legal conditions related to employees
• Employee welfare
• Recruiting employees for the jobs at the right time
• Motivation of employees
• Retention of suitable employees in the institute

SRILANKAN GOVERNMENT INFLUENCE IN BUSINESS

• Central government policies, laws and regulations
• Provincial council policies, laws and regulations
• Local government policies, laws and regulations

GOVERNMENT INFLUENCE IN BUSINESS

• Suppling infrastructure facilities
• Being a competitor
• Formulating policies
• Enacting laws and regulations
• Providing incentives
• Imposing taxes

ECONOMICAL AIMS OF THE GOVERNMENT

• Gradual Economic growth and development
• Full employment
• Economic stability
• Fair income distribution
• Better international

CONTRIBUTION OF BUSINESS FOR GOVERNMENT AIMS

• Paying Taxes
• Using local resources
• Following government policies
• Following Laws and regulations
• Providing jobs
• Minimizing the environmental distraction

The mutual relationships between the government and businesses are important because
businesses get motivated by the facilities provided by the government and the objectives
of the government can be achieved through the development of the businesses.

 

Productivity 

• The ratio of the relationship between inputs and outputs is known as productivity.

Importance of Productivity 

• To make decisions regarding allocation of resources of the business
• To make decisions on expansion of the business
• To compare productivity with other similar business entities
• To know the progress of the business entity

• Some ways through which the productivity can be enhanced are mentioned below:
  • To make the management efficient
  • To utilize modern technology
  • To provide financial as well as non financial incentives to employees
  • To get the employee participation in decision making
  • To use the quality circles

Modern Technologies

• CAD (Computer Aided Design)
• CAM (Computer Aided Manufacturing)
• CIM (Computer Integrated Manufacturing)
• CNC (Computerized Numerical Control)

• The group of managerial affairs in connection with planning, organizing, leading and controlling of operational affairs of an organization is known as operations management.

Tasks of Operations management 

• Production engineering
• Production planning
• Purchasing
• Production controlling
• Research & development

Importance of Research & development 

• To upgrade the quality of product
• To enhance the efficiency of the production process
• To minimize the cost of production
• To introduce new goods and services
• To minimize the wastage
• To satisfy the consumer in a better way

Transformation Process 

• Conversion of inputs in to outputs is known as the transformation process.

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