Tag: Corporate Social Responsibility

Environmental Scanning is the process of gathering information about events and their relationships within an organization’s internal and external environments. The basic purpose of environmental scanning is to help management determine the future direction of the organization.

Every organization has an internal and external environment. In order for the organization to be successful, it is important that it scans its environment regularly to assess its developments and understand factors that can contribute to its success. Environmental scanning is a process used by organizations to monitor their external and internal environments.

The purpose of the scan is the identification of opportunities and threats affecting the business for making strategic business decisions. As a part of the environmental scanning process, the organization collects information regarding its environment and analyzes it to forecast the impact of changes in the environment. This eventually helps the management team to make informed decisions.

The purpose of the scan is the identification of opportunities and threats affecting the business for making strategic business decisions. As a part of the environmental scanning process, the organization collects information regarding its environment and analyzes it to forecast the impact of changes in the environment. This eventually helps the management team to make informed decisions.

As seen from the figure above, environmental scanning should primarily identify opportunities and threats in the organization’s environment. Once these are identified, the organization can create a strategy which helps in maximizing the opportunities and minimizing the threats. Before looking at the important factors for environmental scanning, let’s take a quick peek at the components of an organization’s environment.

Importance of Environmental Scanning

1. SWOT Analysis

As we saw previously in the environmental scanning meaning, it is a complex process. The close study of the internal and external environment of an organization will reveal some very valuable information, i.e. the strengths, weaknesses, opportunities, and threats of a company.

Let us take a brief look.

• Strength: After analysis of the internal environment of a company, we will be able to identify the strengths that give the company a competitive advantage. The entrepreneur can use this information to maximise these strengths and earn more profits.
• Weakness: Study of the internal environment also point out the weaknesses of the company. For the growth and stability of the company, these identified weaknesses must be corrected without delay.
• Opportunity: Analysis of the external environment helps with the identification of possible opportunities. The entrepreneur can prepare to capitalize on these.
• Threats: Analysis of the external environment will also help in the identification of any business threats from competitors or any other factors. The company can come up with a strategy to diffuse such threats or minimize its impact.

2. Best Use of Resources

Environmental scanning helps us conduct a thorough analysis and hence leads to the optimum utilization of resources for the business. Whether it is capital resources, human resources or other factors of production, their best use and utilization is very important for any business. Environmental scanning will help us avoid any wastages and allow for the most effective and economical use of these resources.

3. Survival and Growth of the Business

It is a very competitive world and for any business to survive and thrive it is a difficult task. But if the business employs all the techniques of environmental scanning it can gain a significant advantage. It will allow the firm to prepare for future threats and opportunities while at the same time eliminating their weaknesses and improving on their strengths.

4. Planning for Long Term

A business must have a plan for both short term and long term. The planning of long-term objectives can only occur after proper analysis and environmental scanning meaning. This will help the entrepreneur plan the necessary business strategy.

5. Helps in Decision Making

Decision making is the choice of the best alternative done by management. Environmental scanning allows the firm to make the best decision keeping in mind the success and growth of the business. They point out all the threats and weaknesses. And they also identify the strengths of the firm.

Important Factors for Environmental Scanning

• Events

These are specific occurrences which take place in different environmental sectors of a business. These are important for the functioning and/or success of the business. Events can occur either in the internal or the external environment. Organizations can observe and track them.

• Trends

As the name suggests, trends are general courses of action or tendencies along which the events occur. They are groups of similar or related events which tend to move in a specific direction. Further, trends can be positive or negative. By observing trends, an organization can identify any change in the strength or frequency of the events suggesting a change in the respective area.

• Issues

In wake of the events and trends, some concerns can arise. These are Issues. Organizations try to identify emerging issues so that they can take corrective measures to nip them in the bud. However, identifying emerging issues is a difficult task. Usually, emerging issues start with a shift in values or change in which the concern is viewed.

• Expectations

Some interested groups have demands based on their concern for issues. These demands are Expectations.

Business Environment Scanning Techniques:

• SWOT Analysis:

Assessing Strengths, Weaknesses, Opportunities, and Threats helps in understanding internal capabilities and external factors affecting the business.

• PESTLE Analysis:

Examining Political, Economic, Social, Technological, Legal, and Environmental factors provides a comprehensive view of the external environment.

• Market Research:

Gathering data on market trends, customer preferences, and competitor activities through surveys, interviews, and data analysis helps in understanding the market dynamics.

• Competitor Analysis:

Analyzing competitors’ strategies, strengths, weaknesses, and market positioning provides insights into competitive threats and opportunities.

• Scenario Planning:

Developing scenarios of possible future events and assessing their potential impact on the business helps in preparing for different eventualities.

• Benchmarking:

Comparing the organization’s performance and practices with industry standards and best practices helps in identifying areas for improvement and staying competitive.

• Trend Analysis:

Tracking long-term trends in technology, consumer behavior, regulatory changes, etc., helps in anticipating future developments and adapting the business strategy accordingly.

• Industry Reports and Publications:

Keeping abreast of industry reports, market studies, and relevant publications provides valuable insights into industry trends, challenges, and opportunities.

• Networking:

Engaging with industry experts, attending conferences, and participating in industry forums helps in staying informed about the latest developments and building valuable connections.

• Technology Monitoring:

Monitoring technological advancements relevant to the business helps in identifying opportunities for innovation and potential disruptions.

• Global Analysis:

Understanding global economic trends, geopolitical developments, and international trade policies helps in assessing global opportunities and risks.

• Regulatory Analysis:

Keeping track of changes in regulations and compliance requirements helps in identifying potential regulatory risks and opportunities.

• Consumer Feedback:

Gathering feedback from customers through surveys, reviews, and social media helps in understanding customer preferences and improving products or services.

• Internal Reports and Feedback:

Leveraging internal data and feedback from employees, managers, and stakeholders helps in identifying internal strengths, weaknesses, and areas for improvement.

• Environmental Scanning Tools:

Utilizing specialized software and tools for environmental scanning, such as automated news aggregators, social media monitoring tools, and data analytics platforms, helps in efficiently gathering and analyzing relevant information.

National income refers to the total monetary value of all final goods and services produced within a country’s borders over a specific period, typically a year. It serves as a crucial indicator of a country’s economic performance and standard of living. In India, national income is measured using various methods, including the production approach, income approach, and expenditure approach.

• Gross Domestic Product (GDP):

Gross Domestic Product (GDP) is the most commonly used measure of national income and represents the total value of all final goods and services produced within a country’s borders during a specified period, usually a year. In India, GDP is calculated using both production and expenditure approaches.

• Gross Value Added (GVA):

Gross Value Added (GVA) is a measure of the value added by various sectors of the economy in the production process. It represents the difference between the value of output and the value of intermediate consumption. GVA provides insights into the contribution of different sectors to the overall economy.

• Gross National Income (GNI):

Gross National Income (GNI) measures the total income earned by a country’s residents, including both domestic and international sources. It includes GDP plus net income from abroad, such as remittances, interest, dividends, and other payments received from overseas.

• Net National Income (NNI):

Net National Income (NNI) is derived from GNI by subtracting depreciation or the value of capital consumption. NNI reflects the net income generated by a country’s residents after accounting for the depreciation of capital assets.

• Per Capita Income:

Per Capita Income is calculated by dividing the total national income (such as GDP or GNI) by the population of the country. It represents the average income earned per person and serves as a measure of the standard of living and economic welfare.

Components of GDP:

In India, GDP is composed of several components, including:

1. Consumption (C):

Expenditure on goods and services by households, including spending on food, housing, healthcare, education, and other consumer goods.

2. Investment (I):

Expenditure on capital goods such as machinery, equipment, construction, and infrastructure, including both private and public sector investment.

3. Government Spending (G):

Expenditure by the government on goods and services, including salaries, public infrastructure, defense, and social welfare programs.

4. Net Exports (NX):

The difference between exports and imports of goods and services. A positive value indicates a trade surplus, while a negative value indicates a trade deficit.

Sectorial Composition of GDP:

India’s GDP is composed of several sectors:

1. Agriculture:

This sector includes farming, forestry, fishing, and livestock, and contributes to food security, rural livelihoods, and raw material supply for industries.

2. Industry:

The industrial sector encompasses manufacturing, mining, construction, and utilities. It drives economic growth, employment generation, and technological advancement.

3. Services:

The services sector includes trade, transport, communication, finance, real estate, professional services, and government services. It accounts for a significant share of GDP and employment and plays a crucial role in supporting other sectors.

Trends and Challenges:

India’s national income and its aggregates have witnessed significant growth and transformation over the years. However, the country faces various challenges:

1. Income Inequality:

Disparities in income distribution persist, with a significant portion of the population facing poverty and economic deprivation.

2. Sectoral Disparities:

There are wide gaps in development and productivity across different sectors and regions, with disparities between rural and urban areas.

3. Unemployment and Underemployment:

India grapples with high levels of unemployment and underemployment, particularly among youth and marginalized communities.

4. Infrastructure Deficit:

Inadequate infrastructure, including transportation, energy, and digital connectivity, hampers economic growth and competitiveness.

5. Environmental Sustainability:

Rapid economic growth has led to environmental degradation, pollution, and resource depletion, necessitating sustainable development practices.

6. Policy Reforms:

Structural reforms and policy initiatives are required to address bottlenecks, promote investment, boost productivity, and enhance competitiveness.

Government Initiatives:

The Indian government has introduced various policies and initiatives to promote economic growth, employment generation, and inclusive development:

1. Make in India:

A flagship initiative aimed at boosting manufacturing, promoting investment, and enhancing competitiveness.

2. Digital India:

A program focused on digital infrastructure, e-governance, and digital empowerment to drive technological advancement and digital inclusion.

3. Skill India:

A skill development initiative aimed at enhancing the employability of the workforce and bridging the skills gap.

4. Pradhan Mantri Jan Dhan Yojana (PMJDY):

A financial inclusion program aimed at expanding access to banking services, credit, and insurance for marginalized communities.

5. Goods and Services Tax (GST):

A comprehensive indirect tax reform aimed at simplifying the tax structure, promoting transparency, and boosting tax compliance.

Methods of Measuring National Income

• Product Approach

In product approach, national income is measured as a flow of goods and services. Value of money for all final goods and services is produced in an economy during a year. Final goods are those goods which are directly consumed and not used in further production process. In our economy product approach benefits various sectors like forestry, agriculture, mining etc to estimate gross and net value.

• Income Approach

In income approach, national income is measured as a flow of factor incomes. Income received by basic factors like labor, capital, land and entrepreneurship are summed up. This approach is also called as income distributed approach.

• Expenditure Approach

This method is known as the final product method. In this method, national income is measured as a flow of expenditure incurred by the society in a particular year. The expenditures are classified as personal consumption expenditure, net domestic investment, government expenditure on goods and services and net foreign investment.

These three approaches to the measurement of national income yield identical results. They provide three alternative methods of measuring essentially the same magnitude.

The establishment of the World Trade Organization (WTO) as the successor to ,the GATT on 1 January 1995 under the Marrakesh Agreement places the global trading system on a firm constitutional footing with the evolution of international economic legislation resulted through the Uruguay Round of GATT negotiations.

A remarkable feature of the Uruguay Round was that it paved the way for further liberalization of international trade with the fundamental shift from the negotiation approach to the institutional framework envisaged through transition from GATT to WTO Agreement.

The GATT 1947 and the WTO co-existed for the transitional period of one year in 1994. In January 1995, however, the WTO completely replaced the GATT. The membership of the WTO increased from 77 in 1995 to 127 by the end of 1996.

Structure of the World Trade Organization (WTO)

The organizational structure of the WTO is outlined in the Chart 1.

The Ministerial Conference (MC) is at the top of the structural organization of the WTO. It is the supreme governing body which takes ultimate decisions on all matters. It is constituted by representatives of (usually, Ministers of Trade) all the member countries.

The General Council (GC) is composed of the representatives of all the members. It is the real engine of the WTO which acts on behalf of the MC. It also acts as the Dispute Settlement Body as well as the Trade Policy Review Body.

There are three councils, viz.: the Council for Trade in Services and the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) operating under the GC. These councils with their subsidiary bodies carry out their specific responsibilities

Further, there are three committees, viz., the Committee on Trade and Development (CTD), the Committee on Balance of Payments Restrictions (CBOPR), and the Committee on Budget, Finance and Administration (CF A) which execute the functions assigned to them by e WTO Agreement and the GC.

The administration of the WTO is conducted by the Secretariat which is headed by the Director General (DG) appointed by the MC for the tenure of four years. He is assisted by the four Deputy Directors from different member countries. The annual budget estimates and financial statement of the WTO are presented by the DG to the CBFA for review and recommendations for the final approval by the GC.

Functions of the World Trade Organization (WTO)

The WTO consisting a multi-faced normative framework: comprising institutional substantive and implementation aspects.

The major functions of the WTO are as follows:

1. To lay-down a substantive code of conduct aiming at reducing trade barriers including tariffs and eliminating discrimination in international trade relations.
2. To provide the institutional framework for the administration of the substantive code which encompasses a spectrum of norms governing the conduct of member countries in the arena of global trade.
3. To provide an integrated structure of the administration, thus, to facilitate the implementation, administration and fulfillment of the objectives of the WTO Agreement and other Multilateral Trade Agreements.
4. To ensure the implementation of the substantive code.
5. To act as a forum for the negotiation of further trade liberalization.
6. To cooperate with the IMF and WB and its associates for establishing a coherence in trade policy-making.
7. To settle the trade-related disputes.

Features of the WTO

The distinctive features of the WTO are:

(i) It is a legal entity

(ii) World Bank (WB) it is not an agent of the United Nations.

(iii) Unlike the IMF and the World Bank, there is no weighted voting, but all the WTO members have equal rights.

(iv) Unlike the GATT, the agreements under the WTO are permanent and binding to the member countries.

(v) Unlike the GATT, the WTO dispute settlement system is based not on dilatory but automatic mechanism. It is also quicker and binding on the members. As such, the WTO is a powerful body.

(vi) Unlike the GATT, the WTOs approach is rule- based and time-bound.

(vii) Unlike the GATT, the WTOs have a wider coverage. It covers trade in goods as well as services.

(viii) Unlike the GATT, the WTOs have a focus on trade-related aspects of intellectual property rights and several other issues of agreements.

(ix) Above all, the WTO is a huge organizational body with a large secretariat.

Objectives of the WTO

The purposes and objectives of the WTO are spelled out in the preamble to the Marrakesh Agreement.

In a nutshell, these are:

1. To ensure the reduction of tariffs and other barriers to trade.
2. To eliminate discriminatory treatment in international trade relations.
3. To facilitate higher standards of living, full employment, a growing volume of real income and effective demand, and an increase in production and trade in goods and services of the member nations.
4. To make positive effect, which ensures developing countries, especially the least developed secure a level of share in the growth of international trade that reflects the needs of their economic development.
5. To facilitate the optimal use of the world’s resources for sustainable development.
6. To promote an integrated, more viable and durable trading system incorporating all the resolutions of the Uruguay Round’s multilateral trade negotiations.

Above all, to ensure that linkages trade policies, environmental policies with sustainable growth and development are taken care of by the member countries in evolving a new economic order.

SWOT Analysis is a strategic planning tool used to identify an organization’s internal strengths and weaknesses, as well as external opportunities and threats. It involves assessing factors within the organization’s control, such as resources, capabilities, and processes, to determine competitive advantages and areas needing improvement. Additionally, SWOT analysis evaluates external factors like market trends, competitor actions, and regulatory changes to uncover potential avenues for growth and challenges to address. By synthesizing this information, organizations can develop strategies to capitalize on strengths, mitigate weaknesses, exploit opportunities, and defend against threats, ultimately enhancing their competitive position and guiding decision-making processes.

Elements of a SWOT analysis:

1. Strengths:

Internal attributes and resources that give the organization a competitive advantage. These can include factors such as strong brand reputation, skilled workforce, proprietary technology, efficient processes, and financial stability.

2. Weaknesses:

Internal factors that place the organization at a disadvantage compared to competitors. Weaknesses may include areas such as limited resources, outdated technology, poor brand perception, inefficient processes, and lack of expertise or talent.

3. Opportunities:

External factors or trends in the business environment that the organization could exploit to its advantage. Opportunities may arise from market growth, emerging trends, technological advancements, changes in consumer preferences, or regulatory changes.

4. Threats:

External factors that could negatively impact the organization’s performance or pose risks to its success. Threats may come from factors such as intense competition, economic downturns, changing regulatory landscapes, disruptive technologies, or shifts in consumer behavior.

Factors affecting SWOT Analysis:

• Scope and Objectives:

Clearly defining the scope and objectives of the analysis ensures that relevant factors are considered and that the analysis remains focused on its intended purpose.

• Data Quality:

The accuracy and reliability of the data used in the analysis directly impact the validity of the findings. Using up-to-date, accurate, and comprehensive data sources is essential.

• Perspective and Bias:

Different stakeholders may have varying perspectives and biases that influence their perception of the organization’s strengths, weaknesses, opportunities, and threats. It’s crucial to consider multiple viewpoints to ensure a balanced analysis.

• Expertise and Knowledge:

The expertise and knowledge of the individuals conducting the analysis can affect the depth and insightfulness of the findings. Involving individuals with diverse backgrounds and expertise can enhance the quality of the analysis.

• External Environment:

Changes in the external business environment, such as market trends, competitor actions, regulatory changes, economic conditions, and technological advancements, can impact the validity of the analysis. Regularly updating the analysis to reflect changes in the external environment is essential.

• Internal Dynamics:

Internal factors such as organizational culture, leadership, resource allocation, and decision-making processes can influence the identification of strengths, weaknesses, opportunities, and threats. Understanding internal dynamics is crucial for conducting a realistic SWOT analysis.

• Interrelationships:

Recognizing the interrelationships between different elements of the SWOT analysis is important for understanding how they interact and influence each other. For example, addressing a weakness may create opportunities, or exploiting an opportunity may mitigate a threat.

• Time Constraints:

Time constraints can limit the depth and thoroughness of the analysis. It’s essential to allocate sufficient time and resources to conduct a comprehensive SWOT analysis effectively.

Benefits of SWOT Analysis:

• Strategic Planning:

SWOT analysis provides a structured framework for organizations to assess their internal strengths and weaknesses, as well as external opportunities and threats. This information is invaluable for strategic planning, helping organizations align their resources and capabilities with their goals and objectives.

• Improved Decision Making:

By identifying key factors influencing the organization’s performance and competitive position, SWOT analysis enables informed decision making. It helps organizations prioritize initiatives, allocate resources effectively, and capitalize on opportunities while mitigating potential risks.

• Enhanced Competitive Positioning:

Understanding the organization’s strengths and weaknesses relative to competitors, as well as market opportunities and threats, enables organizations to develop strategies to enhance their competitive positioning. SWOT analysis helps organizations identify unique selling points, differentiate themselves in the market, and capitalize on competitive advantages.

• Risk Management:

By identifying potential threats and weaknesses, SWOT analysis helps organizations anticipate risks and develop strategies to mitigate them. It enables proactive risk management, reducing the likelihood of negative impacts on the organization’s performance and reputation.

• Facilitates Change Management:

SWOT analysis provides valuable insights into the internal and external factors affecting the organization, making it a useful tool for change management initiatives. It helps organizations anticipate resistance to change, identify areas requiring improvement, and develop strategies to overcome barriers to change.

• Enhanced Communication and Alignment:

SWOT analysis fosters communication and alignment within the organization by providing a common understanding of the organization’s strengths, weaknesses, opportunities, and threats. It facilitates collaboration among stakeholders, promotes transparency in decision making, and ensures that everyone is working towards common goals and objectives.

Once our economy opened up post liberalization and globalization, the import and export industry became a huge sector in our economy. Even today India is one of the largest exporters of agricultural goods. So to provide financial support to importers and exporters the government set up the EXIM Bank.

EXPORT AND IMPORT BANK OF INDIA (EXIM)

The Export and Import Bank of India, popularly known as the EXIM Bank was set up in 1982. It is the principal financial institution in India for foreign and international trade. It was previously a branch of the IDBI, but as the foreign trade sector grew, it was made into an independent body.

The main function of the Export and Import Bank of India is to provide financial and other assistance to importers and exporters of the country. And it oversees and coordinates the working of other institutions that work in the import-export sector. The ultimate aim is to promote foreign trade activities in the country.

The management of the EXIM bank is done by a board, headed by the Managing Director. There are 17 other Directors on the board. The whole paid-up capital of the bank (100 crores currently) is subscribed by the Central Government exclusively.

Functions of the EXIM Bank

Let us take a look at some of the main functions of Export and Import Bank of India bank:

1. Finances import and export of goods and services from India.
2. It also finances the import and export of goods and services from countries other than India.
3. It finances the import or export of machines and machinery on lease or hires purchase basis as well.
4. Provides refinancing services to banks and other financial institutes for their financing of foreign trade.
5. EXIM bank will also provide financial assistance to businesses joining a joint venture in a foreign country.
6. The bank also provides technical and other assistance to importers and exporters. Depending n the country of origin there are a lot of processes and procedures involved in the import-export of goods. The EXIM bank will provide guidance and assistance in administrative matters as well.
7. Undertakes functions of a merchant bank for the importer or exporter in transactions of foreign trade.
8. Will also underwrite shares/debentures/stocks/bonds of companies engaged in foreign trade.
9. Will offer short-term loans or lines of credit to foreign banks and governments.
10. EXIM bank can also provide business advisory services and expert knowledge to Indian exporters in respect of multi-funded projects in foreign countries

Importance of the EXIM Bank

Other than providing financial assistance, the Export and Import Bank of India bank is always looking for ways to promote the foreign trade sector in India. In the early 1990s, EXIM introduced a program in India known as the Clusters of Excellence.

The aim was to improve the quality standards of our imports and exports. It also has a tie-up with the European Bank for Reconstruction and Development. It has agreed to co-finance programs with them in eastern Europe.

In order to promote exports EXIM bank also has schemes such as production equipment finance program, export marketing finance, vendor development finance, etc.

ECGC (Export Credit Guarantee Corporation of India)

The ECGC Limited (Formerly Export Credit Guarantee Corporation of India Ltd) is a company wholly owned by the Government of India based in Mumbai, Maharashtra. It provides export credit insurance support to Indian exporters and is controlled by the Ministry of Commerce. Government of India had initially set up Export Risks Insurance Corporation (ERIC) in July 1957. It was transformed into Export Credit and Guarantee Corporation Limited (ECGC) in 1964 and to Export Credit Guarantee Corporation of India in 1983.

Functions of ECGC

• Provides a range of credit risk insurance covers to exporters against loss in export of goods and services as well.
• Offers guarantees to banks and financial institutions to enable exporters to obtain better facilities from them.
• Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan and advances.

Facilities by ECGC

• Offers insurance protection to exporters against payment risks
• Provides guidance in export-related activities
• Makes available information on different countries with its own credit ratings
• Makes it easy to obtain export finance from banks/financial institutions
• Assists exporters in recovering bad debt
• Provides information on credit-worthiness of overseas buyers

Institutions in Financing of Foreign Trade

Business activities are conducted on a global level and even between nations. There is an emergence of global markets. To keep the trade fair and manage trade-related issues on a global level, various International Institutions and Trade Agreements were established.

International Trade Associations

The nations were influenced financially because of World War 1 and World War 2. The reconstruction couldn’t happen as there was an interruption in the financial system furthermore there was a shortage of resources. At this crossroads, the prominent economist J. M. Keynes with Bretton Woods establish an association with 44 countries to meet this and to reestablish commonship on the planet.

This gathering brought forth the International Monetary Fund (IMF) International bank Of Reconstruction and Development (IBRD) and the International Trade Organization (ITO). These three associations were considered as three columns for the improvement of the global economy.

World Bank

The International Bank of Reconstruction and Development (IBRD) is usually known as the World Bank. The fundamental point of IBRD is to remake the war influenced the economies of Europe and help the improvement of underdeveloped economies of the world. The World Bank after 1950 focused more on financially unstable nations and invested heavily into social segments like health and education of such immature nations.

Currently, the World Bank includes five universal bodies responsible for offering fund to various countries. These bodies and its partners are headquartered in Washington DC taking into account diverse financial requirements and necessities.

As specified before, the World Bank has been allocated the undertaking of financial development and expanding the extent of the international business. Amid its underlying years of foundation, it gave more significance on creating facilitates like transportation, health, energy and others.

This has profited the underdeveloped nations too, without doubt, however, because of poor regulatory structure, the absence of institutional system and absence of accessibility of skilled labour in these nations has prompted disappointment. World Bank and its Affiliates Institutions:

• International Bank for Reconstruction and Development (IBRD) 1945
• International Financial Corporation (IFC) 1956
• Multilateral Investment Guarantee Agency (MIGA) 1988
• International Development Association (IDA) 1960
• International Centre for Settlement of Investment Disputes (ICSID) 1966

The World Bank is no longer limited to simply offering money related help for infrastructure development, agriculture, industry, health and sanitation. It is somewhat significantly engaged with regions like reducing rural poverty, increasing income of the rural poor, offering specialized help, and beginning research schemes.

International Development Association (IDA)

International Development Association (IDA) was set up in 1960 as a partner of the World Bank. IDA was set up essentially to offer fund to the less developed countries on a soft loan basis. It is because of its intention of providing soft loans that it is called the Soft Loan Window of the IBRD. The objectives of IDA are as follows,

• To help the underdeveloped countries by giving loans in simple terms.
• Help at the end of poverty in the poorest nations
• Give macroeconomics services such as, for example, those relating to health, nutrition, education, human resource advancement and control of the population.
• To offer loans at marked down interests in order to energize economic development, the increment in manufacturing limit and good expectations for standard of living in the underdeveloped nations.

International Finance Corporation (IFC)

Established in July 1956, IFC was aimed to assist in terms of finance to the private sector of developing nations. IFC is also an associate of the World Bank, but it has its own separate legal entity, functions and funds. All the members of the World Bank are entitled to become members of IFC.

Multinational Investment Guarantee Agency (MIGA)

Established in April 1988, The Multinational Investment Guarantee Agency’s aim was to support the task of the World Bank and IFC. Some objectives of the MIGA are:-

• Advance the stream of direct foreign investment into less developed member countries.
• Give protection cover to fund supplier against political risks.
• Guarantee extension of current investment, privatization and economic reconstruction.
• Provide assurance against noncommercial perils, for example, dangers engaged in currency transfer, war and domestic clashes, and infringement of agreement.