Unit-I

Categories of work in a business organization:

According to Scientist Fayol, all the work carried out in a business enterprises can be

categorized into below five categories-

1. Technical Activity : Production & Manufacturing

2. Commercial Activity : Buying & selling

3. Financial Activity : optimum utilization of Capital

4. Security Activity : Security of Personals & Property (Inventory)

5. Managerial Activity : Planning, Organizing, Directing, Controlling etc.

Scientific Management:

According to F.W. Taylor, Scientific management means, “Knowing exactly what

you want your men to do and seeing them they do it in the best and cheapest way.”

Scientific management can be defined as a systemic approach to run an enterprise

on the basis of observations, experimentations and rational decisions. The methods

based on guess work and trial& error should always be avoided.

F.W. Taylor considered the following steps for scientific analysis:

1. To observe the facts carefully and conduct experiments under controlled

condition.

2. To classify the facts to facilitate the study and interpretation of data.

3. Analysis of the classified data to establish the existing relationship.

4. To formulate a rule or law that explains the factual relationship.

5. To develop the procedure & practice to confirm the discovered law.

6. To check up the results, to see whether the discovered law works out in practice

or not and to modify the law if necessary.

Principles of Scientific Management:

1. Scientific method of Production

2. Standardization

3. Time and Motion Study

4. Costing and Cost Control

5. Production Planning and control through functional Foremanship

6. Scientific selection, Training & Remuneration.

Aims of Scientific Management:

1. Increase in production by use of standard tools, equipment & methods.

2. Improvement in quality of products by research, quality control & inspection

devises.

3. Reduction in cost of production by rational planning & regulation of cost

cutting techniques.

4. Elimination of wastages in the use of resources, time & method of operation.

5. Placement of right person on the right job, through scientific selection &

training.

6. Relative wage payment according to the efficiency of worker.

7. Ensure steady flow of goods to the customer at fixed rate.

Functions of Management:

1. Planning

2. Organizing

3. Staffing

4. Directing

5. Controlling

6. Co-coordinating

Motivation:

Motivation is the action that impulse an individual to assume an attitude generally

favorable towards his work leading him to work satisfactorily.

Motivation is a productivity factor in industry. Motivation concern itself with a

will to work. Motivation means inspiring people with zeal to work for accomplishment of

organizational objectives.

Maslow theory of Motivation is based on the needs of the people. He stated that

human needs may be classified as-

1. Primary needs - as food, water etc.

2. Secondary needs - as self esteem, recognition etc.

Actually these are the needs that complicate the efforts of managers because secondary

needs vary among people much more than primary needs. Since these needs are not

satisfied by the management, workers usually attributed their satisfaction to something

more tangible as wages, time hours etc.

Basically motivation can be defined as a function of –

Motivation=f (Motive X Expectancy X Incentives)

Organizational motives position in the individual hierarchy of motive.

Expectancy is the probability that the act will achieve the goal.

The value of incentive is the reward expected by obtaining the goal.

It is often assume that high motivation would automatically lead to high

performance provided the individual has some convenience to perform the job.

Performance=f (Motivation X Competency)

Reasons of weakness in motivation:

1. Remuneration in form of salary and wages.

2. Lack of involvement and sense of participation.

3. The inelasticity and rigidities of procedures.

4. Various strong controls.

Steps taken for Motivation:

1. Self Interest

2. Attainability

3. Proportioning rewards

4. Human resource element

5. Individual group relationship

Control:

Control is an important function of management. It deals with the measurement

and correction of performance of the subordinates in order to make sure that the

organizational objectives are achieved.

Control is a continuing process of measuring actual results of the operations and

compare them with the planned results.

Control is any process that guides activities toward some predetermined goals.

The concept of control can not exist without planning. So we can say that the control

system have following important tools-

1. A predetermined goal

2. A mean of measuring activity

3. A mean of comparing activity

4. A mechanism to correct the deficiency.

To secure effective control management must have

1. Definite goals and objectives

2. Appropriateness

3. Responsibility for control

4. Prompt reporting

5. Objectivity

6. Flexibility

7. Self control

8. Human Factor

Co-ordination:

Co-ordination

Co-operation

Good Human Relation

Understanding

Communication

Co-ordination of activities of the organization is our goal.

Experience shows that high productivity in a business is dependent on the interest

and willing Co-operation of both managers and workers.

Human being preferably should be lead by goals which they accept as justifiable,

worthy and fair to all concern.

Good Human relation is in turn dependent upon Understanding. There must be

understanding of inter relationship among jobs and significance of one job to the product

and to the company.

There must be effective means of Communication among people for

understanding among them.

Decision Making:

A manager’s effectiveness is related to the quality of his decisions.

His work in planning, Organizing, Leading and Controlling is based on decisions. The

action he takes is implemented through his decisions. The efforts of his sub-ordinates are

predetermined and guided by his decisions.

Decision making is often considered as an inborn aptitude, largely based on the

intuitions and luck. However while both good judgement and intuitions enter into

decision making, it is a skill made up of separate element that can be learned.

Principles of decision making:

Decision making is based on following three principles-

1. Principle of Definition- To solve the problem effectively, you must first

know what the problem is.

2. Principle of adequate evidences- A logical decision must be valid in terms of

the evidences on which it is based.

3. Principle of Indemnity - Facts may appear differ depending upon the point of

view and point in time from which they are observed, as the real value of

money varies with time.

Decision making should be based on following five steps-

1. What is the apparent problem?

2. What are the facts?

a) Situation factor

b) Place factor

c) Time factor

d) Causative factor

e) People factor

3. What is the real problem?

4. What are the possible solutions?

5. Course of action-

a) Determine Objective

b) Set policies

c) Set programs

d) Make Schedule

e) Procedure

f) Determine Budget

Types of Decisions:

Decision making can be of two type-

1. Spontaneous Decisions

2. Reasoned Decisions

Spontaneous decisions: A spontaneous decision is often intuitive one based on the

memories or previous conditions.

Reasoned Decisions: These are based on systematic approach, studies and

analysis of problems & reach in terms of the best in the light of all the relevant factors.

These can be of two types-

a) Tactical- which one makes over & over following the established

rules, procedures, policies and guidelines.

b) Strategic- they involve finding out what the problem is, what the

resources are and what can be done.

Method Study and Work Study:

Work study is the term used to embrace the techniques of method study & work

measurement, which are used to ensure the best possible use of human & material

resources in carrying out a specific activity.

Method Study:

It is a systematic recording & critical examination of the factors & resources

involved in existing & proposed way of doing work as a means of developing and

applying easiest and more effective methods & reducing cost.

This technique is very useful in the following-

1. More applicable in case of repeated operations.

2. More applicable to people working on incentive systems.

Work Study

Method Study Work Measurement

It is the study of methods for a

job to achieve process

improvement, improved design,

better working environment &

reduced fatigue.

It is the measurement of work for a job to

arrive at the best method of work,

improved planning & control.

3. More applicable in case of parts to be machined which requires high degree of

accuracy.

4. More applicable where there is a need to simplify the movements & sequences

of operation.

In fact principles of method study are important in all types of operations. It may not be

possible to analyses highly skill man movement & teach him to improve but it is almost

possible to alter the design of equipment & improve tool layout to effect economies in

production.

It would be wasteful & ineffective to carry out an expensive time study on an

operation in which methods had not been previously simplified & improved.

Procedure for Method Study:

The basic procedure for method can be classified into following components-

1. Select: The work to be studied.

2. Record: All the relevant facts of present method of working.

3. Examine: Facts in sequence.

4. Develop: Economical, Practical & Effective Methods.

5. Install: Developed methods as standard practice.

6. Maintain: Standard Practice.

7. Feedback: To get back the information.

Work Measurement:

It is the mean of measuring the time taken for series of operation in the

performance of application in such a way that ineffective time comes out. Work

measurement not only reveals the existence of ineffective time but also used to set

standard time for carrying the work.

Procedure of work measurement:

1. Select: The work to be measured.

2. Record: All the relevant data breaking the job into elements.

3. Examine: the methods of breakdown critically.

4. Measure: Quantity of work involved.

The following steps are followed-

a) The job is broken down critically into elements.

b) The observed time for each element is recorded.

c) The basic time is determined for those elements for which

data is not available.

d) Frequency of occurrence of each element in the job is

determined & multiplied by the observed time of one element

e) The proportion of rest required is assessed and added to the

basic time for doing job.

f) If there are any contingent delays, a blanket allowance not

exceeding 5% may be added since they are not economical to

measure.

Normal Time = (Avg. Observed Time X Performance Rating)/100

Standard Time = Normal Time +Rest Allowance +Contingent Allowance +Others if

Techniques of Work Measurement:

1. Time Study

2. Activity Sampling

3. Analytical Estimating

4. Predetermined time motion study

5. Synthesis from elementary data

Time Study:

it is a work measurement technique for recording the time and rate of working for

the elements of a specified job carried under specific conditions & for analyzing the data

so as to reach the time necessary for carrying out the job at a defined level of

performance.

Objects of Time Study:

1. For determining production

2. For determining alternative

3. For determining pay incentives

4. For cost allocation.

Methods of time study:

A work measurement must perform the following two steps-

1. The calculation of actual observed time.

2. Adjustment of observed time to get the normal time.

Actual Time Measurement:

1. Stop Watch method

2. By Motion Picture Camera

3. By using Moving Tape & Disc

Conducting Time Study:

We need a time study again for a standard established job if-

1. There is a change in the job.

2. Material is not as per specification.

3. Machine speed has changed.

4. Condition of work has changed.

To have a systematic time study, the analyst must asked the following

questions-

1. Can the speed of machine be increased without affecting the equipment

life?

2. Can we bring changes in the tooling to reduce the cycle time.

3. Can we bring material closer to the work area to reduce the material

handling time?

4. Is the equipment rightly operated?

5. Is the operation being safely performed?

Time Study Sheet:

Element Rating

Factor

Watch

Reading

Observed

Time

Normal

Time

Ineffective

Time

Observed Time R.F Rest Allowance Process Allowance Policy Allowance

Normal Time

Standard Time

Allowed Time

The standard time is expressed in terms of –

1. S.M.M. - Standard Man/Machine Minutes

2. S.M.H. - Standard Man/Machine Hours

Elements of Production Control:

Production control is needed in the following-

1. Control of Material movement

2. Control of raw material

3. Control of Labour

4. Control of Tools

5. Control of Operations

6. Control by proper Inspection

7. Control of activities like Release of Manufacturing Order

8. Control of Replacement

9. Control of Progress

Procedure of Production control:

1. Forecasting

2. Planning

3. Routing

4. Scheduling

5. Dispatching

6. Follow-up

Forecasting:

Production control really starts when it is decided how many of each

product to make, this requires forecasting.

Demand forecasting is important and good to managerial function. It plays

a key role in planning the future decisions.

Demand forecast tells the production deptt. what product will be required

in what quantity and at what time. Knowing this the production planning &

control deptt. meet the specified delivery dates.

A forecast must meet the following conditions-

a) Forecast must define the expected demand in physical quantity.

b) If possible it should include probable variation around the expected

demand.

c) Should be well in time.

d) Must be made repeatedly to adjust the material & production

requirements.

e) Must be reliable, because forecasting error can cost a considerable amount

of money.

Planning:

The first step required for proper control of production is careful planning

of operations well in advance of starting of actual productions. Planning is

done by a separate planning deptt. Persons of planning deptt. will consider

& decide what work is to be done? How it is to be done? By which deptt.

it is to be done? What type of worker will be needed to complete the

work? Whereas, the persons working on the shop floor will see that the

decisions are carried out properly as per the detailed planning procedures.

Routing:

Planning deptt. is concerned mainly with the selection of path or route

over which each piece to travel for being transformed from raw material to

finished product, this is referred as Routing.

Routing my also be said as determination of most advantageous path to be

followed from deptt. to deptt. and machine to machine till the material gets

its actual final shape.

A comprehensive type of routing shows sequence of detailed operations to

be performed, the setup of special fixtures, special tools to be used for

each operation. The following point should be kept in view while

preparing routing card-

1. The machines and the plants should be operated at full capacity.

2. Where accuracy is required, product should pass through proper checks at

different stages.

3. The route indicated on the route card should be shortest and economical in

all possible routes.

Scheduling:

Scheduling may be defined as the fixation of time & date for each

operation and also time required to perform the entire series & considering

allowances for other factors concerned.

The planning deptt. while preparing schedule will have to take into

consideration the various types of orders on hands and date of their

completion to full fill the promises done to the customers. Rust orders are

given priorities.

Generally there are three types of schedule depending upon the program of

production control-

i) Master Schedule

ii) Manufacturing Schedule

iii) Regular / Daily production Schedule

Dispatching:

Dispatching literally means sending something to a particular destination.

In production dispatching means to take all steps needed to make effective

implementation of the production program chalk out by the planning deptt.

Dispatching means starting the processes. Steps taken of dispatching are –

1. Procurement of necessary tools & fixtures before they are actually required.

2. giving necessary orders and drawing to workman to start the work as per

schedule.

3. Maintain a record of time of starting & completion of each operation.

4. Moving the work to the next operation and machine after completion from one

machine.

Follow-up:

Follow-up actually concerned with finding deficiencies in actual working

of the organization & taking necessary corrective measure to set things in order.

The following are the functions of follow-up

1. In time material availability to maintain schedule.

2. Remove bottle necks in production.

3. Ensure carrying of operations smoothly and efficiently.

4. Ensure timely movement of job from one section to another.

5. Ensure recording of work carried out at one section.

Causes of delay:

1. Errors in Routing, scheduling & Dispatching.

2. Shortage of raw materials and tools

3. High rate of rejection

4. Seasonal uncertainty

5. Breakdown of Plant & Equipment.

Unit-II

Job Evaluation:

Job evaluation is a practice which seeks to provide degree of objectivity in

measuring the comparative values of job with in the organization and among similar

organizations. It is essentially a job rating process, not unlike the rating of employees.

The main objective of job evaluation is to establish the relative requirements of

the job for the purpose of properly rewarding workers for the work performed by them.

The other objectives are-

1. Eliminating inequalities.

2. Solving wage controversies.

3. Eliminating personal prejudices.

4. Establish define plan of salary administration.

5. Standardization.

6. Simplification of rate structure.

Method of Job Evaluation:

The important method of job evaluation used for job evaluation are-

a) Non-Quantitative Method

i) Ranking Method

ii) Classification Method

b) Quantitative Method

i) Factor Comparison Method

ii) Point Rating Method

Ranking Method:

This is the easiest and simplest method of job evaluation. In this method the jobs

are ranked in ascending order with respect to their relative values on the basis of the

report of the analysts.

Write the title of respected job on a card and ask the committee members to

assign ranks. The order of values is finally decided by averaging the ranks assigned by

different committee members. The following points must be considered while ranking-

1. How much work is involved?

2. How much supervision is needed?

3. How much responsibility is required?

4. Monotony of work

5. Working condition needed

6. Knowledge and experience required

7. Difficulties involved in the work.

Advantage of Ranking Method:

1. Very simple and easy method

2. Quick & satisfactory results are obtained.

Disadvantage of Ranking Method:

1. It lack in actual information. It shows only higher or lower value but does

not show that how much one job differ from the other.

2. It is suitable for small organization.

Flow Diagram of Job Evaluation:

(Duties & Responsibilities of Job) (Human Quality to fill job)

(Method to study job description

& job specification & score it)

(Assign a money rate of

pay to each job)

(Grading job according to

scale of pay)

Wage Rate Structure:

After the relative worth of a job has been determined by job evaluation, the actual

emoluments to be paid must be determined. A major factor in taking such decision is the

survey of wages and salaries in other enterprises in the same region & in the industries of

same field. The purpose of wage survey is to determine the extent to which the

organization pay scale are like those of other enterprises in the region.

The crucial question to be determined for carrying out a survey are-

1. The jobs to be covered.

2. The employees to be contacted.

3. The method to be used in gathering the datas.

Only the crucial jobs should be covered by the jib survey, because these covers all

ranges. The organizations selected for survey must relate to the same industry and

must be in the same region. Finally the method of survey must be decided.

Personal interview could probably develop the most accurate responces but this is

most expensive. Mail questionnaire are the most frequent used methods but

questionnaire should be designed carefully.

Job Analysis

Job Description Job Specification

Job Rating

Allocation of Money

Job Classification

Merit Rating:

It provides justification and firmness in wage rates and gives inspiration and

incentives to workers.

Merit rating is used to facilitate the orderly determination of a workers worth to

the firm. Merit rating is also known as employee rating of efficiency rating.

Merit rating helps in vital decisions like promotions, changing relative status or

giving extraordinary benefits to a person.

Advantage of Merit Rating:

1. Chances of arbitrary promotions are minimised.

2. It increase consciousness of workers and introduce competitive sprit in

them.

3. It acts as a good devise of increasing industrial production.

4. Hostility among employees and employer is reduced.

PPR(Preliminary Project Report)

1.

* Name of the Entrepreneur__________________

* Date of Birth___________ Age_____________

* Name of the Unit_________________________

* Amount of the Project_____________________

* Main Proposed Product____________________

* Proposed Site/Location____________________

* Type of Organization (Proprietorship/Partnership/Limited)______________

* Permanent address of the entrepreneur_______________________________

* Educational Qualification_________________________________________

* Technical Training____

Training Institute Duration Achievements

* S.C/S.T/O.B.C/Gen.____________________

* Present Occupation of the Entrepreneur_________________________

* Product Description_________________________________________

* Major Consumer of the proposed Product_______________________

2.

# Type of the proposed project/idea/plan_________________________

# Project Base and Assumption_________________________________

# Working hours of the Unit____________________________________

# Working days of the unit per annum_____________________________

3.1

* Description of land and building______________________________

a) If rented required accommodation and monthly rent_________

b) If a part of capital investment___

i) Total Expected Land______________

ii) Cost of Land and Building Development____________

iii) Estimated cost of Building Construction ____________

3.2

Machines & Equipments-

S.No Description Req. Nos. Price Total Value Name & Address of

the supplier

1

2

3.3

Miscellaneous Fixed Assets________________________

3.4

Preliminary & Preoperative Cost(Consultancy, Visit etc.)_________________

4.0

Total Fixed Capital Investment-

i) Cost of the Land__________________________3.1(b-ii)

ii) Cost of Building Construction_______________3.1(b-iii)

iii) Cost of Equipment & Machinery_____________3.2

iv) Miscellaneous Fixed Assets_________________3.3

v) Preliminary & Preoperative cost______________3.4

5.1

Raw Material Monthly-

S.No Particulars Quantity Value

5.2

Utilities (as Power, Fuel, Water, Coal, Oil etc)

S.No. Particulars Annual Requirements Total Annual Expenses Remark

5.3

Man Power Expenses

S.No. Particulars

(Skilled, Semi Skilled,

Unskilled etc.)

No. Required Total Wages &

salaries

Remarks

5.4

Miscellaneous Expenses

S.No Particulars

(Insurance, Traveling, Carriage, Maintenance &

Repairing, Stationary, Postage, Consumer storage etc.)

Total Expenses

6.0

Total Working Capital

S.No Particulars One Cycle One Year

1. Raw Material 5.1

2. Utilities 5.2

3. Man Power Expenses 5.3

4. Miscellaneous Expenses 5.4

5. Rent (if any) 3.1(a)

6. Goods under Process(W.I.P) For one cycle

7. Finished goods stock

Total Working Capital

Cost of the Project:

S.No Particulars Amount

1. Total Fixed Capital Investment Value from 4.0

2. Working Capital(One Cycle) Value from 6.0

Total Project Cost (1+2)

Means of Finance:

S.No Particulars Value Remarks

i) Term Loan

ii) Working Capital Loan

iii) Own Investment

Sales Revenue

S.No Items(Particular) Quantity Selling Price Sales Revenue

Annual Production Cost

i) Annual cost of Working Caprital__________

ii) Annual Interest on Loans________________

iii) Annual Depreciation on fixed Assets_______

iv) Total_________________________________

Annual gross Profit

Annual gross profit = Total Sales Revenue-Annual Production Cost

Break Even Point:

BEP = (Fixed Cost/ Expected Contribution) X100

Expected Contribution = Sales- Variable Expenses

Profitability Projections (Balance Sheet):

S.N

o

Particulars Amoun

t

A. Sales Realization

B. Cost of Manufacturing / Services

i) Raw Material

ii) Utilities

iii) Salaries/Wages

iv) Repair/Maintenance

v) Selling & Distribution expenses

vi) Administrative Expenses

vii) Interest

viii) Rent

ix) Depreciation

x) Miscellaneous Expenses

Total

C. Grass Profit/Loss (A-B)

D. Income Tax

E. Net Profit/ Loss

E1. Interest

E2. Net Profit +Interest

F. Repayment of Interest +Principal

G. Retained Surplus

Depreciation:

Depreciation is an annual charge reflecting the decline in value of an asset due to

wear & tear etc. Instead of charging the cost of an expensive piece of equipment to one

year’s expenses, the charges spread over the no of years during which it is giving

services. It is thus an arbitrary figure entered as a part of cost doing business each year.

Depreciation in effect set a side enough money from each year’s income so that funds

will be available to purchase a new item or equipment, when the present one is worn out.

S.No Type of Asset Cost of Asset Expected Life Depreciation

Training:

Training is a systematic development of Attitude/Knowledge/Skills & Behaviour

pattern required by an individual in order to perform adequately a given task or job. In

order to identify what the problems are & whether training might help to reduce them. It

is necessary to find a no. of questions-

1. What is the current level of performance?

2. How does this compete with the level desired?

3. What changes are desirable? Can they be identified? Are there changes in

structure, policy, procedure, practice or behaviour?

4. Are the desired changes required training to affect them? Is there is a place

of training in change process?

Objectives of Training:

Training of the employees in an industry is essential –

1. To improve performance

2. To increase productivity

3. To reduce wastages

4. To reduce accidents

5. To boost employees moral

6. To improve employer employees relation

7. To acquire work habits

8. To reduce absenteeism

9. To keep pace with the modern production techniques

10. To promote team work

Methods of Training:

There are many methods or techniques for imparting training among trainees. The

choice of any method will depend upon cost, time available, no of persons to be trained,

depth of knowledge required, background of the trainees etc. The following are the

various methods of training-

i) On the Job Training

ii) Vestibule Training

iii) Classroom method Training

On the Job Training:

This is considered to be the most effective method of training the operative

persons. Under this method, the workers are trained on the job & at his work place. This

method enables them to get training under the same working conditions & with the same

processes, materials & equipments which he will be using ultimately.

Vestibule Training:

The term vestibule training is used to impart training in a classroom for semi

skilled jobs in the plant and in the office. It is more suitable where a large no of

employees used to be trained at the same time for the same kind of work. Here emphasize

tends to on training rather than production. It is frequently used to train clerks, typist etc.

Classroom Method:

Class room training are the most useful where concepts, attitude, theories&

problems solving abilities are to be taught. It is associated more with knowledge than

skill. Orientation about organization and safety training can be accomplished more

effectively in classrooms.

There may be some other methods based on classification of training-

1. Pre-recruitment Training Based on Recruitment

2. Post-recruitment Training

3. Workers Training

4. Supervisors Training Based on ranks

5. Managers Training

6. On Job Training

7. Apprenticeship Training Based on source of Training

8. Vestibule Training

9. External Training

10. Induction Training

11. Job Training Based on subject Matter

12. Promotional Training

Unit-III:

Forms of Business Organization:

The business organization can be divided mainly under two heads-

1. Private Sector

2. Public Sector

Sole Proprietorship:

It is form of business organization in which individual invest his own capital, uses

his own skills & intelligence in managing the affairs and is solely responsible for profits

and losses. He is fully responsible for the assets and liabilities of the business. This is

very suitable where-

1. The required capital is small

2. The risks involved are not too heavy.

3. The personal attention to customer is required.

4. It is possible for one man to manage the business.

Advantages of Sole Proprietorship:

1. Easy formation

Business Organization

Private Sector Public Sector

Non-corporate Corporate Non-corporate Corporate

Sole Proprietorship

Partnership

Pvt. Ltd Company

Co-operative Society

Departmental Org. Public Ltd. Company

Government Comp.

Joint Stock Comp.

2. Freedom from government regulations

3. promptness of decisions

4. Minimum expenses.

5. Maintenance of secrecy

6. Flexibility in management

7. Direct contact with the customer.

Disadvantages of Sole Proprietorship:

1. Limited Capital

2. Unlimited Liability

3. Lack of managerial skills

4. lack of supervision

5. Limited expansion

Partnership Organization:

With the expansion & progress of business the individual proprietor becomes

ineffective to meet successfully the needs of business, because the expansion of the

business requires more capital & managerial capabilities. According to Indian Partnership

Act 1932, “The relation between persons who have agreed to shares profits & Losses of a

business carried out by all or anyone of them acting for all”.

The minimum person required for partnership are two & the Maximum limit is

ten for banking business and twenty for non banking business.

All the terms and condition of partnership are written in a document called

“Partnership Deed”.

Types of Partner:

1. Ordinary Partner

2. Limited Partner

3. Active Partner(Salary is also given)

4. Sleeping or Dormant Partner

5. Partners in Profit only

6. Minor partner

7. Nominal Partner

Registration of Partnership Firm (Partner ship Deed):

Under the Partnership Act 1932, the firms have been given the option of getting

themselves register with the registrar of companies. At the time of registration the

following points are needed-

1. Name of the firm

2. The principal place of business

3. Name & permanent address of the partners

4. Date of joining the firm by each partner

5. The rights & duties of each partner

6. Amount of capital contributed by each partner

7. Salary of any partner in addition to the share & profits

8. Ratio of profits & losses to be distributed among partners

9. Procedure for dissolution of the firm & the way of settlement of accounts after

dissolution

10. Re-evaluation of assets & liabilities on admission, retirement or death of a

partner

11. Duration of partnership

12. Nature of partnership

Joint Stock Company:

It is an association of share holders for the purpose of starting a business or

undertaking with limited but sometimes unlimited liabilities. There are two types of joint

stock companies-

a) Private Ltd. Company

b) Public Ltd. Company

Private Ltd. Company:

In a private Ltd. Joint stock company the members should not exceed 50. But

minimum 2 members are sufficient to form a private ltd. Company. The shares of such

companies are non transferable & money can not be raised fro public to share the capital.

There is no restriction on the minimum capital requirement for legally starting the

business. Membership of such company is more or less confined to relatives and friends.

Public Ltd. Company:

A minimum of 7 members are required to form a public Ltd. Company, where

there is no limit for maximum no of members. The membership of the company is open

to the general public. These types of companies must have at least 3 directors. In public

ltd. Company the capital can be raised by offering shares and debentures to the public

through advertisement of prospectus. The shares of the public ltd. Company are easily

transferable, through an organized market called Stock Exchange. A business can only be

started by public ltd. Company after getting a certificate through registrar of companies.

The working of a public ltd. Company is strictly regulated according to Indian

Companies Act.

Formation of a Joint stock company:

The promoter member takes all the pains by bringing all the members together.

He prepares all the legal documents and submit the same to the registrar of the

companies. The main document for formation of a company are-

1. Memorandum of Association

2. Article of Association

Memorandum of Association:

It is a document showing the constitution of the company. Its clauses can not be

changed easily. Memorandum of association consist following six clauses-

1. Name Clause

2. Situation Clause

3. Object Clause

4. Capital Clause

5. Liability Clause

6. Association Clause

Article of Association:

This is a written document regarding rules, regulation& by laws of the company

to be observed by the internal management of the company. The main content of article

of association are-

1. Share capital, kinds of shares & rights of each kind of share holders.

2. Procedure of share allotment

3. Procedure to be observed for transfer of shares.

4. Rules, regulation of the company’s investment.

5. Rules regarding the general meeting of the company.

6. The common seal of the company.

7. Rules & procedures for appointment of managing agents, auditors, bankers etc

8. Powers, qualifications and remunerations of directors.

Along with the above documents a specified amount of fee is also deposited with

the registrar of companies, who examines carefully all the documents and after

getting satisfied, issue a certificate of incorporation which is legal evidence of

company being started. A Pvt. Ltd. Company can be started at once but in a public

ltd. Company the promoter issues the prospectus of the company before starting.

Prospectus:

A prospectus is an invitation to the public to purchase shares & debentures of the

company (through trade magazines, new papers etc.). A prospectus is issued to public and

before issuing it must be dated & signed by each director of the company and filed with

registrar of the companies. A prospectus is a silent representative of the company that

carries a detailed layout of the objects of the company with various rules & regulations.

An investor must go through the prospectus before applying for allotment for shares or

investing money in the company.

Dissolution of a Joint Stock Company:

Dissolution or winding up of a joint stock company is a procedure by which the

company is broken up to realize its assets so as to pay off its creditors. There are two

common ways of dissolution of a company-

1. Voluntary dissolution of a company

2. Dissolution by court

Difference between a Private Ltd and a Public Ltd. Joint Stock Company:

S.No Particulars Pvt. Ltd. Public Ltd.

1. Minimum No of members 02 07

2. Maximum No of members 50 Unlimited

3. Name of the company ends with Pvt. Ltd. Ltd.

4. Mode of raising capital Generally confines to

relatives and friends

Issuing of shares &

debentures to

general public

5. Transferability of shares Restricted Free

6. Minimum no of directors 02 03

7. Issuance of Prospectus Not compulsory Compulsory

8. Audit of accounts No legal provision Legal auditing

9. Protection of Share holders Less More

10. Retirement of directors Not by rotation By rotation

11. Minimum capital Can be started with

any amount

Minimum laid down

capital is required

Co-operative Societies:

“A co-operative society is an association of persons who join together on

voluntary basis for their common cause”. Co-operative society association can also be

defined as a business organization in which the worker invest the capital & manage the

business.

Registration of a Co-operative Society:

In India co-operative society are registered under the Co-operative society act

1912. The co-operative society desired to be registered must fulfill the following basic

condition or requirement-

1. A co-operative society must have at least 10 adult members.

2. The members should be bond together by a common bond ie. They should be

of common trade, community, village etc.

3. The members should present a joint application to the registrar of co-operative

societies, furnishing the important particulars like membership, share, object

of the society.

4. A copy of the bylaws and scheme project should be submitted to the registrar.

5. after verification of all the documents, the registrar will register the co-

operative society, after registration the co-operative society becomes untitled

to enjoy certain privileges like loans from central or state co-operative banks

etc.

State Enterprises:

A business fully owned, run & managed by the government is know as state

enterprise, Public sector enterprise or Govt. undertaking. In order to prevent economic

unbalance & concentration of wealth in few hands, the government run these industries.

Public utility services like Electricity, Water supply, railway, state transport, defence, etc

are managed by government.

Types of State enterprise:

On the basis of its organization, state enterprises can be divided into following

four categories-

1. Board

2. Public Joint stock Ltd. Company

3. Departmental Undertakings

4. Public Corporations

Board:

It is a state enterprise created by a statute of parliament like state electricity board. It

is an autonomous body whose powers are clearly defined by the parliament.

Public Joint Stock Ltd. Company:

If more than 51% share of a company are owned by the government, then it is

called joint stock ltd. Company. eg- HMT

Departmental Undertakings:

Undertaking involves huge investment like Railway, Defence, Irrigation projects

etc. Each undertaking is under the control of concerned ministry of the government. The

administration of these is under the hands of chief administrative officer of the ministry.

Public Corporations:

These are established under a specified law passed by the parliament. It is an

independent body free from parliamentary control. Financially these are self supported.

Chief executive of the board is nominated by the board. eg. LIC, UPSRTC DTC etc.

Entrepreneurial Competencies:

1. Initiative

2. Opportunist

3. Persistence

4. Information seeker

5. Concern for high quality work

6. Commitment to work contract

7. Efficiency orientation

8. Systematic planning

9. problem solving

10. Self-Confidence

11. Assertiveness

12. Persuasion

13. Use of influential strategies

14. Monitoring

15. Concern for employee welfare.

Unit-IV (Marketing Sales)

Marketing:

“Marketing is the performance of business activity that directs the flow of goods

from producer to consumer.”

Marketing can be defined in two ways-

1. Product oriented: Whatever product has to be sold out.

2. Consumer Oriented: Goods and services which satisfy the needs of

customer are supplied to them.

Salesmanship: It is an art of presenting a product in such a way that customer are attracted to buy

it. It consist the following basic steps-

1. Making Contacts

2. Arousing Interest

3. Creating preferences

4. Making a specific proposals

5. Closing a sale

6. Retaining business

Function of Sales Management:

The function of sales management can be broadly classified as follows-

1. To devise channel of distribution

2. To estimate the demand of product in different areas.

3. To study the purchasing power of the customer

4. To devise suitable means of advertising

5. To ascertain co-ordinations between sales personals

6. To carry out market research

7. To select & train salesman

8. To forecast future demands

9. To maintain sales record

10. To formulate future sales policies keeping in mind the changing habits of

the customer.

Market Research:

Marketing research is the careful and objective study of product design, market

and such transfer activities as physical distribution, warehousing, advertising, sales

management.

It can also be said as continuous of a project to be started, expanded or modified.

Objectives of Market Research:

1. To provide basis for proper planning.

2. Reducing marketing cost.

3. To find out new market

4. Determination of proper pricing policies

5. To study likes and dislikes of the consumers

6. To know market competition

7. To study the external forces and their impact.

Methodology Of Market Research:

The logical steps undertaken in conducting proper marketing research are as

under-

1. Define the problem(as decline in sales)

2. Establishing the specified objectives

3. Formulation of research plan

a) Selection & training of staff conducting research

b) Designing & selection of proper sample for research

c) Preparation of questionnaire and other forms

d) Preparation of budget for research

4. Collection of data

5. Analyzing the collected information

6. Drawing conclusions and making recommendations.

7. Preparation of reports.

Classification of Market Research:

Market research can be sub divided into following four categories-

a) Product Analysis

b) Market Analysis

c) Distribution Analysis

d) Competition Analysis

Product Analysis:

Product analysis is carried out to –

1. customer preferences for the product

2. Make improvements according to customer preferences

3. Simplify product lines & eliminate unprofitable product

4. find out the future trends of the components.

Market Analysis:

It is needed to find out scope of the product and customer habit. Following points

should be taken care of-

1. Where is the purchaser of the product?

2. What is the volume of sales during a particular period?

3. On what factors a buyers pays ie. Quality, Price, Safety, Service etc.

4. Why a customer purchase a particular product?

5. How often customer purchases?

Distribution Analysis:

It deals mainly with the study of channels of distribution, pricing methods, after

sales services, sales promotion, sales forecasting, sales training & warehousing.

Competition Analysis:

It is carried out to study sales & pricing policies of competitors & how a customer

compares your product with others.

Product Research:

It is a result of research that technology went on fast changing & a no. of

products are becoming obsolete.

There are two types of research-

a) Basic or Pure research

b) Applied research

Basic/Pure Research:

It deals with the nature’s basic laws regardless of the law that knowledge can be

used. This types of research is usually done at the universities and institutes.

Applied Research:

It is concerned with solving a problem and usually one that now cost money and

will make money if it is solved.

Purpose of Product research:

1. Search for basic chemicals and physical relationship of products amd

processes.

2. To improve products

3. Find out new user for present products.

4. Develop new products

5. Reduce the cost of present products

6. Analyze competitor product

7. Find profitable uses of bi-products.

Sales Promotion:

It is done with the help of advertising, which is defined as “ any paid form of

personal presentation or promotion of ideas, goods or services by an identified sponsor.”

It is a form of paid publicity having strong persuasion power.

Objectives of sales Promotion:

1. It generates awareness of the product & its brand

2. It generates new buyers

3. It promote competition

4. Advertising help salesman by making personal calls

5. It generates favourable climate for maintaining & improving sales

Sales Planning / Planning & Advertising Campaign:

It involves the following steps-

1. Decide the target audience

2. Ascertain the advertising theme & illustration to suit the customer needs

3. Choose the proper media of advertising

4. Estimate the advertising budget

5. schedule the campaign

6. Test the results and impact of advertising on sales.

Sales Forecasting:

Sales forecasting can be said as the level of demand to be expected for the product

in the future. Accurate forecasting is essential for effective inventory planning and

control. Forecasting can be broadly classified as-

a) Short term forecasting - For few months

b) Medium term Forecasting - for 1-3 years eg. Furniture industry

c) Long term forecasting - for 3-5 years eg. Steel, Waterways, Railway

Purpose for Forecasting:

Accurate forecasting is essential for-

1. opening new unit & determining the volume of production

2. Expansion of existing unit

3. Diversification of the product

4. Emphasizing the needs of product research development

5. Establishing pricing policies

6. Determining extent of advertising

7. Making arrangement of training of personals

8. Making arrangement of plants

After ascertaining the exact level of forecasting, proper arrangement for the

following parameters can be made before-

1. Production Schedule

2. Estimation of salesman

3. Material Requirement

4. Purchase Schedule

5. Inventory Schedule

6. Requirement of plants & equipments

7. Requirement of labour

8. Requirement of finance

Techniques of sales forecasting:

Sales forecasting techniques may be categories as-

1. Historical Estimates

2. Estimation by salesman

3. Trend line or Time series analysis

4. Market research with suitable questionnaire

5. Moving average method

6. Co-relation or economic forecasting techniques.