GOVERNMENT ENGINEERING COLLAGE,MODASA

ASSIGNMENT OF E.E.M.SEM-3 OCT-14QUESTION: 1

EXPLAIN THE THEORY OF DEMAND AND SUPPLY ALONG WITH ITS LAW.ALSO EXPLAIN THE DETERMINATES OF DEMAND AND SUPPLY

ANSWER:

Meaning of Demand and SupplyMarket is a group of buyers and sellers for particular goods and

services. Buyer determine the group of the product where as sellers determine the supply of the product.

Market are of two types: Organized and non-organized, in organized market, buyers and sellers meet and decides the price of the product whereas in non-organized markets they do not meet and buyer as per his ability and willingness to buy at fixed price.

Demand quantity is the amount of the goods that buyers are willing and able to purchase.There are many determinants which decides the quantity of demand, but one of the most important factor is price. If the price of the goods increase than the demanded quantities will obviously reduce. This followed pattern is termed as law of demand which can mentioned as follows:

Claiming other things equal, the quantity demanded of Goods falls when the price of the goods increases.

As shown in diagram, suppose D1 is the demand at particular price. Demand shifts upward(D2) with decrease in price whereas demand shifts downward(D3) with increase in price.

Supply quantity is the amount of the goods that sellers are willing and able to sell. There are many determinates which decides the quantity of supply, but again price of goods is most important factor if the price of goods increased than the profit will increase and hence the sellers will supply more amount of goods. This followed pattern is termed as law of supply which can mentioned as follows:

Claiming other things equal, the quantity supplied of Goods falls when the price of the goods increases.

As shown in the diagram, suppose S1 is the demand at particular price. Supply increase S2 with increase in price whereas supply decrease to S3 with decrease in price.

LAWS OF DEMAND AND SUPPLYPrivious section discussed about the demand and supply individually,

When both, demand and supply are combined it gives the equilibrium status in the market. If curves of both demand and supply are plotted on the same graph, than both graphs will intersect at one point and this point is termed as equilibrium as shown in the diagram below, At this point, the quantity of goods that buyers are willing to buy same as the seller are willing to sell. The corresponding quantity and price is known as equilibrium and price respectively. At this point buyers are equally satisfied as the seller.

Now, suppose there is market price of goods is above equilibrium price. So, the seller will be motivated to supply more quantity of goods than the quantity demanded. So, the quantity supplied is more than the quantity demanded. this excess of goods is termed as surplus. Here, the sellers will try to sell at more price, because with increase in price, the quantity demanded by the buyer will reduce, so, the price will reduce and market will bring price to equilibrium price.

Determinants of Demand and Supply:

(A)Determinants of Demand

Following are the determinants of demand in the market.

(1)Price (4)Future Expectation

(2)Numbers and Buyers (5)Price of Relative goods

(3)Income (6)Tastes

(1)Price

As discussed in the law of demand, if the price increase, then the demand will decrease and vice versa. So, it clear that price and demand have negative relationship. Based on these fact law of demand was developed.

(2)Numbers of Buyers

Market demand is the sum of individual’s demand if the number buyer are more, then quantity demand will be more, So as numbers of buyer increases the demanded quantity also increase.

(3)Income

If income of the person is low, then the demand of the goods also will be low. Inverse relationship also holds true. So, from this it can be concluded that lower income will have low demand.

(4)Future expectation

Future expectation affects the purchase for a goods of services today. If save money for tomorrow, you will reduce your expectation today. So you will cut your today’s expenditure.

(5)Price of Relative Goods

Suppose the price of product X is reduced. So, as per low of demand, the demand of that product X will increase. On the other hand, the demand of product Y having same characteristics would decrease. Such items are called substitute of each other. This can be reversed also. So, rise of fall relative price of goods significantly affects the demand of the products.

(6)Tastes

As tastes is personal psychological parameter, inclination towards the product will be high if the taste of product is more. So, tastes has positives co-relationship with demand of the quantity.

(B)Determinants of Supply

Following are the determinants of supply in a market.

(1)Selling price (4) future expectation

(2)Numbers of sellers (5) Technology

(3) Price of raw material

(1)Selling Price

Selling price is decided after adding certain amount of profit in the cost. If selling price is increased, the profit will also increases.

This increases the profit of the seller, which motivates to supply more quantity. So, increase the supply og goods.

(2)Number of sellers

Supply of product in the market is the sum of individual’s seller’s supply. If the number of seller are more, then quantity supplied will be more. So, as the number of quantity supplied in the market increases, the price of the goods decreases.

(3)Price of Raw materials

Price of raw materials directly effects the quantity supplied in the market. Keeping the selling price constant, if the price of raw materials required to produce the goods increases, the seller will produce less amount of goods. So, this reduces the quantity of supplied goods.

(4)Future Expectation:

Future expectation affects the supply for a goods or services today. If supplier anticipate the increase in price in near future, he stores the good right now to get more price tomorrow. So, the supplied quantity would decrease at present.

(5)Technology

In the era of technology, rate production of goods is significantly increased. This has reduced the labor cost significantly and hence input cost is also reduced. So, sellers are able to supply more amount of goods in the market at lower rate than the previous era.

Q:2 WHAT IS ELASTICITY OF DEMAND?EXPLAIN DEFFERENT

TYPES OF ELASTICITY WITH EXAMPLE.

Law of demand explains the direction of the changes in demand.A

fall in price ieads to an increase in quantity demanded and vice

versa.but itdoes not tell us the rate at which demand changes to

changein price.The concept of elasticity of demand was introduced

by marshall.This concept explains the relationship between a

change in price and consequent change in quantity

demanded.Nutshell,it shows the rate at which changes in demand

take place.

Elacticity of demand can be defined as”the degree of

responceiveness in quantity demanded to a change in price”.Thas

it represents the rate of change in quqntity demanded due to

change in price.There are three types of elasticity of demand:

1. Price Elasticity of Demand

2. Income Elasticity of Demand And

3. Cross Elasticity of Demand

Price Elasticity of demand:

Price elasticity of demand measures the change in quantity

demanded to a change in price.It is the ratio of percentage

change in quantity demanded to a percentage change in

price.This can be measured by the following formula.

Price Elacticity=proportionate change in quantity demanded/

Proportionate change in price

INCOME ELASTICITY OF DEMAND

Income elasticity of demand shows the change in quantity

demanded as a result of a change in consumers

income.Income elasticity of demand may be stated in the form

of formula:

Ey= proportionate change in quantity demanded/ proportionate

change in income.

For example:

Yed = - 0.6: Good is an inferior good but in elastic a rise in

income of 3% would lead to demand falling by 1.8%

Yed = + 0.4: Good is a normal good but inelastic a rise in

incomes of 3% would lead to demand rising by 1.2%

Yed = + 1.6: Good is a normal good and elastic a rise in

incomes of 3% would lead to demand rising by 4.8%

Yed = - 2.1: Good is an inferior good and elastic a rise in

incomes of 3% would lead to a fall in demand of 6.3%

CROSS ELASTICITY OF DEMAND

Cross elasticity of demand is the proportionate change in the

quantity demanded of a commodity in response to change in

Ped = % Δ Quantity Demanded____________________% Δ Price

the price of another related commodity.Related commodity

may either substitutes or complements.

Examples of substitute commodities are tea and

coffee.Examples of compliment commodities are car and

petrol.Cross elasticity of demand can be calculated by the

following formula:

Cross Elasticity= proportionate change in quantity demanded of a

commodity/ proportionate change in the price of related

commodity.

If the cross elasticity is positive ,the commodities are said to

be substitutes and if cross elasticity is negative,the

commodities are compliments .The substitute goods( tea and

coffee) have positive cross elasticity because the increase in

the price of tea may increase the demand of the coffee and

the

o consumer may shift from the consumption of tea to

coffee

Complementary goods(car and petrol) have negative cross

elasticity because increase in the price of car will reduce the

quantity demanded of petrol.

The concept of cross elasticity assists the manager in the

process of decision making.For fixing price of product which

having close substitutes or complimates.cross elasticity is

very useful.

Q.3 What is production? What are the factors affecting production?

Meaning : Production means process by which a commodity is transformed in to a different usable commodity. In other words, production means transforming inputs like labour, machines, raw materials into an output. This king of production is called manufacturing.

The production process however does not necessarily involve physical conversion of raw material in to tangible goods. It also includes the conversion of intangible inputs to intangible outputs.

For example, production of legal, medical, social and consultancy service- where lawyers, doctors, social workers consultants are all engaged in production intangible goods.

An “input” is good or service that goes into the process of production and “output” is any good or service that comes out of production process.

Production is process, and as such it occurs through time and space. Because it is a flow concept, production is measured as a “rate of output per period of time”.

There are three aspects to production processes;

(1) The quantity of the good or service produced,(2) The form of the good or service created,(3) The temporal and spatial distribution of the good or service

produced.

Fixed and variable input

A fixed input is one whose supply is inelastic in the short run. Therefore, all of its users cannot buy more of it in short run. Conceptually, all its users, cannot employ more of it in the short run. If one user buys more of it, some other users will get less of it.

A variable input is defined as one whose supply in the short run is elastic, eg: labour, raw material etc. All the users of such factors can employ larger quantity in the short run. In technical sense, a fixed input remains fixed up to a certain level of output whereas a variable input changes with change in output. A variable factor of production is one whose usage rate can be changed easily.

Examples include electrical power consumption, transportation services, and most raw material inputs. In the short run, a firm’s “scale of operations” determines the maximum number of outputs that can be produced.

A firm has two types of production function:

(1) Shot run production function(2) Long run production function

Short run and long run

Short run refers to a period of time in which the supply of certain inputs (e.g: plant, building, machines, etc) are fixed or inelastic. Thus an increases in production during this period is possible only by increasing the variable input. In some industries, short run may be a matter of few months and in some others it may extent even up three or more years.

The long run refers to a period of time in which supply of all the input is elastic; but not enough to permit a charge in technology. In the long run, the availability of even fixed factor increased. Thus in the long run, production of commodity can be increased by employing more of both, variable and fixed inputs.

In the strict sense, production function is defined as the transformation of physical input in to physical output where output is a function input. It can be expressed algebraically as;

Q = f (K, L etc).Where,

Q = is the quantity of output produced during a Particular periodK, L etc, are the factors of productionF = denotes the function of or depends on.

Factors of production

Economic resources are the goods or services available to individuals and businesses used to produce valuable consumer products. The classic economic resources include land, labor and capital. Entrepreneurship is also considered an economic resource because individuals are responsible for creating businesses and moving economic resources in the business environment. These economic resources are also called the factors of production.

The factors of production describe the function that each resource performs in the business environment. Materials and energy are considered as secondary factors in classical economics because they are obtained from land, labour and capital. The primary factors facilitate production but neither become part of the product nor become significantly transformed by the production process.  Land includes not only the site of production but natural resources above or below the soil.

Land

Land is the economic resource encompassing natural resources found within a nation & rsquo;s economy. This resources includes timber, land, fisheries, farms and other similar natural resources. Land is usually a limited resource for many economies.

Although some natural resources such as timber, food and animals, are renewable, the physical land is usually a fixed resource. Nations must carefully use their land resource by creating a mix of natural and industrial uses. Using land for industrial purposes allows nations to improve the production processes for turning natural resources into consumer goods

Land is sometimes merged with capital to simplify micro-economics. However, a common mistake is combining land and capital in macro-analysis. Income derived from ownership or control of natural resources is referred to as rent. Land was smetimes defined in classical and neoclassical economics as the "original and indestructible powers of the soil."

Labor

Labor represents the human capital available to transform raw or national resources into consumer goods. Human capital includes all able-bodied individuals capable of working in the nation & rsquo;s economy and providing various services to other individuals or businesses.

This factor of production is a flexible resource as workers can be allocated to different areas of the economy for producing consumer goods or services. Human capital can also be improved through training or educating workers to complete technical functions or business tasks when working with other economic resources.

Entrepreneurship

Entrepreneurship is considered a factor of production because economic resources can exist in an economy and not be transformed into consumer goods. Entrepreneurs usually have an idea for creating a valuable good or service and assume the risk involved with transforming economic resources into consumer products.

Entrepreneurship is also considered a factor of production since someone must complete the managerial functions of gathering, allocating and distributing economic resources or consumer products to individuals and other businesses in the economy.

Capital

Capital has two economic definitions as a factor of production. Capital can represent the monetary resources companies use to purchase natural resources, land and other capital goods. Monetary resources flow through a nation & rsquo;s economy as individuals buy and sell resources to individuals and businesses.

Capital also represents the major physical assets individuals and companies use when producing goods or services. These assets include buildings, production facilities, equipment, vehicles and other similar items.

Individuals may create their own capital production resources, purchase them from another individual or business or lease them for a specific of time from individuals or other businesses. Many definitions and descriptions of capital goods production have been proposed in the literature.

Capital goods are generally considered as one-of-a-kind, capital intensive products that consist of many components. They are often used as manufacturing systems or services themselves.

Q. 4. What is “COST”? Describe different types of cost & also explain break-even analysis.

Cost :-

The term of cost simply means cost or production.It is the expenses incurred in the production of goods.It is the sum of all money-expenses incurred by a firm in order to produce a commodity.Thus it includes all

expenses fromthe time the raw materials are bought till the finished product reach at the wholesaler.

A managrial ecomist must have a proper understanding of the different cost concept which are assentil for clear business thinking.The cost concept which are relvant to business operation and decision can be grouped on the basis of their purpose under to overlapping catagories:

1.Concept used for accounting purpose

2.concept used in economics analysis of the business

Types of cost (or cost concepts)

These are several types of costs (or cost concepts).Following are the important items.

a.)Money Cost :- Money cost means the total money expenses incurred by a business firm on the various items entered into the production of a particular product.money cost is also called as nominal cost.

b.)Real Cost :- Real cost means the real cost of production of a particular product.It is the next best alternative sacrificed in order to obtain the product.It is also denotes the effords of workers and sacrifices of owners undergone in the production of a particular product.

c.)Opportunity cost:-Opportunity cost refers to the cost of foregoing or giving up an opportuinty.It is the cost of the next best alternative.A film actress can either act in filme or do modeling work.She can`t do both the jobs at the same time.Her acting in the film results in the loss of an opportunity of doing modeling work.

The oppourtunity cost concept plays an important role in managerial decisions.Above all,it helps in the best allocation of available resources.

d.)Sunk cost :-Sunk costs are those which have already been incurred and which can not be changed by any decision made now or in the future.These are past or historical costs.

e.)Incremental costs:-These are additional costs incurred due to a changed in the level or natural of activity.

f.)Differential costs :- It refers to the change in costs due to change in the level of activity or pattern of production or method of production.

g.)Explicit costs:-Explicit costs are those costs,which are actually paid or paid in case. They are paid out costs.

h.)Implicit costs:-Implicit costs are those costs,which are not paid in case to anyone.These are not actually incurred,but are computed for decision-making purpose.Implicit costs are also known as imputed costs or hypothetical costs.

i.)Accounting costs:accounting costs represent all such expenditures,which are incurred by a firm on factors of production.Thus,accounting costs are explicit costs.Since all the expenses on production are in money terms,the accounting costs are money costs or nominal costs.

j.)Economic costs:- Economic costs refers total of explicit cost and implicit costs.Thus it includes the payment for factors of production and the payment for the self owned factors.

Break-even analysis

The fundamentals objectives of any businesses is to earn more and more profit. Profit mainly depends on three factors namely costs of production, amount of output and revenue. The value of these components depends on the level of various activities performed in the organisation. There is a need to analyse fixed costs, variable costs and revenues at different level of output to determine optimum profit. Cost of production is composed of two components viz. Fixed costs and variable costs.

Assumptions in break-even analysis

The following assumption are made while plotting a break-even chart

1.The total costs of production can be divided into two categories

(a) Fixed costs,(b)variable costs,

2.Fixed costs remains constant.It is independent of the quantity produced and includes executive salaries,rent of buildings, depreciation of plant and equipment etc.

3.The variable cost various directly and proportionally with the volume of production if V=variable cost per unit and Q is the quantity produced,variable cost=V×Q.

4.The firm deals with only one product,or the sales mix remains unchanged.

5.Productivity per worker and efficiency of plant,etc remains mostly unchanged.

Q.5. Define market and explain types of market.

Definition:

An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter.

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.

While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for moneyfrom buyers.

It can be said that a market is the process by which the prices of goods and services are established.

The market facilitates trade and enables the distribution and allocation of resources in a society.

Markets allow any trade-able item to be evaluated and priced. A market emerges more or lessspontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods.

Types of market:

1   Types of markets o 1.1   Physical consumer markets o 1.2   Physical business markets o 1.3   Non-physical markets o 1.4   Financial markets o 1.5   Non authorized and illegal markets

Physical consumer markets

food retail markets: farmers' markets, agricultural markets, fish markets and wet markets

retail marketplaces: public markets, market squares, bazaars, souqs, night markets, shopping centers and shopping malls

big-box stores: supermarkets, hypermarkets and discount stores

ad hoc auction markets: process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder

used goods markets such as flea markets temporary markets such as fairs

Physical business markets

physical wholesale markets: sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users or to other wholesalers and related subordinated services

markets for intermediate goods used in production of other goods and services

labor markets: where people sell their labour to businesses in exchange for a wage

ad hoc auction markets: process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder

temporary markets such as trade fairs

Non-physical markets

media markets (broadcast market): is a region where the population can receive the same (or similar) television and radio station offerings, and may also include other types of media including newspapers and Internet content

Internet markets (electronic commerce): trading in products or services using computer networks, such as the Internet

artificial markets created by regulation to exchange rights for derivatives that have been designed to ameliorate externalities, such as pollution permits (see carbon trading)

Financial markets

Financial markets facilitate the exchange of liquid assets. Most investors prefer investing in two markets:

the stock markets, for the exchange of shares in corporations(BSE, NSE, FPO etc are common in India)

and the bond markets

Non authorized and illegal markets

grey markets (parallel markets): is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer

illegal black markets such as the market for illicit drugs, arms or pirated products

Q.6 Explain the terms:-GDP, GNP, NNP, NDP, NI, PI, DI, PCI.

1. GDP (Gross Domestic Product):-

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis.

GDP estimates are commonly used to measure the economic performance of a whole country or region, but can also measure the relative contribution of an industry sector. This is possible because GDP is a measure of 'value added' rather than sales; it adds each firm's value added.

GNP( Gross national product):-

The market value of all the products and services produced in one year by labor and property supplied by the citizens of a country.

GNP does not distinguish between qualitative improvements in the state of the technical arts (e.g., increasing computer processing speeds), and quantitative increases in goods)

NNP(Net National Product):-

The total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation.

Net National Product (NNP) is given by the two following formulas:

o

NDP(Net Domestic Product):-

An annual measure of the economic output of a nation that is adjusted to account for depreciation, calculated by subtracting depreciation from the gross domestic product (GDP).

Net Domestic Product (NDP) is given by the two following formulas:

o

NI(Net Income):-

A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses.

This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share.

PI(Profitability Index):-

An index that attempts to identify the relationship between the costs and benefits of a proposed project through the use of a ratio calculated as:

DI( Disposable Income):-

The amount of money that households have available for spending and saving after income taxes have been accounted for. Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy.

PCI( Per Capita Income ):-

Also known as income per person, is the mean income of the people in an economic unit such as a country or city.

It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross national income) and dividing it by the total population.

Q.7 Define poverty. What are the causes and remedies of poverty?

Poverty:-o Poverty is a characteristic of the economic situation of individual

or social group in which they cannot satisfy a certain range of the minimum requirement needed for life saving ability, continues the race .poverty is a relative concept and depends on the overall standard of living in this society.

o Poverty can be defined in very precise technical terms that facilitate its measurement. Poverty can also characterized in a more multidimensional-yet less price-manner that help see poverty in relation to its causes, its context, its consequences and the ways it is related to phenomena that can influenced.

Absolute poverty:-o It’s the lack of one or more basic needs over a period long

enough that it endangers your life or can cause it harm. As opposed to relative poverty, it covers vital and biological needs such as food, water, clothing, basic housing, and a minimum of sanitation.

Causes of Poverty:-o Poverty is a consequence of diverse and interrelated reason,

which combines into following groups:o Economic (unemployment, low wages, low productivity, lack of

competitiveness of the industry); socio-medical (disability, old age, high level of morbidity); demographic (parent families, a large number of dependents in the family); socio-economic (low level of social guarantees); educational qualifications (a low level of education, lack of training); political (military conflict, forced migration) regional- geographic (uneven development of regions), according to Causes of poverty.

o Detail reasons of poverty are as below:

A. High population growth:-Fast growing population has reduced the per capita income of our country. Hence the standard of living has also fallen considerably. If the country is overpopulated a large part of the income is spent on consumption and very little is saved for developmental.

B. Unemployment:-This is the basic reason why most of the rural people are poor. Many of our countrymen do not have a proper job sustain themselves and their families. Hence they remain poor cannot repay the loans taken by them.

C. Inflation:-The income earned by the poor is insufficient to buy them the basic necessities of life and get them even two meals a day. Due the lack of nutrition they are unable to do any physical work and hence they remain poor. The price of basic food item are so high due to high rate to inflation that the little income earned by them is just insufficient.

D. Underutilization of natural sources:- India is the blessed with the plenty of natural sources but we are unlucky as we cannot them properly. The rural areas are blessed with forest and wildlife but they are not aware of the proper ways of exploding theme. Hence the productivity of forest decreases over time. Also we do not have sufficient capital and technology to exploit them properly.

E. Backwardness of Agriculture:-India is an agricultural economy. About 60% of our working population depends on agricultural directly or indirectly. But the pressure on the land has increased so much and productivity of land has decreased over time. Hence the agricultural has failed to respond to the needs of time as it cannot provide employment to the growing population which results in poverty. Also the small farmers produces for self-consumption and very little is left for sale in the market.

F. Social Causes:-The social setup our country is still backward. There are many traditions which do not allow fast development of our society. For

example, dowry system tends to make a person poor as he is forced to sell off his land and property to satisfy the greed of his daughter’s finance.

G. Political causes:-In India, all the developmental plans are guided by the selfish interests of the politicians. They exploit the weaker section of our society.

Q.8. What is unemployment? What are types of unemployment and also give its causes.

Introduction to unemployment

When a person is actively searching for employment,but unable to find the job,is called unemployment .unemployment is often used as a measure of the health of the economy.It is measured by unemployment rate .Unemployment rate is the number of unemployed persons divided by the number of the people in the labor force.For many of us the notion of unemployment is one of those who do not have a job or , are paid no salary. This is partly correct but not wholly. Such a notion would apply largely to the educated people who are not able to find work or to those in urban areas who come to seek employment .so, unemployment is very serious problem to society.

Types of unemployment

Following are different types of unemployment in the country:

1. Causal Unemployment

Cyclical unemployment is based on a greater availability of workers than there are for workers. It is usually directly tied to the state of the economy. Lower demand for products due to lack of consumer confidence, disinterest, or reduction in consumer spending results in the workforce cutting back on production. Since production is reduced, companies that retail such products may also cut back on workforce, creating yet more cyclical unemployment.

2. Disguised Unemployment

There are many instances where too many people working when so many are not required. In agriculture, all members of the family work. It is possible that 3-4 people can do a given work in the farm, but we find that the whole family of say 10 people doing the job. This may be because the excess people are not able to find employment elsewhere, so rather than remain unemployed they prefer to do the work along with others. This is known asDisguised Unemployment. This occurs when more than the necessary number of people are employed for the specified work. Disguised employment is found in agriculture because of the lake of employment opportunities elsewhere. Similarly disguised employment can be found in industry and offices as well.

3. Seasonal Unemployment

Normally people are supposed to work throughout the year. But this may not possible for all. In agriculture, work seasonal even though agriculture activities are performed throughout the year. During the peak agriculture seasons (when the crop is ready for harvesting) more people are required for work. Similarly, in the sowing, weeding and transplantation period more labor is required. Employment therefore increases at this time. In fact, there is hardly any unemployment in rural areas during these peak agriculture seasons. However, once these seasons are over the agriculture workers, especially those who do not own land or whose land is not sufficient to meet their basic requirement and they remain unemployed. This type of unemployment is knownas seasonal unemployment.

4. Voluntary Unemployment

People who are unwilling to work at prevailing wage rate and people who get a continuous flow of income from their property or any other sources and need not to work, such people are voluntarily unemployed.

Causes of unemployment

There are many causes which causes unemployment but following are the major causes of unemployment:

1. Illiteracy It is the most important and primary reason for unemployment in our country. Moreover we do not have adequate educational facilities in rural areas. Poor parents are not willing to send their children to school as they think they are a source of income for their family. A greater stress is laid on general education than vocational training. This type of education is neither job oriented nor skilloriented.Thus the country has a large number of educated unemployed.

2. TechnologyTechnology is also a major cause of unemployment especially in agriculture sector. Machines can perform the job of many persons in a short span of time and in a better way. A large number of people became unemployed when computers were introduced in our country by Rajiv Gandhi. It lead to wide scale protests from all over the country.

3. Population Growth

The employment growth in our country could not keep up pace up with the population growth. It has also resulted in underutilization of our resources. Eventually, investments and saving in our country has reduced considerably. Thus the major sectors have failed to provide job to all the people.

4. Social and cultural factorsIt has generally been seen that people do not want to leave their family and work at distant places. In a joint family, individuals have a tendency to neglect work as they want to spend their life on the income of other family members.

Remedies of poverty:-

The great social problem for all the large cities of this country lying at the bottom of the trouble from poverty which arises every winter, is, how to connect the supply and demand of labor? The good fortune of our country is an almost unlimited extent of fertile territory, and proportionally great demand for industrious hands to cultivate it. But on the other side, immigration, with attendant ignorance and poverty, gathers together in the large cities multitudes of strong men and hard-working women, who each season lose a certain portion of their employment and become dependent on charity. If a winter of business revolution or panic occurs, this evil is vastly increased. Each year, people who look beyond the temporary assistance of the unfortunate, ask why they should forever be called upon to fill these leaky vessels of the poor, when there is bread enough and to spare for them, and to be earned by honest labor, in our country districts. Why not connect supply and demand, -- they ask anew each winter, and no one ventures to answer the question.

This winter, the dread of civil war and unknown dangers has deranged all business relations. Every merchant, every manufacturer, every householder, draws in his enterprises and employs fewer hands. One great portion of the country delays the payment of its obligations; this, of course, cripples all their creditors here. It is considered doubtful by business men whether the entire secession of the Cotton States, or even civil war, could produce more disastrous effects on the business of this City than have already been produced by this uncertain state of things.

New-York, for instance, is an immense manufacturer of clothing for the South. The house in this business employ great numbers of poor Germans and Irish, men and women. They should be engaged now busily in preparing

the summer clothing, but the dealers have not been paid for their last year's sales, and must wait; so their employees are left idle.

The same is true of various other branches of business. Considerable numbers of working-people must live on their savings this Winter, or depend on public assistance, or else suffer bitter privations. There is nothing in this, on which Southern pride can plume itself. Any man by refusing to pay his debts, can leave his creditor in embarrassment. It will take time to turn our capital and labor to new branches. In the meanwhile, individuals must suffer.

Now, in prospect of the usual privations which come upon our laboring classes every Winter, as well as the unusual sufferings this year from the interruptions of business, -- what is to be done? The West have had a rich harvest; have sold much of it, and feel in good condition.

They need industrious and sober laborers; they are generous and charitable, and will be ready to a reasonable extent to help the cities. How shall we bring together this demand in the country and this unemployed labor in the towns? The obstacles which hinder individuals from hiring or being hired are very plain.

A poor mechanic or honest day-laborer out of employ in New-York, and exposed to hunger, has not the means to take even himself to the West; and if he had, he might land in a district where no one needed him. And a farmer coming to the City is not willing to pay the expenses of a laborer to a distant part of the country, without any security that he will remain with him after he has arrived.

What is needed is an Association, managed by such men that the public would have full confidence in it, which should select among the honest and sober poor, such laboring men and women as would be adapted to Western work -- work on the farm, in the dairy and kitchen.

Then the agents of the Society should collect applications from certain districts where labor is in demand, and take out parties of these people -- as is done now for destitute children by the Children's Aid Society -- and distribute them. No doubt the Western farmers would pay a certain portion of the traveling expenses (to be reimbursed perhaps from the wages of the laborer,) provided they could immediately make profitable use of and hands. If they could not, and were only willing to furnish food and shelter for the winter, our City could well afford to pay the transit of such persons, as they would be a heavy burden and expenditure.

Our charitable and generous merchants would surely far prefer this permanent and thorough relief of poverty, to the never-ending labor of filling leaky vessels, where the more they give the less seem to remain. Such a course would be a benefit to both sides; an advantage to the West, in supplying what is the great want for their development, labor for the farm and the household, and an immense relief to the City in draining off, by natural means, the unemployed and suffering classes.

Great discretion, of course, would be needed in selecting such persons as should not become a burden to the rural communities, and in placing them where they were most needed. But we are confident the thing might be done, and with immense advantage to the whole country.

Q.9 what is the INFLATION? Give causes and control measure of inflation.

ANS:-

Inflation may be defined as the president and appreciable rise in the general price level. Inflation is statically measured in terms of percentage increase the price index over a period of time usually a year or a month.

CAUSES OF INFLATION:-

Broadly speaking inflation arise when the aggregate demand exceed the aggregate supply of goods and services. We analyses the factor which lead to increase in demand and shortage of supply.

1. FACTOR CAUSING INCREASE IN DEMAND:-

Both Keynesians and monetarist believe that inflation is caused by increase in the aggregate demand. Following are the factor which caused increases the rise demand:

1. Increase The Money Supply:

Inflation is caused by an ‘increase in the supply of money which leads to increase in aggregate demand. The higher the growth rate of nominal money supply the higher is the rate of inflation.

2. Increase The Disposable Income:

When the disposable income of the people increases, it raises their demand for goods and services. Disposable income may be increase with the national income or reduction in taxes or reduction in the saving of the people.

3. Increase in Public Expenditure:

In modern world government activities have been expanding which resulted in increase government expenditure. This raised the aggregate demand for goods and services, thereby causing inflation.

4. Increase The Consumer Spending:

The demand for goods and services also increase when consumer spending increase due to the conspicuous consumption or demonstration effect.

5. Cheap Monetary Policy:-

Cheap monetary policy or the policy of credit expanding also leads to increase in the money supply which raises the demand for goods and services in economy thereby leading to inflation. This is also known as the credit-induced inflation.

6. Deficit Financing:-

In order to meet its mounting expenses, the government resorts to deficit financing by borrowing from the public and even by printing more notes. This raises aggregate demand in the relation to aggregate more notes. The raises aggregate demand in relation aggregate supply thereby, leading inflationary rise in prices.

7. Increase in Exports:-

When the demand for domestically produced goods increase the foreign country, this raise is earning of industries producing exports commodities. These in turn create a more demand for goods and services within the economy.

MEASURE TO CONTROL INFLATION:-

Inflation is caused by the failure of aggregate demand. Therefore, inflation can be controlled by increasing by the supply of goods and reducing money income

1. MONEY MEASURE:-

(a) Credit Control: the central bank could adopt a number of methods to control the quantity and quality of credit to reduce the supply of money. For, this purpose, it raises the bank rates ,sells security in the open market, raises reserve ratio , and adopt a number of selective credit control measure, such as raising margin requirement and regulating consumer credit.

(b) Demonetisation of currency:- another monetary measure is demonetize currency of higher demonetisation. Such a measure is usually adopted when there id abundance of black money in the country.

(c) Issue Of New Currency:-the most extreme monetary measure is the issue of new currency in place of the old currency. Under this system one new note is exchanged for a number of the old currency. Such as a measure is adopted when there is excessive issue of notes and there is hyperinflation in the economy.

2. FISCAL MEASURES

Monetary policy alone cannot control inflation. Therefore, it should supplemented by fiscal measures. The principal fiscal measures are discussed below.

(a)Reduction in Unnecessary Expenditure:-

The government should reduce unnecessary expenditure on not development activities in order to curb inflation.

(b) Increase in taxes:-

The cut personal consumption expenditure, the rates of personal, corporate and commodity tax should be raised and even new taxes should be levied, but the rates of taxes should not be to high as to discoverage saving, investment and production.

(c) Increase in saving:-

Another measure is to increase saving on the part of people so that their disposable income and purchasing power would be reduced. For this the government should be encourage saving by giving various incentives.

(d) Surplus budget:-

An important measure is to adopt anti-inflationary budgetary policy. For this purpose, the government should give up deficit financing and instead have surplus budget.it means collecting more in revenues and spending less.

(e) Public debt:-

In addition, the government should stop repayment of public debt and postpone it to feature date till inflationary pressures are controlled. Instead, the government should borrow more to reduce money supply with the public.

3 DIRECT MEASURES:

Other measure to control inflation generally aims at increasing aggregate supply and reducing aggregate demand directly. These are:-

(a) To Increase Product:-the following measure should be adopted to increase production

(1) The government should in coverage the production of essential consumer goods like, food, clothing, kerosene oil, sugar, veg. oil, etc.,

(2) All possible help in the from latest technology raw material, financial help, subsidies, etc... Should be provided to different consumer goods sector to increase production

(b) Rational wage policy:-

Another important measure is to adopt a rational wags policy. The best course for this is to link increase in wages to increase in productivity. This will have a dual effect.it will control wags and at the same time increase production of goods in the economy.

(c) Price control:-.

Price control ant rationing is another measure of direct control to check inflation. Price control means fixing an upper limit for the price of essential consumer goods.

(d) rationing:-rationing aim at distributing consumption of scare goods so as to make them available to a large number of consumer.it is applied to essential consumer goods such as wheat, rice, sugar, kerosene oil, etc., it is meant to stabilizer the price of necessaries and as your distributive justices.

Conclusion:-from the various monetary, fiscal and other measure, discussed above, it becomes clear that to control inflation, the government should adopt all measure simultaneously.

Q-10 WHAT IS MONEY? WHAT ARE THE OBJECTIVES OF MONETARY POLICY OF INDIA?

Definition of money:

it is very difficult to define money in exact sense. this is because various categories of assets which posses the attributes of money many things such as clay ,cowry shells ,iron ,brass, silver, cattle, slaves,rice,wool,solt,porceline,stone,and leather etc.

THE OBJECTIVES OF MONETARY POLICY OF INDIA:

(1) GROWTH WITH STABILITY:

traditionally, RBI's monatary policy was focused on controlling inflation through contraction of money suplly and credit.this resulted in poor growth performance .

(2) REGULATION , SUPERVISION AND DEVELOPMENT OF FINANCIAL STABILITY:

financial stability means the ability of the economy to absorb shocks and mantain confidance in financial system .threats to financial stability can come from internal and external shocks .

(3) PROMOTING PRIORITY SECTOR:

priority sector includes agriculture, export and small scale enterprises and weaker section of population. RBI with the help of bank provides timely and adeqately credit at affordable cost of weaker sections and low income groups.

(4) GENERATION OF EMPLOYMENT:

monetary policy helps in employment generation by influencing the rate of investment and allocation of investement among various economics activities of different labour intensities.

(5) EXTERNAL STABILITY:

with the groth of inports and exports india's linkages with global economy are getting stronger. earlier RBI controlled foreign exchange market by determining exchange rate .now RBI has only indirect control over external stability through the michanism of manage flaxibility where it influences exchage rate by buying and selling foreign currencis in open market.

(6) ENCOURAGING SAVING AND INVESTMENTS:

RBI by offering attractive interest rates encourage saving the economy. A high rate of saving promotes investments, thus, the monetary management by influencing rates of interest can influence saving mobilization in the country.

(7) REDISTRIBUTION OF INCOME AND WEALTH:

By control of inflation and deployment of credit to weaker sectors of society the monetary policy redistributes income and wealth favoring the weaker section.

(8) REGULATION OF NBFIs:

Non banking financial institutions, like UTI , IDBI ,IFCI plays an important role in deployment of credit and mobilization of savings.RBI does not have any direct control on the functioning of such institution .

Q. 11. Role and Function of the Reserve Bank of India (RBI)

In every country there is one organization which works as the central bank. The function of the central bank of a country is to control and monitor the banking and financial system of the country. In India, the Reserve Bank of India (RBI) is the Central Bank.

The RBI was established in 1935. It was nationalized in 1949. The RBI plays role of regulator of the banking system in India. The Banking Regulation Act 1949 and the RBI Act 1953 has given the RBI the power to regulate the banking system.

RBI is the Regulator of Financial System

The RBI regulates the Indian banking and financial system by issuing broad guidelines and instructions. The objectives of these regulations include:

Controlling money supply in the system, Monitoring different key indicators like GDP and inflation, Maintaining people’s confidence in the banking and financial system,

and Providing different tools for customers’ help, such as acting as the

“Banking Ombudsman.”

RBI is the Issuer of Monetary Policy

The RBI formulates monetary policy twice a year. It reviews the policy every quarter as well. The main objectives of monitoring monetary policy are:

Inflation control Control on bank credit Interest rate control

The tools used for implementation of the objectives of monetary policy are:

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), Open market operations, Different Rates such as repo rate, reverse repo rate, and bank rate.

RBI is the Issuer of Currency

Section 22 of the RBI Act gives authority to the RBI to issue currency notes. The RBI also takes action to control circulation of fake currency.

RBI is the Controller and Supervisor of Banking Systems

The RBI has been assigned the role of controlling and supervising the bank system in India. The RBI is responsible for controlling the overall operations of all banks in India. These banks may be:

Public sector banks Private sector banks Foreign banks Co-operative banks, or Regional rural banks

The control and supervisory roles of the Reserve Bank of India is done through the following:

Issue Of Licence:

Under the Banking Regulation Act 1949, the RBI has been given powers to grant licenses to commence new banking operations. The RBI also grants licenses to open new branches for existing banks. Under the licensing policy, the RBI provides banking services in areas that do not have this facility.

Prudential Norms:

The RBI issues guidelines for credit control and management. The RBI is a member of the Banking Committee on Banking Supervision (BCBS). As such, they are responsible for implementation of international standards of capital adequacy norms and asset classification.

Corporate Governance:

The RBI has power to control the appointment of the chairman and directors of banks in India. The RBI has powers to appoint additional directors in banks as well.

KYC Norms:

To curb money laundering and prevent the use of the banking system for financial crimes, The RBI has “Know Your Customer“guidelines. Every bank has to ensure KYC norms are applied before allowing someone to open an account.

Transparency Norms:

This means that every bank has to disclose their charges for providing services and customers have the right to know these charges.

Risk Management:

The RBI provides guidelines to banks for taking the steps that are necessary to mitigate risk. They do this through risk management in basel norms.

Audit and Inspection:

The procedure of audit and inspection is controlled by the RBI through off-site and on-site monitoring system. On-site inspection is done by the RBI on the basis of “CAMELS”. Capital adequacy; Asset quality; Management; Earning; Liquidity; System and control.

Foreign Exchange Control:

The RBI plays a crucial role in foreign exchange transactions. It does due diligence on every foreign transaction, including the inflow and outflow of foreign exchange. It takes steps to stop the fall in value of the Indian Rupee. The RBI also takes necessary steps to control the current account deficit. They also give support to promote export and the RBI provides a variety of options for NRIs.

Development:

Being the banker of the Government of India, the RBI is responsible for implementation of the government’s policies related to agriculture and rural development. The RBI also ensures the flow of credit to other priority sectors as well. Section 54 of the RBI gives stress on giving specialized support for rural development. Priority sector lending is also in key focus area of the RBI.

Q . 12 Explain the function of management and role of manager.

1. Planning

It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources.

2. Organizing

It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. Organizing as a process involves:

Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.

3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed UN the structure”. Staffing involves:

Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).

Recruitment, Selection & Placement.

Training & Development . Remuneration . Performance Appraisal . Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

Supervision Motivation Leadership Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:

a. Establishment of standard performance. b. Measurement of actual performance. c. Comparison of actual performance with the standards and finding

out deviation if any.d. Corrective action.

ROLE OF MANAGER

1. FIGUREHEAD: The Manager performs ceremonial and symbolic duties as head of the organisation.

2. LEADER: Fosters a proper work atmosphere and motivates and develops subordinates.

3. LIASION: Develops and maintains a network of external contacts to gather information.

4. MONITOR: Gathers internal and external information relevant to the organisation.

5. DISSEMINATOR: Transmits factual and value based information to subordinates.

6. SPOKESPERSON: Communicates to the outside world on performance and policies.

7. ENTREPRENEUR: Designs and initiates change in the organisation.

8. DISTURBANCE HANDLER: Deals with unexpected events and operational breakdowns.

9. RESOURCE ALLOCATOR: Controls and authorises the use of organisational resources.

10. NEGOTIATOR: Participates in negotiation activities with other organisations and individuals.

Q .13 Explain the scientific and administrative principles of management.

Scientific management:

Frederick winslow taylor took up Henry Towen’s challenge to develop principle of scientific management. Taylor, considered “father of scientific management”, wrote The principle of scientific management in 1911. An engineer and inventor, Taylor first began to experiment with new managerial concepts in 1878 while employed at the Midvale steel co. at Midvale, his rise from laborer to chief engineer within 6 years gave him the opportunity to tackle a grave issue faced by the organization – the soldiering problem. ‘soldiering’ refers ‘to the practice of employees deliberately working at a pace slower trap their capabilities. According to Taylor, workers indulge in soldering for three main reasons:

1. workers feared that if they increased their productivity, other workers would lose their jobs.

2. Faulty wage systems employed by the organization encouraged them to work at a slow pace.

3. Outdated methods of working handed down from generation to generation led to a great deal of wasted efforts.

Taylor felt that the soldiering problem could be eliminated by developing a science of management.

Scientific management as propounded by taylor emphasizes:

I. Need for developing a scientific way of performing each job.II. Training and preparing workers to perform that particular job.III. Estabilishing harmonious relations between management and

workers so that the job is performed in the desired way.

The two major managerial practices that emerged from taylor’s approach to management are the piece rate incentive system and the time and motion study.

Piece rate incentive system:

Taylor felt that the wage system was on of the major reasons for soldiering. To resolve this problem, he advocated the use of a piece rate incentive system.

The piece rate system, according to taylor, would motivate workers to produce more and thus help the organization perform better.

Time and motion study:

Taylor tried to determined the best way to perform each and every job. To do so, he introduced a method called “time and motion” study.

The objective of a time and motion analysis is to ascertain a simpler , easier and better way of performing a work or job.

Administrative theory:

French industrialist Henri fayol (1841-1925), a prominent European management theorist, developed a general theory of management. fayol believed that “with scientific forecasting and proper methods of management, satisfactory results were inevitable.” Fayol was unknown to American managers and scholars until his most important work, general and Industrial management, was translated into English in 1949. Many of the managerial concepts that we take for granted today were first articulated by fayol. He emphasized that all activities that occur in business organization could be delivered into six main groups:

1 technical (production, manufacturing)

2 Commercial (buying, selling, exchange)

3 Financial (obtaining and using capital)

4 Security (protection of property and persons)

5 Accounting (balance sheet, stocktaking, statistics, coasting)

6 Managerial (planning, organizing, commanding, coordinating, controlling)

Fayol focused on the last activity, managerial activity. Within this, he indentified five major functions: planning, organizing, commanding, coordinating and controlling. Fayol’s five management functions are clearly similar to the modern management functions – planning, organizing, staffing, leading and controlling.

Fayol also set forth a series of fourteen administrative principles. These principles were the more frequently used.

Administrative principles of Management:

1. Division of Work – When employees are specialized, output can increase because they become increasingly skilled and efficient.

2. Authority – Managers must have the authority to give orders, but they must also keep in mind that with authority comes responsibility.

3. Discipline – Discipline must be upheld in organizations, but methods for doing so can vary.

4. Unity of Command – Employees should have only one direct supervisor.

5. Unity of Direction – Teams with the same objective should be working under the direction of one manager, using one plan. This will ensure that action is properly coordinated.

6. Subordination of Individual Interests to the General Interest – The interests of one employee should not be allowed to become more important than those of the group. This includes managers.

7. Remuneration – Employee satisfaction depends on fair remuneration for everyone. This includes financial and non-financial compensation.

8. Centralization – This principle refers to how close employees are to the decision-making process. It is important to aim for an appropriate balance.

9. Scalar Chain – Employees should be aware of where they stand in the organization's hierarchy, or chain of command.

10. Order – The workplace facilities must be clean, tidy and safe for employees. Everything should have its place.

11. Equity – Managers should be fair to staff at all times, both maintaining discipline as necessary and acting with kindness where appropriate.

12. Stability of Tenure of Personnel – Managers should strive to minimize employee turnover. Personnel planning should be a priority.

13. Initiative – Employees should be given the necessary level of freedom to create and carry out plans.

14. Esprit de Corps – Organizations should strive to promote team spirit and unity.

Q-14 Explain the principles of organization.

1. Principle of unity of objectives: Organizational goals, departmental goals, and individual goals must be clearly defined. All goals and objectives must have uniformity. When there is contradiction among different level of goals desired goals can’t be achieved. Therefore, unity of objectives is necessary

2. Principle of specialization:  Sound and effective organization believes on organization. The term specialization is related to work and employees. When an employee takes special type of knowledge and skill in any area, it is known as specialization. Modern business organization needs the specialization, skill and knowledge by this desired sector of economy and thus, efficiency would be established.

3. Principle of coordination: In an organization many equipment, tools are used. Coordination can be obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in several management concepts

4. Principle of authority: Authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can be achieved. It is also related with decision making. It is vested in particular position, not to the person because authority is given by an institution and therefore it is legal. It generally flows from higher level to lowest level of management. There should be unbroken line of authority.

5. Principle of responsibility: Authentic body of an organization is top level management, top level management direct the subordinates. Departmental managers and other personnel take the direction from top level management to perform the task. Authority is necessary to perform the work .only authority is not provided to the people but obligation is also provided. So the obligation to perform the duties and task is known as responsibility. Responsibility can’t be delegated. It can’t be avoided.

6. Principle of delegation: Process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. Authority is only delegated, not responsibilities in all levels of management. The authority delegated should be equal to responsibility

7. Principle of efficiency: In enterprise different resources are used. Therese resources must be used in effective manner. When the organization

fulfill the objectives with minimum cost, it is effective. Organization must always concentrate on efficiency.

 

8. Principle of unity of command:  subordinates should receive orders from single superior at a time and all subordinates should be accountable to that superior. More superior leads to confusion, delay and so on.

9. Principle of span of control: unlimited subordinates can’t be supervised by manager, this principle thus helps to determine numerical limit if subordinates to be supervised by a manager. This improves efficiency.

10. Principle of balance: the functional activities their establishment and other performances should be balanced properly. Authority, centralization, decentralization must be balance equally. This is very challenging job but efficient management must keep it.

11. Principle of communication:  Communication is the process of transformation of information from one person to another of different levels. It involves the systematic and continuous process of telling, listening and understanding opinions ideas, feelings, information, views etc, in flow of information. Effective communication is important

12. Principle of personal ability: for sound organization, human resources are important. Employees must be capable. Able employees can perform higher. Mainly training and development programs must be encouraged to develop the skill in the employees

13. Principle of flexibility:  organizational structure must be flexible considering the environmental dynamism. Sometimes, dramatically change may occur in the organization and in that condition, organization should be ready to accept the change

14. Principle of simplicity: this principles emphasizes the simplicity of organizational structure, the structure if organization should be simple with minimum number of levels do that its member an understand duties and authorities.

Q.15 Explain line, staff and hybrid types of organization structure.

Organizational structure involves, in addition to task organizational boundary considerations, the designation of jobs within an organization and the relationships among those jobs. There are numerous ways to structure jobs within an organization, but two of the most basic forms include simple line structures and line-and-staff structures.

In a line organization, top management has complete control, and the chain of command is clear and simple. Examples of line organizations are small businesses in which the top manager, often the owner, is positioned at the top of the organizational structure and has clear "lines" of distinction between him and his subordinates.

The line-and-staff organization combines the line organization with staff departments that support and advise line departments. Most medium and large-sized firms exhibit line-and-staff organizational structures. The distinguishing characteristic between simple line organizations and line-and-staff organizations is the multiple layers of management within line-and-staff organizations. The following sections refer primarily to line-and-staff structures, although the advantages and disadvantages discussed apply to both types of organizational structures.

Several advantages and disadvantages are present within a line-and-staff organization. An advantage of a line-and-staff organization is the availability of technical specialists. Staff experts in specific areas are incorporated into the formal chain of command. A disadvantage of a line-and-staff organization is conflict between line and staff personnel.

Hybrid organizationA hybrid organization is an organization that mixes elements, value systems and action logics of various sectors of society, i.e. the public sector, the private sector and the voluntary sector. Examples include organizations employed in the provision of public services that were originally established by societal actors, such as (in the European context) most social housing providers, public schools and hospitals. Other examples are public sector organizations that, due to the New Public Management revolution, behave in a more business-like way and organizations as the state-owned enterprise that also compete on the market place.

Advantages of the Hybrid Structure

Increased Efficiency:- The hybrid structure consists of multiple organizational designs. It is the result of two different organizational structures that have been combined together. The main aim behind the formation of such a structure is to improve the efficiency and manner of functioning of the company. As we all know, running an organization

smoothly is not one man's job, it requires a team of dedicated and talented professionals. These professionals should be assigned work in the right quantity and at the right time. The most important feature here is that it makes work allotment and distribution extremely easy for the senior level management. This structure lays emphasis on giving employees the work in which they are experts, to ensure that they deliver good performance for the benefit of the organization.

Unity Among Staff Members:- Hybrid organizational structure is crucial for creating a sense of unity among the employees of the organization. Such an organizational structure is useful to carry out business operations on a very large scale. Individuals belonging to different regions work closely with each other in a hybrid organization to attain set goals. Cross-cultural unity has helped many small organizations become large corporations with operations in several regions.

Increased Flexibility:- This organizational structure is much more flexible as compared to divisional and functional structures. Hybrid organizations have different product lines which gives them a competitive advantage in a market which has many participants. A flexible organizational structure helps keep relations between the senior management and junior employees cordial through consistent dialog and interaction. Also, all sorts of employee problems, grievances, and doubts are easily addressed.

Decentralized Decision-making:- Decentralization of the decision-making process is very essential to make junior-level employees a part of the organization's growth. It has been observed that the autocratic leadership process in which the management imposes their rules, which the juniors follow without voicing their opinion, may not be favorable for organizational growth. Giving power and rights to junior-level employees to take some decisions on their own can help build their confidence steadily.

Optimum Use of Resources:- Optimum use of available resources is possible with the hybrid organizational structure. Resources are valuable and if they are put to the best use, they can help the company

achieve its financial goals. Under this organizational structure, wastage of time and resources can be completely avoided.

A hybrid organization is operational in both, the public as well as the private sector. Hence, it caters to the needs of government as well as private bodies, which is indeed a major plus point. This structure's implementation is a big challenge, which the company management needs to take up seriously. However, it can safely be said that in today's business environment, the hybrid organizational structure is among the best.

Q.16 What is marketing? What is market segmentation? Explain the basis of segmentation

Marketing

Marketing is "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Marketing is the science of choosing target markets through market analysis and market segmentation, as well as understanding consumer behavior and providing superior customer value. From a societal point of view, marketing is the link between a society's material requirements and its economic patterns of response. Marketing satisfies these needs and wants through exchange processes and building long term relationships.

Market segmentationMarket segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs and priorities, and then designing and implementing strategies to target them. Market segmentation strategies may be used to identify the target customers, and provide supporting data for positioning to achieve a marketing plan objective. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and attributes of the target segment.

Basis of Market Segmentation Gender

The marketers divide the market into smaller segments based on gender. Both men and women have different interests and preferences, and thus the need for segmentation.

Organizations need to have different marketing strategies for men which would obviously not work in case of females.

A woman would not purchase a product meant for males and vice a versa.

The segmentation of the market as per the gender is important in many industries like cosmetics, footwear, jewellery and apparel industries.

Age Group

Division on the basis of age group of the target audience is also one of the ways of market segmentation.

The products and marketing strategies for teenagers would obviously be different than kids.

Age group (0 - 10 years) - Toys, Nappies, Baby Food, PramsAge Group (10 - 20 years) - Toys, Apparels, Books, School BagsAge group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and so on

Income

Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to their monthly earnings.

The three categories are:

High income GroupMid Income GroupLow Income Group

Stores catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group.

Pantaloon, Carrefour, Shopper’s stop target the high income group as compared to Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals belonging to the lower income segment.

Marital Status

Market segmentation can also be as per the marital status of the individuals. Travel agencies would not have similar holiday packages for bachelors and married couples.

Occupation

Office goers would have different needs as compared to school / college students.

A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals.

Q.17. What is Finance? Explain the functions of finance.

Finance is the field that deals with the allocation of assets and liabilities over time under condition of certainty and uncertainty.

Finance functions are carried on to achieve the objective of the firm. There are mainly two approaches to express the "Financial Function". The first approach relates it to the collection of funds. The second approach relates finance functions to the procurements of funds and their effective utilization. The first ignores the uses of funds it was. It was major finance function at the early stage of the development of finance. The second is comprehensive and universally accepted; we are following the Second One.

Finance FunctionExecutive Finance Function Routine Finance Function

1) Investment decision1) Supervision of cash receipts and disbursements

2) Financial Decision2) Safeguarding of cash balances

3) Dividend Decision3) Custody and safeguarding of valuable documents                     Like securities and policies

4) Working Capital Decision4) taking care of mechanical details of financing5) Record keeping of the financial performance of the     Firm.6) Reporting the top management7) supervision of fixed assets and current assets

                                                                                                                  Executive finance functions are those functions that require managerial skills in their planning, execution and control. Since these functions require greater managerial ability, they are also known as managerial functions.The executive finance functions are explained here:

1.       Investment DecisionIt refers to acceptance/ rejection of long-term investment proposal. Proposal related to acquisition, modification and replacement of assets are long-term investment proposal. Long-term refers to the time horizon of more than one year. The long term assets like plants, machines, equipments, land, buildings etc…………

2.       Financing DecisionIs concerned with the collection of the fund. The financial manager needs to decide about the appropriate amount and sources of the fund. ………………

3.       Dividend Decision

The net income after paying preference dividend belongs to the equity shareholders. However, there is no legal obligation to pay dividend to the equity shareholders. The dividend decision is the allocation of net profit after tax and preference dividend to equity shareholders. ……………….

4.       Working Capital DecisionWorking capital decision refers to the commitment of funds to current such as inventory, bills receivable, cash balance, prepaid, etc. this decision is known as current assets management also……………..

5.       Routine Finance DecisionIt is also the incidental finance function, which is performed to execute the executive finance effectively. Routine finance function does not require specialized skills of finance. They are of clerical nature. So they are called clerical finance function too. These function cover procedures and system and involve a lot of paper work and time, some of them are below:

1.       Supervision for cash receipts and disbursements2.       Safeguarding of cash balances3.       Custody and safeguarding of valuable documents like securities and

insurance policies4.       Taking care of mechanical details of financing5.       Record keeping of the financial performance of the firm6.       Reporting to the top management7.       Superviion of fixed assets and current assets.

Profit Maximization ObjectiveIn the conventional theory of the firm, the principle objective of a business fir is to maximize profits. Under the assumption of given tastes and technology, price and output of a given product under perfect competition are determined with the sole objective of maximization of profit.Maximization of profit simply refers to the maximization of rupees income of the firm. Under profit maximization objective, business firm attempt to adopt those investments projects, which yield profits, and drop all other unprofitable activities.In maximizing profit, input-output relationship is crucial, either input is minimized to achieve a given amount of output or the output is maximized with a given amount of input. Thus, this objective of the firm enhances productivity and improves the efficiency of the firm.The conventional theory of the firm defends profit maximization objective on the following grounds; 

a.     Only those firms survive in the long-run in a competitive market, which are able to make a reasonable amount of profit. Once they are able to make profit, they will always try to make it large as possible. All other objectives are subjected to this primary objective.

b.     Profit maximization assumption is a time-honored objective of a firm and evidence against this objective is not conclusive or unambiguous

c.     Profit maximization objective has been found extremely accurate in predicting certain aspect of firm's behavior and trends as such the behavior of most firms are directed with the objective of profit maximization.

d.     Though not perfect, profit is the most efficient and reliable measure of the efficiency of a firm

e.     Under the condition of competitive market, profit can be used as a performance evaluation criterion, and profit maximization leads to efficient allocation of resources

Wealth Maximization ObjectiveWealth refers to the market price of stock. Wealth maximization (shareholders wealth maximization) is almost universally accepted goal/ objective of a firm. According to this goal, the manager should take decision that maximizes the shareholders wealth. In other words, it is to make the shareholders as richer as possible. Shareholders wealth is maximized when a decision generates net present value. The net present value is the difference between present value of the benefits of a project and present value of its costs. A decision that has a positive net present value creates wealth for shareholders and a decision that has a negative net present value destroys wealth of shareholders. Therefore only those projects which have positive net present value should be accepted.Wealth maximization: A superior Decision Criterion

a.       Efficient allocation of resourcesb.       Separation between ownership and managementc.       Residual ownersd.       Emphasis on cash flowe.       Recognizes time value of money

Financial MarketFinancial markets consist of financial markets, financial institutions, financial instruments, and financial services. Financial markets are the place where transactions of financial instruments and services take place. Financial markets exist in order to bring buyer and seller of securities and financial services together. They are the mechanism that exists in order to facilitate the exchange of financial assets, thus adding to the liquidity of financial assets. Financial markets facilitate the flow of saving generated from one sector of the economy to another, where there is the demand for funds. In financial markets fund suppliers and funds borrowers are brought together with the help of financial intermediaries directly. These intermediaries channel nation's savings into most productive uses.

Division of Financial Markets1.   Primary Market: - When securities are issued for the first time, they are

traded in the primary market. All proceeds from the issue in this market go to issuing corporation. It is the market for first issue of securities by corporation, in which the corporation raise new capital. However in issuing the securities,

the issuing corporation could take the service of investment bankers and securities dealers, which could cover wide geographical area for distribution of securities by forming underwriting syndicate.

2.  Secondary Market: - Secondary market is the market for existing securities. It deals with trading of outstanding securities. Once the securities are issued in primary markets, they become a part of secondary market. A secondary market is the market for already existing securities, where trading between investors to investors take place. The original issuer has no role in secondary markets, and the proceeds from securities transaction do not go to them.

3.  Money Market: - money market deals with trading of securities with less than one year of life spam, it is the market for borrowing and lending for relatively short period of time, usually less than one year. Government, corporations and individuals requiring short-term loan are major participants of money market. Government issues Treasury bills to meet its need of short-term funds. Corporation could issue commercial papers or take loan on short-term basis from banks to satisfy their short-term needs of funds. Other money market instruments include bankers' acceptance, certificate of deposits, promissory notes, bills of exchange and any other with less than one year life.

4. Capital Market:-Capital market involves the trading of financial assets having a life spam greater than one year .all long terms securities issued by corporation and government such as common stock, corporate bonds, government bonds are the instruments of capital market. These capital market instruments are also traded in both primary as well as secondary market. Capital market instruments are not as liquid as money market instruments because of longer maturity. However the existence of secondary market adds to the liquidity of these instruments to a greater extent. When there is a change in market interest rates, value of these instruments fluctuate widely tan money market instruments because of longer maturity.

Q.18 .What are the factors affecting selection of plant location?

1. Availability of R.M (Transportation cost of R.M & Market is min; Location Decision)

Depends on the type of Raw Material:

1.) Loses weight:- Near to the place of R.M. (Cement, Iron & Steel, Sugar factories)

2.) Weight of the product increases:- Near to the market (Tyre, Soap)

3.) Perishable product:- Near to the Market (Milk)

4.) Price of Finished product very higher than R.M.:-Near to the Market

5.) R.M. are precious but of lighter weight:- Near to the Market (Diamond Industry)

Product Index= Weight/ Size of Raw Materials (>1 Near to the R.M, <1>

Weight/ Size of finished goods

2. Proximity to the market (Demand for the product, Tran cost min; Bulky, Perishable, Fragile)

3. Transport facilities (Transporting R.M, Finished products, Employees & their children)

Mode of transport depends upon the Size of R.M, Distance between Factory & Places of Markets & R.M.

(Coal: Railway wagons, Sugar cane: Road transport)

4. Motive power (Coal, Electricity, Gas; Regular & sufficient supply, Transport Cost, Permission of GEB)

5. Man power (Skilled, Semiskilled, Unskilled, Supervisory staff, Managers; Attract man power by offering attractive wages or Pay packets→ increases total cost of production, Location where manpower is easily available

6. Financial facilities (For Collection & Payment of Cheques, For raising Short & Long term capital)

7. Communication facility (Maintain Contacts & Relations with Customers, Suppliers, Creditors, Bankers, Gov officers, Shareholders, Deb holders 7; Post Office, Telephone, Telegram, Fax, Internet 5;Difficult to get Quick information of Prices & Supply position)

8. Climatic factors (Affects Production Quality, Cost & Efficiency of workers; Artificial climate is costly;

Pleasant for living & Favourable to the Industry)

9. Historical & Personal factors (Native place or Birth place of Promoter or his Father or Desire of Wife)

10. State aid (Developing Eco backward areas→ Gov provides Subsidies, Tax Concession, Institutional loans, Cheap land, Transport facility, Guaranteed market6; Adv of such Concessions→ Location in eba)

11. Other factors (Where other units of the industry have been locate; Centralisation of many units→ Auxiliary services develop there→ Training centres, Maintenance units, Petrol Pump

12. Decentralisation (Avoiding Social Evils, Risk or War; Gov encouraging it)

Q.19 . Explain Manpower Planning and Development Process

Analysing the current manpower inventory- Before a manager makes forecast of future manpower, the current manpower status has to be analysed. For this the following things have to be noted-

Type of organization Number of departments Number and quantity of such departments

Making future manpower forecasts- Once the factors affecting the

future manpower forecasts are known, planning can be done for the future manpower requirements in several work units.

The Manpower forecasting techniques commonly employed by the organizations are as follows:

Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi technique.

Trend Analysis: Manpower needs can be projected through extrapolation (projecting past trends), indexation (using base year as basis), and statistical analysis (central tendency measure).

Work Load Analysis: It is dependent upon the nature of work load in a department, in a branch or in a division.

Work Force Analysis: Whenever production and time period has to be analysed, due allowances have to be made for getting net manpower requirements.

Other methods: Several Mathematical models, with the aid of computers are used to forecast manpower needs, like budget and planning analysis, regression, new venture analysis.

Developing employment programmes- Once the current inventory is compared with future forecasts, the employment programmes can be framed and developed accordingly, which will include recruitment, selection procedures and placement plans.

Design training programmes- These will be based upon extent of diversification, expansion plans, development programmes,etc. Training programmes depend upon the extent of improvement in technology and advancement to take place. It is also done to improve upon the skills, capabilities, knowledge of the workers.

Importance of Manpower Planning:- Key to managerial functions- The four managerial functions, i.e., planning, organizing, directing and controlling are based upon the manpower. Human resources help in the implementation of all these managerial activities. Therefore, staffing becomes a key to all managerial functions.

Efficient utilization- Efficient management of personnels becomes an important function in the industrialization world of today. Seting of large scale enterprises require management of large scale manpower. It can be effectively done through staffing function.

Motivation- Staffing function not only includes putting right men on right job, but it also comprises of motivational programmes, i.e., incentive plans to be framed for further participation and employment of employees in a concern. Therefore, all types of incentive plans becomes an integral part of staffing function.

Better human relations- A concern can stabilize itself if human relations develop and are strong. Human relations become strong trough effective control, clear communication, effective supervision and leadership in a concern. Staffing function also looks after training and development of the work force which leads to co-operation and better human relations.

Higher productivity- Productivity level increases when resources are utilized in best possible manner. higher productivity is a result of minimum wastage of time, money, efforts and energies. This is possible through the staffing and it's related activities ( Performance appraisal, training and development, remuneration)

Need of Manpower Planning:- Manpower Planning is a two-phased process because manpower planning not only analyses the current human resources but also makes manpower forecasts and thereby draw employment programmes. Manpower Planning is advantageous to firm in following manner:

Shortages and surpluses can be identified so that quick action can be taken wherever required.

All the recruitment and selection programmes are based on manpower planning.

It also helps to reduce the labour cost as excess staff can be identified and thereby overstaffing can be avoided.

It also helps to identify the available talents in a concern and accordingly training programmes can be chalked out to develop those talents.

It helps in growth and diversification of business. Through manpower planning, human resources can be readily available and they can be utilized in best manner.

It helps the organization to realize the importance of manpower management which ultimately helps in the stability of a concern.

Q.20 Explain The Importance Of Corporate Social Responsibility.

In this article, we tackle the importance of Corporate Social Responsibility (CSR), Corporate Social Investment (CSI) and the ethics surrounding both,

in a global as well as South African context. We will also look at how sustainable these efforts are.

Corporate Social Responsibility: People, Planet and Profit

It is important to understand the legislative, policy and institutional frameworks that govern contemporary CSR and CSI practices and programmers, and how concepts like the Triple Bottom Line – understood in the context of People, Planet, Profit (Social, Environmental, Financial measures) – can benefit the organization and the environment in which the company conducts its business.

Previously, the terms CSR and CSI were used interchangeably. Subsequently, with the change of the corporate and Broad–Based Black Economic Empowerment landscapes, these terms have been defined separately. Corporate Social Investment is a sub-component of Corporate Social Responsibility.

Let’s begin by defining CSR. CSR refers to an organization’s total responsibility towards the business environment in which it operates. CSR encompasses a broader solution to the Triple Bottom Line mentioned above.

The term ‘Corporate Social Responsibility’ came about in the late 1960's and early 1970's after many multinational corporations used it to describe organizational activities that impacted their responsibility towards the greater environment. CSR originated in philanthropy. Currently it supports projects external to the normal business activities of a company that are not directed towards making a profit. Typically, such projects have a strong developmental approach and utilize company resources to benefit non-profit organizations and communities. CSR spend must not be confused with marketing spend, which is utilized to promote the profile of the company brand.

CSR Standards and Practices: - ISO 26000 is the recognized international standard body for CSR. The ISO 26000 standards benefit CSR because they provide clarity on an organization’s concepts, terms and definitions related to social responsibility. ISO 26000 intends to assist organizations in contributing to sustainable development. The standards provide insight into trends and characteristics of social responsibility. ISO 26000 therefore aims to integrate, implement and promote socially responsible behavior throughout the organization and in its engagement with its stakeholders.

It is important for businesses not only to provide products and services to satisfy the customer, but also to ensure that the business is not harmful to the environment in which it operates. In order for an organization to be successful, the business must be built on ethical practices. Companies are increasingly pressurized to behave ethically. This pressure comes from customers, consumers, governments, associations and the public at large. ISO 26000 was created with this in mind, to provide guidance on the international standards on CSR. It is intended for organizations in both public and private sectors, in developed and developing countries.

These standards motivate businesses to go beyond legal compliance, recognizing that compliance with the law is a fundamental duty of any organization and an essential part of their social responsibility. Being trustworthy and transparent, however, increases consumers’ preference for a company and its product or service.

The King Report on Corporate Governance (South Africa 2009 – King III) promotes good social and environmental practices as part of good corporate governance. It is closely aligned with the standards for international corporate governance. The JSE (Johannesburg Stock Exchange) Securities Exchange prescribes compliance with King III for listed companies.

CSR focuses on achieving economic success through responsible corporate governance in a company’s core area of business. CSR pushes organizations to do better because their actions affect customers, suppliers, employees, shareholders and the community at large. Partnerships with the communities, particularly those that have been disadvantaged, can help companies build productive relationships and stimulate economic growth in disadvantaged areas.

Around the world, companies are motivated to make their business decisions more sustainable by applying the principles of CSR within their organizations. Examples include the protection of human rights, drawing up and implementing employment and environmental standards, and minimizing corruption.

Choosing the Right CSI Strategy:- Corporate Social Investment is a strategically focused investment in bringing about meaningful transformation that is in line with core business objectives.

There are four CSI strategies, organizations usually fit in one of the following. These include:

Obstructive strategy – these are companies that meet economic demands;

Defensive strategy – these are companies that meet economic and legal responsibilities;

Accommodative strategy – these are companies that meet economic, legal and ethical responsibilities; and

Proactive strategy – these are companies that meet economic, legal, ethical and discretionary responsibilities.

It must be the goal of every organisation to use a proactive strategy where they do what is right, meet legal obligations and contribute to the community, while still making a profit. A well-known example of this strategy is the Tylenol case in 1982. Johnson & Johnson spent over $100 million dollars recalling Tylenol, its best-selling product, after someone tampered with bottles of the painkiller. The result was a rise in consumer confidence despite the contamination scare.

Companies that operate with business ethics have a competitive advantage because consumers are more willing to trust ethical brands and remain loyal to those products, even during difficult periods. However, not all businesses operate in the same way.

Ethical companies that relocate their manufacturing facilities to developing countries must not tolerate certain practices that are acceptable in some of those countries, such as child labour, poor health and safety, poverty-level wages and coerced employment.

It is important for companies to understand the importance of operating ethically and to measure their success by more than just profitability. Corporate Social Responsibility is more than just philanthropic activity. There must be measurable and sustainable action with each programme that is implemented.

In conclusion, by becoming a good corporate citizen, an organisation can improve its competitive edge in respect of attracting and retaining investors, clients and employees. If carefully aligned to the core business strategy (as well as to company and industry charters from Broad–Based Black Economic Empowerment, Social Responsibility Index and Global Reporting

Index), organisational CSR and CSI strategies can maximise opportunities for South African and international corporates. This will enable them to go beyond compliance and a ‘tick-box’ exercise, to good corporate citizenship and sustainability.