Business Environment

The main legal provisions for starting a business in Nepal are:

1. Registration of the business. A company is registered at the Office of the Company Registrar under the Companies Act 2063; proprietorships, partnerships and small firms are registered under the Industrial Enterprises Act 2016 or with the local government (for example the Firm Registration Act).
2. Permanent Account Number (PAN) or VAT registration at the Inland Revenue Office under the Income Tax Act and VAT Act.
3. Industry registration/licence with the Department of Industry or Cottage and Small Industries Office, according to size and type.
4. Foreign investment approval under the Foreign Investment and Technology Transfer Act (FITTA) 2019 through the Department of Industry or the Investment Board.
5. Local government and sector permits such as business licences, environmental clearance (EIA/IEE), and labour registration under the Labor Act and social security rules.
6. Compliance after start-up: annual returns, audit, tax filing, and contribution to the Social Security Fund.

Together, these laws make a business legal and provide its rights and obligations.

Major legal provisions for starting a business in Nepal:

• Registration: companies at the Office of the Company Registrar (Companies Act 2063); other firms and industries at the Department of Industry or Cottage and Small Industries Office (Industrial Enterprises Act 2016), or at local government.
• Tax registration: PAN and, when required, VAT at the Inland Revenue Office.
• Foreign investment: approval and registration under FITTA 2019 if foreign money is involved.
• Licences and permits: sector licences, local government business permits, and environmental approval (IEE/EIA) for relevant projects.
• Labour and social security: registration of employees and following the Labor Act 2017 and Social Security Fund contribution rules.
• Continuing compliance: annual returns, audited accounts and tax filing.

Following these provisions makes the business legal, and gives it legal protection and access to incentives and credit.

The task environment (specific or micro environment) consists of the groups that directly interact with and affect the firm's day-to-day operations:

• Customers
• Suppliers
• Competitors
• Financial institutions / creditors
• Shareholders and owners
• Employees and trade unions
• Government regulators and the community / media (pressure groups)

An open market economy is an economic system in which resources are allocated mainly by market forces of demand and supply, with little government control. Private ownership, free competition, freedom of entry and exit, and open trade and capital flows with other countries characterise it. Prices, rather than government orders, guide what is produced and consumed.

BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) has the following objectives:

• Create an enabling environment for rapid economic development in the sub-region.
• Promote cooperation in trade, investment, technology, transport, energy, tourism, agriculture and fisheries.
• Accelerate economic growth and social progress through joint efforts.
• Promote active collaboration and mutual assistance in economic, social, technical and scientific fields.
• Use the members' resources to reduce poverty and improve people's living standards.

Main provisions of the Labor Act 2074 (2017):

• Employment: a written appointment letter is compulsory, and the probation period is up to six months.
• Working hours: eight hours a day and 48 hours a week, with overtime paid at 1.5 times the normal rate.
• Wages: minimum wage fixed by government, with equal pay for equal work and a bonus of 10% of profit shared among employees.
• Leave: weekly, public, home, sick, maternity (98 days) and paternity leave.
• Safety, health and welfare facilities, and provision for a provident fund, gratuity and insurance.
• Prohibition of forced and child labour, and no discrimination.
• Formation of trade unions, collective bargaining, and settlement of labour disputes through the Labour Court.

The main elements of an economic system are:

• Resources / factors of production (land, labour, capital, entrepreneurship)
• Ownership of property (private, public or mixed)
• Decision-making and coordination mechanism (market, central planning or mixed)
• Economic institutions (firms, households, government, banks, markets)
• Incentives, prices and the distribution of income
• Economic goals (growth, stability, equity, full employment)

Bureaucratic hurdle means the delays, complex procedures, excessive paperwork, multiple approvals and red tape in government offices that obstruct business activities. It raises the time and cost of registering, licensing, trading and investing, and discourages entrepreneurs and investors.

Four objectives of monetary policy:

• Maintain price stability by controlling inflation.
• Achieve economic growth and increase employment.
• Maintain a stable exchange rate and a healthy balance of payments.
• Ensure adequate liquidity and credit flow to productive sectors, and keep the financial system stable.

Methods of Foreign Direct Investment (FDI):

• Establishing a wholly owned subsidiary (greenfield investment).
• Joint venture with a local partner.
• Mergers and acquisitions (brownfield investment) of an existing local firm.
• Acquiring a controlling share of a local company.
• Licensing, franchising, management contracts and turnkey projects.

Cultural assimilation is the process by which a minority or a newcomer group gradually adopts the language, values, customs and behaviour of the dominant culture and loses its own distinct identity.

Examples: immigrants in the USA adopting English and American lifestyles; Nepali youth adopting Western dress, fast food and music, so that jeans, pizza and pop culture are common in cities.

Functions of the Trade and Export Promotion Centre (TEPC):

• Formulates and carries out programmes to promote Nepal's exports and diversify products and markets.
• Collects and provides trade information, market research and statistics to exporters.
• Organises and takes part in trade fairs, exhibitions and buyer-seller meetings.
• Provides training and consultation to exporters on quality, packaging and standards.
• Advises the government on trade policy and helps solve trade problems, including trade-related negotiation support.

Environmental scanning is the continuous process of collecting, analysing and using information about external events and trends so that managers can detect opportunities and threats early. The process has these steps:

1. Identify the scope and factors to scan. Decide which environmental areas (economic, political, legal, socio-cultural, technological, competitive) matter to the business.
2. Collect information. Gather data from newspapers, government reports, the internet, market research, customers, suppliers, trade associations and personal contacts.
3. Analyse and interpret the data. Identify trends, changes and relationships, and sort them into opportunities and threats (for example with PEST or SWOT).
4. Forecast. Predict the likely direction and impact of the important trends.
5. Communicate and integrate. Pass the findings to decision makers and include them in strategy and planning.
6. Monitor and review. Scan continuously, because the environment keeps changing, and revise strategies when needed.

Good scanning helps the firm adapt in time, reduce uncertainty and gain competitive advantage.

The Industrial Enterprises Act 2016 (2073 BS) replaced the earlier industrial legislation to promote industrial development. Its salient features are:

• Classification of industries. Industries are classified as micro, cottage, small, medium and large according to fixed capital, employment and energy use, and they are also grouped by type (manufacturing, energy-based, agro and forest-based, mineral, tourism, construction, information and communication).
• Registration and licensing. The Act sets simple registration procedures, with licences needed only for specified industries.
• Industry-friendly facilities. The Act provides for a one-stop service centre, an Industrial Promotion Board to advise on policy and approve large projects, and special economic and industrial zones.
• Incentives and concessions. Tax exemptions, loans on easy terms, and extra benefits for industries in remote areas and for women, Dalit and youth entrepreneurs.
• Protection. Industries are not nationalised, and the Act protects investment.
• Priority sectors. Promotes agro-based, export-oriented and employment-generating industries, and encourages the use of local raw materials and technology.
• Support for micro and cottage industries, and provisions on foreign investment, technology transfer, environmental safeguards and workers' interests.
• Penalties for violation of the provisions.

Internal environment of business means the factors inside the organisation that the management can largely control and that shape its performance and strategy. They are the strengths and weaknesses of the firm.

Components:

• Owners and shareholders: their objectives, capital and interests affect policy and the choice of leaders.
• Board of directors: sets vision and strategy and supervises management.
• Organisational structure: the authority, responsibility and communication pattern affect speed and coordination.
• Human resources: the skills, motivation and attitudes of employees decide productivity and quality.
• Organisational culture: shared values and norms shape behaviour and the way work is done.
• Physical and financial resources: plant, technology, capital and liquidity set the firm's capacity.
• Mission, vision and objectives: give direction.
• Labour relations and management style: decide industrial peace and employee commitment.

The socio-cultural environment consists of the values, beliefs, customs, lifestyles, demographics and social institutions of society. When it changes, business is affected in these ways:

• Demand patterns change. Changing tastes and lifestyles create demand for fast food, branded clothes, mobile phones and online shopping, and reduce demand for traditional goods.
• Changing family structure and women's role. Nuclear families and working women increase demand for ready-made food, childcare, appliances and insurance.
• Demographic change. A young population creates demand for education, entertainment and jobs, and urbanisation changes retail and housing markets.
• Workforce changes. Education and awareness, migration and new attitudes to work alter HR policy, wages and motivation.
• Marketing practices. Language, religion, festivals and taboos decide product design, promotion and packaging.
• Ethics and social responsibility. Greater awareness of consumer rights and the environment pushes firms toward ethical and green practices.

So businesses must monitor social change and adapt their products, marketing and employment policies.

Energy management issues in Nepal:

• Hydropower potential not utilised. Nepal has large hydropower potential (about 83,000 MW, with about 42,000 MW economically viable), but only a small share is developed.
• Dependence on traditional fuels. Firewood, agricultural waste and imported petroleum make up most energy use, which harms health and forests.
• Imported petroleum products. Heavy dependence on imports (mainly from India) strains the trade balance and exposes the country to price shocks.
• Transmission and distribution weaknesses. Weak grid, high system losses, and delay in building lines and substations.
• Seasonal imbalance. Surplus in the monsoon and deficit in the dry season; the power is sold cheaply or spilled and then imported in winter.
• Project problems. Delays, cost overruns, weak financing, land and compensation disputes, environmental and political obstacles.
• Lack of use. Low per capita consumption, limited industrial demand, and slow adoption of electric cooking, vehicles and alternative energy (solar, wind, biogas).
• Institutional issues. Weak coordination, regulation and the policy of the Nepal Electricity Authority (NEA), and uncertain power trade agreements.

Solutions include faster project completion, grid strengthening, regional power trade and promotion of alternative energy.

Globalization is the process of increasing integration and interdependence of the world's economies, societies and cultures through free flow of goods, services, capital, technology, people and information across borders.

Advantages:

• Larger markets and more exports and trade for firms.
• Foreign investment, technology and management know-how flow in.
• Greater consumer choice, better quality and lower prices through competition.
• Employment and income growth, and efficient use of global resources.
• Exchange of ideas and culture.

Disadvantages:

• Local and small industries may fail against large multinationals.
• Widening gap between rich and poor countries and within countries.
• Dependence on foreign capital and exposure to global crises.
• Loss of local culture and traditions, and environmental damage.
• Brain drain and job loss in sectors that cannot compete.

Features of Nepalese agriculture

• Dominant sector: it employs about 60% of the population and provides livelihoods for the majority of households.
• Subsistence-oriented: most farms are small and fragmented, with average holdings of under one hectare, and produce mainly for family consumption.
• Dependence on monsoon: only a part of the cultivated land has year-round irrigation, so output varies with the weather.
• Traditional technology: low use of fertilizer, improved seeds and mechanisation, so productivity is low.
• Diverse geography and crops: cereals (paddy, maize, wheat) dominate, with cash crops (sugarcane, tea, cardamom, ginger), vegetables, fruit and livestock.
• Labour intensive with seasonal and disguised unemployment, and an increasing role of women because men migrate abroad.
• Weak commercialisation and marketing: poor roads, storage, credit and price information, and a growing food import bill.
• Raw material source for agro-based industries such as sugar, jute, tea and dairy.

Contribution to GDP

Agriculture is the largest single sector of the economy. Its share in GDP has fallen from about 60% in the 1970s-80s to about 24-25% in recent years, while services have risen to over 60%. It still supplies food for the population, raw materials for industry, a significant part of exports (tea, cardamom, ginger, lentils), and employment for the majority. Its slow growth (around 2-3% a year) and dependence on the monsoon limit overall growth.

Evaluation: although the share of GDP has declined, agriculture remains the backbone of the economy for employment, poverty reduction and food security. Modernisation through irrigation, commercial farming, inputs, rural roads and agro-processing is necessary for it to contribute more.

Organizational culture is the set of shared values, beliefs, norms, symbols and behaviour patterns that distinguish one organisation from another. It is the "personality" of the firm and an important part of its internal environment.

Role in shaping business:

1. Guides behaviour and decisions. Shared values tell employees what is acceptable and so give consistency in decisions and conduct.
2. Identity and direction. A clear culture gives employees a sense of identity and purpose, and supports the vision and mission.
3. Motivation and commitment. A supportive culture increases satisfaction, loyalty and productivity and lowers turnover.
4. Strategy implementation. Strategy succeeds only when it fits the culture; a culture of innovation supports change, a rigid one resists it.
5. Competitive advantage. A strong culture is hard to copy and can become a source of advantage (for example, Google's culture of innovation).
6. Quality and customer service. A culture of excellence and customer focus affects product quality and reputation.
7. Coordination and control. Norms act as informal control and reduce the need for rules and supervision.
8. Attracting talent and ethical conduct. It helps hire people who fit and promotes ethics, teamwork and social responsibility.
9. Adaptation to change and mergers. A culture that welcomes learning helps the business adapt; a clash of cultures can cause mergers to fail.

Conclusion: culture can strengthen or weaken a business. A positive, adaptive culture helps a firm perform better and survive in the long run, which supports the statement. Weak or toxic culture, in contrast, leads to conflict, low morale and failure.

Political environment includes the political system, government stability, policies, political parties, and the relation of the state with business. It strongly affects business growth.

Positive aspects

• Nepal is a federal democratic republic with a constitution (2015) that guarantees the right to property and private business, and a three-level government (federal, provincial, local) that brings services closer to people.
• The constitution adopts a mixed economy with a role for the private, public and cooperative sectors.
• Liberal policies since 1990s: privatisation, industrial, foreign investment and trade policies, and membership of the WTO, SAARC and BIMSTEC.
• Public participation in politics and a free press.
• Peace after the 2006 peace agreement and an ended conflict improve investor confidence.

Negative aspects

• Frequent changes of government and coalition politics bring instability and policy inconsistency.
• Weak implementation of laws and policies, bureaucratic hurdles and corruption.
• Trade union politicisation, strikes (bandhs), and conflict between the labour and the owners.
• Unclear division of power between the three levels of government and overlapping taxes and regulation.
• Political interference in public enterprises and appointments.
• Delays in major projects and in the legislation of business laws.

Evaluation: the political environment has become more open and supportive in law and structure, but instability, corruption and weak implementation reduce its benefit. To support growth, Nepal needs political stability, consistent policies, strong rule of law, a transparent bureaucracy and a friendly investment climate.

Economic environment consists of the factors that affect consumer purchasing power and spending patterns: the economic system, growth, income, inflation, interest rates, infrastructure and economic policy. It is crucial because it determines demand, costs and profit.

Relevance in Nepal and its major dimensions:

1. Economic system: Nepal follows a mixed, increasingly market-oriented economy with private, public and cooperative sectors. This decides the freedom and role of business.
2. Economic growth and structure: growth is around 4-5% a year, with a service sector share of over 60%, agriculture about 24% and industry about 14%. This indicates where opportunities are (tourism, banking, telecom, hydropower).
3. Income and consumption: per capita income of about US$1,400, with high poverty and inequality, limits purchasing power; remittances (about a quarter of GDP) support consumption.
4. Inflation and interest rate: affect costs, saving and investment.
5. Monetary and fiscal policy: the central bank (Nepal Rastra Bank) controls credit and liquidity, and government tax, budget and subsidy decisions affect business costs.
6. Foreign trade and balance of payments: a large trade deficit, imports dependent on India, and remittance reliance.
7. Infrastructure: limited roads, energy and transport raise the cost of doing business.
8. Employment and labour: large labour surplus, migration, and the skill gap.
9. Foreign investment and aid: FDI is low, and development depends partly on aid.
10. Economic planning and reforms: periodic plans, liberalisation and privatisation.

Conclusion: the economic environment decides market size, input costs, financing and profitability, so the statement is reasonable. Businesses in Nepal must plan around these dimensions, and the government should improve infrastructure, stability and investment climate.

(a) Issues and prospects discussed in the case

Issues:

• Cross-border transmission of Western (especially American) culture is seen as cultural imperialism by critics, and it threatens local culture and industries.
• Products such as jeans, cola, fast food, pop music and Hollywood films have spread rapidly, especially among the youth.
• The global cultural market is concentrated and dominated by US products (Hollywood gets over 50% of revenue abroad, 70% of the European film market), driving out small local industries.
• The trade is one-way: foreign films take under 3% of the US market.

Prospects:

• Culture has become a tradable economic good (crafts, music, films, TV, software, books, tourism), which creates new business and export opportunities.
• New technologies (satellite, the Internet, fibre optics) provide a global reach for cultural products, so local producers can also use them.

(b) Implications of the spread of pop culture for business

• Large markets for global brands, with similar tastes among youth, make standardised products and global marketing possible.
• Opportunities in entertainment, media, fashion, fast food, advertising and tourism, and for local firms in licensing or franchising.
• Threats to local products and small industries that cannot compete with global firms.
• Marketing must be adapted to local sensitivities to avoid cultural conflict (glocalisation).
• Changes in consumption and in the workforce's values, which affect HR and management practices.

(c) Can pop culture encourage achievement motivation?

Yes, to a degree. Pop culture spreads ideas of success, individualism, entrepreneurship, risk taking, and material achievement through films, brands and media. Heroes and role models inspire young people to compete, innovate and aim high, in line with McClelland's need for achievement. However, it can also encourage mere consumerism, imitation and dependency, so the effect depends on how it is used and balanced with local values.

(d) Projected future business environment

• More globalised and digital, with greater cross-border trade in cultural goods, software and entertainment through the Internet.
• More convergence of consumer tastes, but also more demand for local identity, so global-local strategies will matter.
• Stronger competition and concentration among global firms, with pressure on local firms, and a need for regulation and cultural protection policies.
• New opportunities for developing countries in tourism, crafts and creative industries when they use technology.
• Greater need for cultural awareness and cross-cultural management in business.

Four major provisions of Nepal's tourism policy (Tourism Policy 2065 and the later revisions):

• Develop tourism as a major sector for economic growth, employment and poverty reduction, with participation of the private sector and local communities.
• Diversify tourism products (such as trekking, mountaineering, rural, eco-, cultural, religious, adventure and medical tourism) and develop new destinations.
• Develop infrastructure including airports, roads, accommodation and trails, and ensure the safety and security of tourists.
• Promote Nepal internationally through branding, and conserve the natural, cultural and heritage resources for sustainable tourism.

Two relations between e-business and consumer protection:

• E-business involves online transactions where customers cannot see the goods, so laws such as the Consumer Protection Act and the Electronic Transactions Act protect them from fraud, misleading advertising, wrong or defective goods and non-delivery.
• Consumer protection protects privacy and data security of online customers (personal and payment information) and ensures easy return, refund and complaint handling, which builds trust and so supports e-business growth.

Impacts of family structure on business:

• Joint families favour family-run, traditional businesses, shared capital and succession within the family, while nuclear families increase demand for housing, appliances and ready-made goods.
• Family size and decision-making affect buying patterns (who decides, quantity purchased), so they shape marketing, packaging and product design.

Two objectives of BIMSTEC:

• To create an enabling environment for rapid economic development of the sub-region and promote cooperation in trade, investment, energy, transport, tourism and technology.
• To promote active collaboration and mutual assistance in economic, social, technical and scientific fields and accelerate economic growth and social progress among members.

Benefits of economic integration:

• Larger market and economies of scale for producers.
• Free movement of goods, services, capital and labour, with lower tariffs and trade costs.
• Greater competition, efficiency and quality, with lower prices and more choice for consumers.
• More foreign investment, technology transfer and employment.
• Stronger bargaining power in international negotiation and political cooperation.

Two components of the political structure of Nepal:

• The three-tier federal structure of government: federal, seven provincial and 753 local governments.
• The three organs of the state: the legislature (federal parliament with the House of Representatives and the National Assembly), the executive (Prime Minister and Council of Ministers), and the independent judiciary (Supreme Court, High Courts, District Courts).

Two quantitative (general) tools of monetary policy:

• Bank rate / policy rate: the rate at which the central bank lends to commercial banks; raising it makes credit costlier and reduces money supply, and lowering it does the opposite.
• Cash reserve ratio (CRR) or open market operations: the CRR is the part of deposits that banks must keep with the central bank; the central bank can raise or lower it, or buy and sell government securities, to control liquidity.

Organizational culture is the set of shared values, beliefs, norms and behaviour patterns that members of an organisation hold and that guides how they think and act. As a component of the internal business environment, it affects employees' motivation, decision-making, teamwork and the firm's performance and image.

The Trade and Export Promotion Centre (TEPC) is the national government agency, established in 1971 under the Ministry of Industry, Commerce and Supplies, to promote Nepal's foreign trade. It supports exporters by providing trade information, market research, training, and help in trade fairs and exhibitions, and by identifying new export products and markets. It also advises the government on trade policy and works to solve problems of exporters.

Four roles of business towards government:

• Pay taxes and duties honestly and on time.
• Obey the laws and regulations (company, labour, consumer, environmental laws).
• Support national development through investment, employment and the supply of goods and services.
• Cooperate with the government by giving information and by supporting its social and economic programmes and policies.

Environmental analysis is the process of studying the factors in the internal and external environment to identify opportunities, threats, strengths and weaknesses. Its process is:

1. Scanning: continuously watching the environment to detect early signals of change.
2. Monitoring: tracking the trends and events identified to see how they develop.
3. Forecasting: predicting the direction, speed and probable effects of the key trends.
4. Assessment/evaluation: judging the importance and impact of each factor on the firm's goals, and classifying them as opportunities or threats (and internal strengths and weaknesses), often with PEST/SWOT.
5. Use in decisions: communicating results to management and using them to set strategy, plans and policies, and then reviewing them as conditions change.

The analysis helps the firm adapt, reduce risk and gain an advantage.

Five major emerging socio-cultural trends in Nepal:

1. Urbanisation and migration. Rapid movement from villages to towns, and large foreign employment, change consumption and family patterns and create demand for housing, services and retail.
2. Changing family structure. Joint families are giving way to nuclear families, which increases demand for appliances, ready-made food and childcare.
3. Greater role of women. More women in education, jobs and business expand the labour force and demand for products suited to working women.
4. Westernisation and changing lifestyles. Youth adopt Western fashion, food, music and technology, which raises demand for branded and imported goods.
5. Growing awareness and use of technology. Increased literacy, mobile and Internet use, social media and online shopping, and growing consumer rights consciousness, health and environment concerns.

Businesses must adjust their products, marketing and HR policies to these trends.

Internal environmental factors of a business organisation and their influence:

• Owners and shareholders: their objectives and capital decide policy and risk taking.
• Board of directors: sets strategy and gives governance, which affects direction and control.
• Organisational structure: affects coordination, speed of decisions and communication.
• Human resources: skilled and motivated employees raise productivity, quality and innovation.
• Organisational culture: shared values shape behaviour, teamwork and commitment.
• Financial resources: capital and liquidity decide the capacity to expand and survive.
• Physical resources and technology: plant, equipment and technology determine efficiency and cost.
• Mission, vision and objectives: give direction and focus.

A firm that manages these strengths well and corrects the weaknesses is more likely to succeed.

Investment legislation in Nepal consists mainly of the Foreign Investment and Technology Transfer Act (FITTA) 2019, the Industrial Enterprises Act 2016, the Investment Board Act 2019 and the Special Economic Zone Act. The main provisions are:

• Foreign investors may invest in most sectors, including joint ventures, in the form of equity, loans, reinvested earnings or technology transfer, with a minimum investment (Rs 50 million under FITTA 2019).
• A list of areas closed to foreign investment (for example, cottage industries, personal services, arms, and some trading) is maintained.
• A one-stop service centre and the Department of Industry/Investment Board approve and register projects, with a simple procedure.
• Investors are guaranteed against nationalisation and may repatriate profits, dividends, sale proceeds and loan repayments in foreign currency.
• Tax and other incentives for priority sectors, remote areas, exports and special economic zones.
• Provisions for dispute settlement (arbitration), intellectual property and technology transfer.

These provisions aim to attract domestic and foreign capital and protect investors.

Introduction: The Small and Cottage Industry Development Board (formerly the Cottage and Small Industry Development Board, established in 1990s under the Ministry of Industry) is a government body that promotes and supports micro, cottage and small enterprises. These industries use local raw materials and labour and provide employment and income, especially in rural areas.

Major roles:

• Policy formation and advice to the government on the development of small and cottage industries.
• Give training in skills, entrepreneurship and management.
• Provide technical help, product design, technology and quality improvement.
• Help in access to credit, raw materials and finance through banks.
• Help in marketing through information, exhibitions and trade fairs, and market linkages.
• Promote entrepreneurship among women, youth and disadvantaged groups, and develop industrial districts and clusters.
• Carry out research, survey and coordination with other agencies.

Regional integration is the agreement of neighbouring countries to reduce barriers and cooperate economically (for example SAARC/SAFTA, BIMSTEC, EU, ASEAN). It is seen as a power-building block for business because:

• Larger market: removing tariffs and barriers gives firms access to a bigger market, so they can gain economies of scale.
• Increased competitiveness: regional competition raises efficiency, quality and innovation.
• More investment and technology flows into the member countries from inside and outside the region.
• Cheaper inputs and resources: easier movement of capital, labour and raw materials.
• Collective bargaining strength: the bloc negotiates better in the WTO and with other powers than individual small countries can.
• Regional supply chains and infrastructure: joint projects in transport, energy and trade facilitation.
• Stability and peace: economic interdependence reduces conflict and creates a predictable business climate.

For a small landlocked country like Nepal, regional integration with India, China and Bay of Bengal neighbours offers transit, markets and power trade.

Nepal started planned development in 1956 with the First Five-Year Plan, and has completed many periodic plans. Even so, poverty, unemployment, trade deficit and dependence on remittances and aid persist. Possible reasons are:

1. Political instability. Frequent changes of government and the conflict period interrupted policy continuity and implementation.
2. Weak implementation. Plans were ambitious and had unrealistic targets, but poor monitoring, evaluation and accountability.
3. Lack of resources and dependence on aid. Low domestic savings and revenue, and dependence on foreign aid that comes with conditions and uncertainty.
4. Corruption and inefficient bureaucracy. Leakage of funds, delays and red tape.
5. Poor project management. Cost and time overruns in major projects, weak project selection and political pressures to spread resources thinly.
6. Weak infrastructure and low productivity. Poor roads, energy and irrigation, with agriculture still traditional and industry small.
7. Geographical and structural constraints. Landlocked location, difficult terrain and heavy dependence on one neighbour.
8. Limited skilled manpower and brain drain, as youth migrate for foreign employment.
9. Lack of coordination between the central, provincial and local levels, and among agencies, and weak private sector participation.
10. External shocks, such as the 2015 earthquake, the blockade and the COVID-19 pandemic.

Opinion: the main cause is not the planning concept itself but poor governance and implementation. To get better results Nepal needs political stability, realistic and prioritised plans, strong monitoring, honest and efficient administration, better infrastructure and private investment, and investment in education, skills and productive sectors.

The statement is largely true. Since the 1990s Nepal has opened most sectors to private and foreign participation, yet the specialised sectors of technology (IT/ICT) and tourism have not gained the momentum that liberalisation promised.

Impact of liberalisation on the specialised sectors

(a) Tourism

• Private airlines, hotels, trekking and travel agencies grew after liberalisation, and arrivals rose to roughly one million before COVID-19.
• However, growth is concentrated in a few destinations (Kathmandu, Pokhara, Chitwan, Everest and Annapurna regions) and is seasonal.
• Weak infrastructure (roads, airports, the delayed Pokhara and Bhairahawa international airports), poor safety records in aviation (EU ban on Nepali carriers) and limited product diversification hold back the sector.
• Foreign investment is low, and there is a shortage of skilled hospitality manpower, so earnings per tourist stay low.

(b) Technology / ICT

• Telecom liberalisation brought mobile and internet services to most of the country, and IT outsourcing firms, fintech and digital payments have appeared.
• But the sector is small. Reasons are unreliable power and connectivity, weak cyber and data laws, restrictions on foreign payments and remittance of earnings, the lack of venture capital, and the brain drain of IT graduates abroad.
• Research and development and technology transfer from foreign investors are minimal.

Why momentum is missing

1. Liberalisation was not matched by supporting reforms: infrastructure, energy, skilled labour and regulatory capacity.
2. Political instability and frequent policy changes reduce investor confidence.
3. Bureaucratic delay, corruption and a weak one-window system raise the cost of doing business.
4. A small domestic market, landlocked location and high transport costs limit scale.
5. Foreign direct investment mostly flows into low-risk sectors such as banking, telecom and services, not high technology.

Conclusion

Liberalisation created the opening, but specialised sectors need more: sector-specific policy, infrastructure, human capital, incentives, and stable, predictable government policy. Without these, Nepal will remain liberalised on paper but slow in technology and tourism.

Political stability and consistent policy are the foundation of a healthy business environment. Nepal has had more than ten governments in the last fifteen years, and each tends to revise budgets, tax rules, incentives and priorities. This makes the future unpredictable, so investors delay or cancel long-term decisions.

Major political factors affecting business in Nepal

1. Political instability and frequent change of government Coalitions break and re-form often. Ministers and secretaries change, so projects stall and commitments given to investors are not honoured by the successor. Long-gestation projects (hydropower, infrastructure) suffer most.

2. Policy inconsistency Tax rates, customs duty, incentives and sector rules are changed with each budget or government. Businesses cannot plan costs and returns, and foreign investors see higher country risk.

3. Government's economic philosophy and constitutional framework The 2015 Constitution commits to a mixed economy with public, private and cooperative sectors. Liberalisation is the stated direction, but implementation varies with the party in power, and uncertainty over the roles of the three tiers of government (federal, provincial, local) leads to overlapping taxes and approvals.

4. Role of political parties, trade unions and bandhs Party-affiliated unions and strikes (bandhs, transport blockades) disrupt production and supply. The 2015 border blockade showed how political disputes can paralyse the economy.

5. Bureaucracy, corruption and political interference Delay in approvals, commission-seeking and political appointments in public enterprises and regulators raise transaction costs and discourage honest investors.

6. Law and order, and foreign relations Security conditions affect investment and tourism. Relations with India, China and donors affect trade, transit, aid and investment inflows.

7. Government regulation and public sector role Licensing, price control, and state-owned enterprises that compete with the private sector shape market conditions.

Critical discussion

The statement is valid. Instability reduces predictability, which raises the risk premium and cuts private investment, FDI and job creation; the weak growth and capital flight that follow reduce public revenue. Positive points exist: federalism brings services closer to business, and liberal laws (FITTA, Industrial Enterprises Act) have been enacted. The remedy is a stable multi-party consensus on economic policy, long-term policy commitments, a real one-window service, and legal guarantees against retroactive changes.

Features of Nepalese agriculture

1. Subsistence and traditional: most farms produce mainly for family consumption with traditional tools, animal power and little mechanisation.
2. Small and fragmented holdings: the average holding is under one hectare and is divided into scattered plots, which prevents economies of scale.
3. Dependence on monsoon: only a part of the cultivated land has year-round irrigation, so output varies with rainfall.
4. Low productivity: yields of rice, wheat and maize are low compared with neighbouring countries because of limited use of improved seed, fertiliser and technology.
5. Food-crop dominance: paddy, maize, wheat, millet and potato dominate, with cash crops (tea, cardamom, ginger, vegetables, coffee) of smaller share.
6. High labour dependence and disguised unemployment: a large share of the population relies on agriculture, many only seasonally employed, and with growing male migration, farming is increasingly done by women and elders.
7. Geographic diversity: the Terai, hills and mountains give diverse crops and livestock, but difficult terrain raises transport cost.
8. Weak market linkage and credit access: poor roads, few storage and processing facilities, middlemen and limited formal credit.
9. Mixed crop and livestock farming.

Contribution of agriculture to the economy

Economic contribution

• GDP: agriculture contributes roughly one quarter of GDP (about 24-25 percent), the largest single sector.
• Employment: it engages about 60 percent of the working population, and is the main source of rural livelihood.
• Food security: supplies most of the staple food and reduces import dependence.
• Raw materials for industry: jute, sugarcane, tea, tobacco, hides, milk and cereals feed agro-based industries.
• Foreign trade: exports such as cardamom, tea, ginger, lentils, herbs and pulses earn foreign exchange (though Nepal is now a net food importer).
• Rural income and poverty reduction: raises farm incomes, creates demand for manufactured goods and services in rural areas.
• Government revenue and market for inputs: drives trade, transport and input industries (fertiliser, seeds, equipment).
• Savings, capital formation and balanced regional growth: supports rural development and reduces migration to cities.

Conclusion: Agriculture remains the backbone of Nepal's economy. Commercialisation, irrigation, mechanisation, rural roads and agro-processing are needed to raise its contribution.

(a) Internal and global environments revealed by the case

Internal environment (of IOC and its home country)

• IOC is a public sector firm, with government ownership, so major strategic decisions need government permission.
• It is the main oil refiner, marketer and importer, so it has the capability and ambition to expand abroad (planned stake in Balal oil field).
• Capital limits: investment depends on RBI and government approval (the cleared amount was $15 million).
• Slow decision-making and bureaucracy: a committee of the RBI, Finance and Commerce ministries took more than a year to clear the deal, and the structure to process such investments was not in place.

Global environment

• Volatile world oil prices: $11 per barrel in late 1998,$24 by December 1999.
• Falling refining margins, closing of refineries, and oil properties in the Middle East coming up for sale.
• Competition from foreign firms, such as Elf of France, which acquired Premier Oil.
• Opportunities taken by developing countries which bought oil equity abroad.
• Foreign government/partner dealings: Iran, the Iranian company and Premier Oil.

(b) Domestic or global environment as the hindrance?

The domestic environment hindered IOC. The global environment offered an opportunity (low prices, assets for sale). What failed was the Indian regulatory process: a screening committee with several bodies, no ready framework for outbound investment, and a delay of over a year. By the time clearance came, prices had more than doubled and a competitor had taken the deal. Global conditions (price volatility, competitors) are external realities that every firm faces, but they can be exploited only with quick internal decisions. So the domestic, mainly policy and bureaucratic, environment was the real obstacle to globalisation.

(c) Impact of the delay even if Elf had not acquired Premier Oil

• The acquisition price would have been much higher as oil prices rose from $11 to$24, so the same reserves would cost far more and the return on investment would fall.
• The $15 million approved might no longer buy the same stake, so IOC would get less than the targeted four million tonnes or would need more funds and fresh approvals.
• Opportunity cost: the chance to buy distressed assets cheaply was lost.
• Loss of credibility and bargaining power with the seller, and weaker ability to secure supply security.
• Higher import bills in the meantime, as IOC is the channelling agency for imports.

(d) Best alternative for IOC

Investing in the Iranian company was a good proposal at the time, since it gave about four million tonnes of reserves at depressed prices. Now, with prices at $24 and a rival having acquired Premier Oil, I would recommend searching for a new target, for these reasons:

1. The original deal is gone, and the cost of any similar asset has risen.
2. A fresh search lets IOC compare several properties on reserves, cost per barrel, political risk and fiscal terms.
3. Diversification across countries reduces risk concentration in Iran.

But IOC should first lobby for a single-window clearance system with time limits, and use a conditional or phased approval so that later opportunities can be closed quickly. If a fresh search shows no better value, a smaller equity stake or a joint venture with another firm can be considered.

Four firm-specific (internal) environmental factors:

1. Mission, vision and objectives of the firm
2. Organisational structure and culture
3. Human resources (skills, attitude and capacity of employees)
4. Financial and physical resources, including technology

Business (environmental) scanning is the continuous process of collecting, analysing and monitoring information about external and internal factors, such as political, economic, social and technological changes. It helps managers identify opportunities and threats early and make better strategic decisions.

Four recent labour market issues in Nepal:

1. Large-scale foreign labour migration (brain and skill drain) and heavy dependence on remittances
2. High youth unemployment and underemployment
3. Mismatch between education or skills and market needs
4. Large informal sector with weak enforcement of labour rights and wages

Political risk is the possibility that political events or decisions, such as government change, instability, policy reversals, strikes, civil unrest, nationalisation or war, will adversely affect a business's operations, profits or investments.

Acculturation is the process by which individuals or groups adopt the cultural traits, values, language and practices of another culture through continuous contact. In business, it occurs when employees or firms adapt to a new cultural environment, such as when working in a foreign country.

Two common technology transfer issues in Nepal:

1. Lack of skilled manpower and weak R&D capacity to absorb, adapt and maintain the imported technology.
2. High cost of technology and unsuitable (inappropriate) technology, along with weak intellectual property protection and limited finance.

Voluntary turnover is when employees choose to leave the organisation on their own initiative, for example by resigning for better pay, career growth, a better work environment or migration abroad. It differs from involuntary turnover, where the employer ends employment (dismissal, layoff).

Two benefits of WTO membership:

1. Access to wider international markets with reduced tariff and non-tariff barriers and most-favoured-nation (non-discriminatory) treatment.
2. A rules-based system and dispute settlement mechanism that protects small countries like Nepal from unfair trade practices, along with better technical assistance and investor confidence.

Two major functions of the Ministry of Labour (Labour, Employment and Social Security):

1. Formulating, implementing and monitoring labour and employment policies and laws, including the minimum wage and workplace safety.
2. Managing foreign employment and social security, including protecting migrant workers and promoting employment and skill development.

The business environment in Nepal faces several contemporary issues.

1. Political instability: Frequent changes of government and policy uncertainty discourage long-term investment.
2. Infrastructure and energy: Poor roads, transport, logistics and (historically) power shortages raise costs. Landlocked status makes trade expensive.
3. Economic issues: Large trade deficit, high dependence on remittances and imports, weak industrial base and limited productive employment.
4. Regulatory and bureaucratic problems: Red tape, corruption, delays in approvals, and inconsistent tax and labour regulation.
5. Labour issues: Migration of skilled youth, skill mismatch and strikes.
6. Technology and finance: Limited access to credit, high interest rates, low R&D and slow digital adoption.
7. Globalisation challenges: Competition from cheap imports, weak export competitiveness and adjustment to WTO commitments.
8. Environmental and social issues: Natural disasters, climate change and the need for corporate social responsibility.

Managers must scan and respond to these issues to survive and grow.

Organisational culture is the shared set of values, beliefs, norms and practices that members follow. It shapes employee behaviour in the following ways:

1. Guides behaviour and decisions: It tells employees what is acceptable, so they act according to shared norms with little supervision.
2. Creates identity and belonging: A strong culture gives a sense of identity and loyalty, which reduces turnover.
3. Motivation and commitment: A culture that rewards achievement, recognition and fairness raises morale and productivity.
4. Coordination and control: Shared values reduce conflict and improve teamwork and communication.
5. Shapes attitudes to change, quality and ethics: Cultures of innovation, customer service or integrity influence how employees treat customers and ethical issues.
6. Attracts and retains talent: People join and stay where the culture fits their own values.
7. Socialisation: New employees learn how things are done through stories, rituals and leadership example.

A positive culture therefore improves performance, while a weak or toxic culture leads to low morale, resistance and poor results.

Nepal's Trade Policy (2015, with later updates) aims to expand trade, reduce the trade deficit and use trade to support growth and poverty reduction. Its main provisions are:

1. Vision and objectives: Increase the competitiveness of Nepali goods and services, diversify exports and integrate into regional and global markets.
2. Export promotion: Identify priority export products (such as tea, cardamom, ginger, handicrafts, herbs, pashmina and agro products), and provide incentives, support schemes and branding.
3. Institutional arrangements: The Trade and Export Promotion Centre (TEPC), the Nepal Trade Integration Strategy (NTIS) and trade facilitation bodies coordinate implementation.
4. Trade facilitation and infrastructure: Simplified customs, single window, dry ports, quality testing laboratories and transit arrangements with India and third countries.
5. Regional and multilateral trade: Use WTO, SAARC/SAFTA, BIMSTEC and bilateral agreements, especially with India and China.
6. Import management: Tariff and non-tariff measures to protect domestic industry and control unnecessary imports.
7. Services trade and intellectual property: Promotion of tourism, IT and other services, with standards and IPR protection.
8. Private sector role and monitoring: Encourages public-private cooperation, with regular review of results.

E-business means conducting buying, selling and related business activities through electronic means. It has grown rapidly in Nepal through online shopping, mobile wallets and digital payments, but it raises consumer protection concerns.

Opportunities: E-business offers convenience, wider choice, lower prices and access for remote consumers.

Problems for consumers:

• Delivery of defective, fake or different goods, and refusal of returns or refunds
• Misleading online advertising, hidden charges and unclear terms
• Fraud, phishing and weak security of payment and personal data
• Few trusted sellers and little verification of identity of online sellers
• Difficult cross-border disputes and delayed redress

Legal situation: The Electronic Transactions Act 2063 recognises digital records and signatures and penalises cyber crime. The Consumer Protection Act 2075 and its rules protect consumers' rights to safety, information, choice and redress and provide for the Consumer Protection Council and a complaint process. However, enforcement and specific e-commerce regulation and a data protection law are still weak, and consumer awareness is low.

Effective protection therefore needs stronger regulation, platform accountability, secure payment systems and consumer education.

Nepal has undergone important socio-cultural changes that influence business.

1. Urbanisation and migration: Movement from villages to cities and abroad creates urban markets and housing demand but also a labour shortage in agriculture and industry.
2. Changing family structure: Joint families are giving way to nuclear families, increasing demand for housing, appliances and packaged foods.
3. Rising education and awareness: Higher literacy raises demand for quality, branded goods and services and for skilled jobs.
4. Role of women: More women work and own businesses, widening the labour force and markets for childcare, fashion and financial services.
5. Youth population and consumer culture: Young consumers prefer mobile phones, fashion, fast food, online shopping and entertainment, influenced by media and foreign culture.
6. Remittance-driven lifestyle: Remittances raise incomes and consumption, but also dependence.
7. Changes in values and attitudes: Greater acceptance of entrepreneurship, inclusion and social responsibility, while festivals and traditions still drive seasonal demand.
8. Health and lifestyle awareness: Growing demand for organic and health products and for services.

Businesses must adapt their products, marketing and employment practices to these changes.

Energy is essential for industry, transport and households. The common issues in energy management in Nepal are:

1. Heavy dependence on imported petroleum: Nepal imports all its petroleum products, which strains foreign exchange and exposes it to price shocks.
2. Hydropower development delays: Projects face funding shortages, delays in construction, land acquisition, environmental clearances and political uncertainty.
3. Transmission and distribution problems: Weak grid, high line losses (technical and non-technical) and poor connection between generation and demand centres.
4. Seasonal imbalance: Surplus power in the wet season and shortages in the dry season, with limited storage-type projects.
5. Pricing and financial problems: Low tariffs, high losses and the financial weakness of the Nepal Electricity Authority, and unresolved power purchase agreements.
6. Limited market and export access: Dependence on India for export, with trade rules and agreements still developing.
7. Reliance on traditional biomass: Many households still use firewood, which causes deforestation and health problems.
8. Governance issues: Corruption, weak coordination among agencies and slow adoption of alternative energy such as solar, wind and electric vehicles.

Better planning, investment, grid expansion and renewable energy promotion are needed.

The framework of the business environment consists of the external and internal factors that affect a firm. Its major issues are:

1. Complexity and dynamism: The environment includes many interacting factors (economic, political, legal, socio-cultural, technological, global) that change rapidly, making forecasting hard.
2. Uncertainty and risk: Managers must decide with incomplete information about government policy, competitors and markets.
3. Interdependence of factors: A change in one factor, such as an exchange rate or regulation, affects others.
4. Distinguishing internal and external factors: Internal factors (resources, culture, structure) can be controlled, while external factors (micro environment of customers, suppliers and competitors, and macro environment) cannot, so the firm must adapt.
5. Constraints and opportunities: The environment both limits firms through regulation and competition and gives openings through new markets and technologies.
6. Globalisation: Integration with foreign markets increases both competition and opportunities.
7. Social responsibility and ethical issues: Pressure from stakeholders for ethics, sustainability and consumer protection.
8. Need for scanning and strategic response: Firms must monitor the environment continuously and align strategy with it.

Environmental scanning is the systematic monitoring of the internal and external environment to identify opportunities and threats. As business manager, I would conduct it through the following process.

1. Define the purpose and scope. Decide what decisions the scanning will support (for example entering a new market or reacting to a new policy) and which environment to cover: macro (political, economic, social, technological, legal, ecological) and micro (customers, competitors, suppliers, intermediaries, financial institutions, public).

2. Identify sources of information.

• Primary: customer surveys, discussions with dealers and suppliers, sales staff feedback, direct observation.
• Secondary: government publications (budget, Economic Survey, trade policy), Nepal Rastra Bank and Central Bureau of Statistics reports, newspapers, industry associations (FNCCI, CNI), the internet and competitor reports.

3. Collect information. Use a team (marketing, finance, operations) and a regular system such as a market intelligence unit, so that scanning is continuous rather than occasional.

4. Analyse and interpret information. Use tools such as PEST/PESTLE analysis, Porter's five forces and SWOT. Separate trends from noise and judge which are important for the firm.

5. Forecast. Project the likely direction of key variables (inflation, interest rate, demand, regulations) using trend analysis, scenario building or expert opinion.

6. Identify opportunities and threats and assess impact. Rank them by probability and impact on the business.

7. Communicate to decision makers. Prepare concise reports for top management and relevant departments.

8. Strategic response and implementation. Revise strategies, plans and budgets, for example launching a new product or reducing exposure to a risky market.

9. Monitor and evaluate. Check the accuracy of the scanning and update it regularly.

Scanning in this way keeps the firm from being "self-centric", improves anticipation of change and supports better strategic decisions.

Foreign direct investment (FDI) inflow into Nepal has remained very low, roughly below 1 percent of GDP, compared with its needs and with regional countries. The major causes are:

1. Political instability and policy uncertainty: Frequent changes of government and unclear or changing policies, along with strikes and bandhs, create risk for foreign investors.
2. Weak infrastructure: Poor roads and transport, high logistics cost, landlocked location and past power shortages make production costly.
3. Bureaucratic hurdles and corruption: Delays in approvals, multiple agencies, red tape, lack of effective one-window service and unclear rules about repatriation of profit.
4. Small domestic market and limited purchasing power: The market is small, and Nepal's economy depends on remittances and imports.
5. Legal and regulatory weaknesses: Frequent changes in tax and labour laws, weak contract enforcement, slow dispute resolution and weak intellectual property protection. Restrictions on foreign ownership in some sectors and limits on profit repatriation also discourage investment.
6. Labour problems: Militant trade unions, skill shortages due to migration, and poor productivity.
7. Financial sector weaknesses: Limited long-term finance, high interest rates, a thin capital market, and foreign exchange and convertibility restrictions.
8. Weak investment promotion and image: Poor country promotion, limited investor confidence and a negative image of the business climate, reflected in a low rank in the ease of doing business.
9. Security and natural disaster risk, and dependence on India: Earthquakes and floods, and border and trade dependence, add risk.

Evaluation: The causes mainly come from the weak governance, infrastructure and policy-consistency situation rather than lack of resources. To increase FDI, Nepal needs political stability, a stable and predictable policy, a real one-stop service, better infrastructure and energy, sound labour relations, special economic zones and active investment promotion, together with sound implementation of the Foreign Investment and Technology Transfer Act 2019.

When information technology (IT) is introduced into production, employees may resist change, fear layoffs and lose motivation. Labour legislation in Nepal protects workers and regulates the employer-employee relationship. The major provisions of the Labour Act 2074 (2017) and related laws are:

1. Employment classification and appointment: Workers are regular, time-bound, task-based, casual or part-time. A written appointment letter with terms of employment is required, and a probation period (up to 6 months) is allowed.
2. Working hours: Not more than 8 hours a day and 48 hours a week, with rest intervals. Overtime must be voluntary and paid at 1.5 times the normal rate, with a limit on the amount of overtime.
3. Leave and holidays: A weekly holiday, public holidays, home leave, sick leave, maternity leave (98 days) and paternity leave, mourning leave and other leaves.
4. Remuneration: Payment of at least the minimum wage fixed by the government, timely payment of wages, festival bonus and a profit-sharing bonus (10 percent of profit) for eligible enterprises.
5. Occupational safety and health: The employer must provide a safe workplace, safety equipment, medical care and compensation for injury or death.
6. Social security and welfare: Provident fund, gratuity and insurance; the Contribution-based Social Security Act 2074 provides a social security fund.
7. Trade unions and collective bargaining: Workers can form unions and bargain collectively; there are provisions for settling labour disputes through the Labour Office and Labour Court.
8. Termination, retrenchment and layoff: Services may be terminated for misconduct after a proper hearing. In the case of retrenchment, for example due to new technology, the employer must give prior notice, follow the legal process and pay compensation or severance (usually a gratuity and retrenchment benefit). Employees cannot be removed arbitrarily.
9. Training and skill development: Provisions for training, and employer funding of training are promoted so that workers can adapt to technological change.
10. Child labour and discrimination: Employment of children under 14 is prohibited, hazardous work is restricted for those under 18, and equal pay for equal work and no discrimination on grounds of gender is guaranteed.

Link to the scenario: When introducing IT, the employer should follow the retrenchment provisions, consult unions, provide retraining and compensation, and use incentives to maintain motivation. A balanced approach improves acceptance of technology and performance.

Agencies in support of business in Nepal

1. Ministry of Industry, Commerce and Supplies (MoICS), which makes industrial and trade policy.
2. Department of Industry, Department of Commerce, Supplies and Consumer Protection and Department of Customs.
3. Investment Board Nepal (IBN) and the Office of the Company Registrar for large investment and company registration.
4. Trade and Export Promotion Centre (TEPC) for export promotion.
5. Nepal Rastra Bank and financial institutions, including commercial banks, Nepal Industrial Development Corporation (NIDC) and Rastriya Banijya Bank, for finance and credit.
6. Cottage and Small Industry Development Board / Small and Cottage Industries Department for small enterprises.
7. Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce as private sector associations.
8. Nepal Bureau of Standards and Metrology (NBSM), Department of Food Technology and Quality Control and Intellectual Property bodies for standards and quality.
9. Securities Board of Nepal and Nepal Stock Exchange for capital market, and Nepal Tourism Board for tourism.
10. Special Economic Zone Authority and Industrial Enterprise Development Institute and training institutions for skills.

Major functions of the Trade and Export Promotion Centre (TEPC)

TEPC is a government agency under the Ministry of Industry, Commerce and Supplies. Its functions are:

1. Identify and develop exportable products and markets and carry out market research and provide trade information and publications.
2. Organise and participate in trade fairs, exhibitions and buyer-seller meetings in Nepal and abroad.
3. Support exporters through training, consultation and capacity building.
4. Help exporters with branding, quality improvement, packaging and product development.
5. Coordinate with government, private sector and international agencies such as the WTO, ITC and donors on trade policy matters and implementation of the Nepal Trade Integration Strategy.
6. Prepare export promotion policies and recommend measures to reduce trade deficit.
7. Issue certificates of origin and other trade-related documents (in some cases) and provide trade facilitation services.
8. Promote e-commerce and trade through a trade portal and monitor and evaluate export performance.

a. Landscape of the case with major issues

ABC Pharmaceuticals is a leading Nepali pharmaceutical company with a multi-location workforce, known for innovation and employee welfare. Its major issues are:

• Manual record-keeping, so employee data is inaccurate and out of date
• Traditional communication systems and limited resources, which reduce engagement and collaboration
• An inefficient recruitment process and failure to attract new talent
• Inappropriate training and development programmes
• Disagreement between the HR team, which wants an integrated HR technology solution (HRMS, self-service portal, collaboration tools, recruitment software and automated appraisal), and the finance manager, who opposes the large capital investment

b. SWOT analysis

c. Major problems behind poor effectiveness, with justification

1. Outdated HR systems: Manual records cause errors, delays and poor decisions, so HR cannot plan.
2. Weak communication and engagement: Poor access to information and tools lowers morale, collaboration and productivity.
3. Ineffective recruitment and training: The firm cannot attract talent, and employees lack skills, so performance suffers.
4. No integrated performance management: Appraisals are not objective, so motivation is limited.
5. Lack of unified decision-making and investment vision: The finance manager's resistance delays modernisation, showing a short-term view of cost rather than the long-term benefit (productivity, retention).

These cause the problems of low efficiency and engagement, and loss of competitive advantage. The solution is a phased adoption of HR technology, supported by a cost-benefit analysis showing savings in time and turnover.

d. Regulatory organisations related to ABC and the benefits

By complying with these regulators and using their support, ABC can maintain quality, avoid legal penalties, access finance and training programmes, and strengthen its reputation.