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MODULE 1: INTRODUCTION:
MODULE 2: BUSINESS ENVIRONMENT
BUSINESS
MEANING OF BUSINESS:
Business refers to the economic activities concerned with the production and sale
of goods and services for the purpose of earning profit. Trading, manufacturing, mining,
transportation, banking, etc. are the example of business activities related to industry
and commerce.
DEFINITION OF BUSINESS:
According to Prof. R N Owens, “Business is an enterprise engaged in the
production and distribution of goods for sale in a market or rendering of services for a
price.”
From the above definition it is clear that business refers to all those economic
activities which are concerned with the production or purchases of goods and services
for the purpose of sale at a profit.
CHARACTERISTICS OF BUSINESS:
Economic activity
Size of operation is large
Global market leader
Technology oriented
Government control
Quality of goods and services
Possibility of loss
Profit motive
BUSINESS OBJECTIVES:
It is, generally, believed that business is carried on only for profit. It is true to
some extent. But earning profit cannot be the sole objectives of a truly successful
business.
In the words of Urwick, “earning profit cannot be the objectives of a business
any more than eating is the objectives living.”
According to this statement, as man is not living for eating, but is eating for
living, every business must earn profit, but making profit is not the only objectives of a
business.
To conclude, earning of profit is only one of the objectives of business. In fact, a
service to the community is the real objectives of business. It cannot ignore the society
in which it operates.
The objectives of modern business may be broadly classified as:
1. Economic objectives
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2. Social objectives
1. Economic objectives: Business is basically an economic activity. So the main
economic objectives of a modern business are:
a. Earning of adequate profit
b. Creation of customer
c. Optimum utilization of resources
d. Innovation or research and development
b. Creation of customer:
Business activity of an enterprise can be sustained only if there are
enough customers to buy the product and services offered by the
enterprise. Without a body of customers, a business enterprise cannot
survive. Thus, creation of customers is one of the economic objectives of
a business. A business can create customers by supplying the goods and
services which the customers want. Through market research, a business
can understand what the customers want.
c. Providing employment:
One of the important social objectives of a business is to provide employment to
the people in the society.
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e. Development of human resources:
One of the important social objectives of a business is the development of
human resources. Human resources can be developed by a business by giving
opportunities to its employees for developing new skill and abilities individual
development.
g. Social welfare:
One of the social objectives of a business unit is to participate actively in the
social welfare activities of the area in which it functions. A business unit can contribute
to the social welfare by running school land colleges, hospitals, maintaining public
gardens, etc.
h. Prevention of pollution:
With growth of industries, pollution has become a serious matter. Pollution
affects the environment and the health of human beings and even animals. So, one of
the social objectives and obligation of every business is to make efforts to prevent the
pollution of air and water.
2. Market economy:
Market economies are based on consumers and their buying decisions
rather than under government control. Market trends and product popularity
generate what businesses produce. The producers choose how to make products
based on the most economically sound decision; that might means machine labor
to save costs or human labor for specific skills. The buyers decide who gets
which products by what they are willing to pay for what they want.
3. Command economy:
In a command economy, the government controls all economic activity.
One example of a command economy is communism. Command economies are
less flexible than market economies and react slower to changes in consumer
purchasing patterns and flection’s in supply and demand.
4. Mixed economy:
A mixed economy combines qualities of market and command systems
into one. In many countries where neither the government nor the business
entities can maintain the economy alone, both sectors are integral to economic
success.
BUSINESS ENVIRONMENT
INTRODUCTION:
ENVIRONMENT:
In the words of Dr. M.S. Swami Nathan (A winner of economics times standard
award) “A good environment is good business.”
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In simple words, environment refers to the surrounding in which man lives and
words. In other words it consists of number of factors, events, conditions and
influences arising from different sources.
BUSINESS ENVIRONMENT:
Business environment is the sum of all external and internal factors that
influence a business.
Keith Devis - “Business Environment is the aggregate of all conditions, events
and influences that surround and affect it.” All the activities of the business are
motivated by profit.
The definition of business environment means all of the internal and external
factors that affect how the company functions including employees, customers, and
management, supply and demand and business regulations.
Types of environment can be broadly divided into two types they are:-
a. Internal environment
b. External environment
a. Internal environment
The internal environment refers to all the factors within the organization which
the firms can exercise control over it. The can alter and modify such factors as its
personnel, physical, facilities, organizational resources are under its control.
Factors influence the internal environment
Objectives of the firm
Business policy
Management structure and nature
Professional skills
Human resources
Image and brand equity of company
Internal power relationship
Technological capabilities
Marketing resources
Vision, mission
Management control system
Strategy formulation and implementation
b. External environment
The external environment includes all the factors outside the organization. These
factors cannot be control by the firm. It is classified into two factors i.e.
Micro environment
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Macro environment
a. Micro environment:
Micro environment is also called task environment or operating environment. It is
not common for every business, its vary from one organization to another. These
factors which effect business are as follows:
a) Customers
b) Suppliers
c) Marketing intermediaries
d) Competitors
e) Public
a) Customers:
Customer is the king of a market.
A business firm manufactures products or provides services to meet the
needs of customers.
Satisfying the needs of customers is ultimate goal of any business.
Business can exist only when consumers buy its product or its services
b) Suppliers:
Suppliers are those who supply inputs like raw material, spares and
components to the firm.
Business should have sufficient stocks of raw materials for the day to day
functioning.
It is very risky to depend on a single supplier because a strike, lockout, or
other problems with the suppliers may seriously affect the company.
c) Marketing intermediaries:
Marketing intermediaries include middlemen such as agents who help the
company to find the customers.
He acts as bridge between sellers and ultimate customers.
d) Competitors:
Competitors directly or indirectly help in the growth of the companies.
Helps in undertaking research and development activities.
Competition is one of the important factors which influence the operations
and decisions of a firm. Competition may be three types.
Competition among the products manufactured by the same firm.
Competition among the firms manufacturing similar products.
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Competition that exists among firms manufacturing unrelated products.
e) Public:
The word public refers to people in general.
A firm operates in an environment surrounded by several types of public
like media public, financial public and local public.
Media public includes news papers, magazines, television and radio.
Financial public includes financial institution like commercial banks and
development banks
Local public are people living in the surrounding area of the firm.
b. Macro environment:
Macro environment of a company refers to all those economic and non economic
factors which exercise their influence on the business activity. These factors are
common to all the companies they are:
a) Economic environment
b) Socio-cultural environment
c) Political and Legal environment
d) Technological environment
e) Natural environment
f) Demographic environment
a) Economic environment
The economic environment includes those factors that affect consumer
purchasing power and spending patterns. The business sector has
economic relation with government, capital market, household sectors and
global sector. These sectors together influence the trends and structure of
the economy.
It classified in to six areas:
i. Economic condition
ii. Economic system
iii. Economic policies
iv. Economic growth
v. Currency exchange
i. Economic condition: The general economic conditions prevailing
National income
Per capital income
Economic resources
Distribution of income and assets
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Economic developments etc. are important determinants of business
strategies.
ii. The economic system:
Operating in the country also affects the business enterprise to a very
great extent. The economic system of a country may be capitalist, socialist
and communist or mixed.
iii. Economic policies:
The government decides the economic environment of business through
Budget
Industrial policy and regulations
Economic planning
Import and export
Business law
The size of the national income
Demand and supply of various goods etc.
iv. Economic growth:
The stage of economic growth of the economic has direct impact on the
business strategies.
Increased economic growth rate
Increase in consumption expenditure
Industrial performance
Opportunities and threats
v. Currency exchange:
Currency exchange rates have direct impact on the business environment.
b) Socio-cultural environment:
The socio-cultural factor should be analyzed while formulating
business strategies.
The buying and consumption habits of people, language, beliefs
and values, customs and traditions, tastes and preferences
occupation, education are all factors that affect business.
For a business to be successful, the business strategy should be
appropriate in the socio-cultural environment.
The marketing mix will have to be designed in a way that suits the
environmental characteristics of the market.
The different in language sometimes poses serious problems even
necessitating a change in the brand name preeti was a good brand
name in India, but it did not suit for the overseas market and
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hence it was appropriate to adopt “prestige” for the overseas
market.
d) Technological environment:
By the technology we understand all the skill, knowledge and producers for
making, using and doing useful things.
According to JK Gal braith “technology is a systematic application of scientific
or other organized knowledge to practical tasks.”
Technological factors also sometimes pose problems. A firm which is unable to
cope with the technological changes may hardly survive.
Further the differing technology environment of different markets or countries
may call for product modifications.
Technological development may increase the demand for some existing
products.
For ex: - the voltage stabilizers help, increase the rate of electrical appliance in
markets characterized by frequent voltage fluctuations in power supply.
e) Natural environment:
Natural environment which include factors like climate, land, water resources,
fisheries, mineral resources, rainfall, forests etc.
The important constituents of natural environment are:
Natural resources
Weather and climate conditions
Topographical factors
Vocational aspects in the global context
Port facilities
For example, in hilly areas jeeps may be in greater demand than cars.
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f) Demographical environment:
Demographical factors like size of the population, population growth rate, age
composition, life expectancy, family size, occupational status, employment
pattern, educational levels, religion etc. are the factors relevant to business.
A fast increase of population indicates growing demand for many products high
population growth rate also indicate enormous increase in labor supply.
The labor shortage and rising wages encourage labor saving technologies
environment of the developing countries are encouraging labor intensive
methods of production the population growth rate is an important environment
factors that affects the business
The occupational and spatial mobility’s of population have implication for
business.
If labor is easily mobile between different occupations and regions, labor supply
will be relatively smooth and this also affects the wage rate.
If the labor is highly heterogeneous in respect of language, caste and religion,
etc personnel management is likely to become a more complex problem.
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MODULE 3: BUSINESS ETHICS
ETHICS
Ethics refer to system of moral principal – a senses of right and wrong and
goodness and badness of actions and their motives and consequences.
Business ethics refers to the application of ethics to business.
To be more specific, business ethics is the study of good and evil, right and
wrong and just and unjust action of businessmen.
BUSINESS ETHICS
Business ethics does not differ from generally accepted norms of good and bad.
If dishonesty considered to be unethical and immoral in society, then any
businessman who is dishonest with employees, customers, shareholders or
competitors is acting unethical and immorally. If protecting others from any harm
is considered to be ethical.
OBJECTIVES OF BUSINESS ETHICS:
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9. Commitment to excellence.
10. Leadership.
11. Reputation and morale.
12. Accountability.
1. HONESTY.
Ethical executives are honest and truthful in all their dealings and they do not
deliberately mislead others by misrepresentations, overstatements, partial truths, or any
other means.
2. INTEGRITY.
Ethical executives demonstrate personal integrity and the courage of their
convictions by doing what they think is right even when there is great pressure to do
otherwise; they are principled, honorable and upright; they will fight for their beliefs.
They will not sacrifice principle for expediency, be hypocritical, or unscrupulous.
4. LOYALTY.
Ethical executives are worthy of trust, demonstrate fidelity and loyalty to persons
and institutions by friendship in adversity, support and devotion to duty; they do not
use or disclose information learned in confidence for personal advantage. They
safeguard the ability to make independent professional judgments by scrupulously
avoiding undue influences and conflicts of interest. They are loyal to their companies
and colleagues and if they decide to accept other employment, they provide reasonable
notice, respect the proprietary information of their former employer, and refuse to
engage in any activities that take undue advantage of their previous positions.
5. FAIRNESS.
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Ethical executives and fair and just in all dealings; they do not exercise power
arbitrarily, and do not use overreaching nor indecent means to gain or maintain any
advantage nor take undue advantage of another’s mistakes or difficulties. Fair persons
manifest a commitment to justice, the equal treatment of individuals, tolerance for and
acceptance of diversity, the they are open-minded; they are willing to admit they are
wrong and, where appropriate, change their positions and beliefs.
8. LAW ABIDING.
Ethical executives abide by laws, rules and regulations relating to their business
activities.
9. COMMITMENT TO EXCELLENCE.
Ethical executives pursue excellence in performing their duties, are well informed
and prepared, and constantly endeavor to increase their proficiency in all areas of
responsibility.
10. LEADERSHIP.
Ethical executives are conscious of the responsibilities and opportunities of their
position of leadership and seek to be positive ethical role models by their own conduct
and by helping to create an environment in which principled reasoning and ethical
decision making are highly prized.
12. ACCOUNTABILITY.
Ethical executives acknowledge and accept personal accountability for the
ethical quality of their decisions and omissions to themselves, their colleagues, their
companies, and their communities.
Comparison chart
Ethics Morals
What are The rules of conduct recognized in Principles or habits with respect
they? respect to a particular class of human to right or wrong conduct. While
actions or a particular group or morals also prescribe dos and
culture. don'ts, morality is ultimately a
personal compass of right and
wrong.
Why we do it? Because society says it is the right Because we believe in something
thing to do. being right or wrong.
Flexibility Ethics are dependent on others for Usually consistent, although can
definition. They tend to be consistent change if an individual’s beliefs
within a certain context, but can vary change.
between contexts.
The "Gray" A person strictly following Ethical A Moral Person although perhaps
Principles may not have any Morals at bound by a higher covenant, may
all. Likewise, one could violate Ethical choose to follow a code of ethics
Principles within a given system of as it would apply to a system.
rules in order to maintain Moral "Make it fit"
integrity.
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Ethics Morals
Doctrine of trusteeship:
Doctrine is derived from Latin word ”doctrina”which means
a codification In law,(codification is the process of collecting and restating the law of
a jurisdiction in certain areas) Of beliefs or a body’s, taught principles or positions, as
the essence of teachings in a given branch of knowledge or belief system.
1. Reduce In equalities:
This concept tries to reduce inequalities. It tries to reduce the gap between the
rich and poor. It tries to reduce exploitation.
3. Social Pressure:
People must put social pressure on businessmen to follow the principle of
trusteeship. They should boycott (not purchase) the products of those who do not
practice trusteeship.
4. Legal Pressure:
If voluntary measures and social pressure do not work, legal pressure must be put on
the businessmen to follow the principle of trusteeship.
5. Socialism:
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This concept gives more importance to socialism. That is, the society is given
much more importance than an individual. So, the wealth of the society should be
distributed equitably to all its members.
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ETHICAL PRACTICES IN BUSINESS:
Here are a few ethical business practices that should be followed to build an honest
reputation and ensure smooth running of any organization.
1. Investors:
Ensuring safety of their money and timely payment of interest.
2. Employees:
Provision of fair opportunities in promotions and training, good working
environment and timely payment of salaries.
3. Customer:
Complete information of the service and product should be made available.
Personal information of the customers should not be used for personal gain.
4. Competition:
Unscrupulous tactics, competitor bashing and wrong methods should be avoided
while handling competitors.
5. Government:
Rules and regulations regarding taxes, duties, restrictive and monopolistic trade
practices and unlawful activities like corruption and bribing should be adhered to.
6. Environment:
Polluting industries should ensure compliance with the government norms
regarding air, water and noise pollution.
Following are some of the activities that come under the ambit of unethical practice.
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10. Encouraging smuggling activities.
11. Avoiding penalty or compensation for unlawful act.
12. Lack of transparency and resistance to investigation.
13. Harming the environment by exceeding the government prescribed norms for
pollution.
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We are all in business to be successful, but we are all people too. Another way to
send a strong message about doing the right thing is to step up to the thorny
“quality of life” issues, including balancing one’s work and personal life, work at
home, and providing the right health, social, and spiritual needs.
Introduction:
Business depends on the society for the needed inputs like money, men
and skills.
Business also depends on the society for market where products may be
sold their buyers.
Thus, business depends on society for existence, sustenance and
encouragement.
Dependence of business on society is so complete that as long as the
latter wants the former, business has reason to exist.
Once society ceases to have any use for business, it has no place and
reason to live.
Being so much dependent, business has definite responsibility towards
society. Popularly called the social responsibility of business, or corporate
social responsibility(CSR)
Social responsibility of business refers to what the business does, over
and above statutory requirement, for the benefit of the society.
Corporate social responsibility (CSR) refers to the moral responsibility of
business to the society by the virtue of being a part of the society.
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Government Programmes:
Governments are the most significant forces pressuring firms for social actions.
Most government pressures concern compliance with existing regulations. But
governments are also major sources of potential rules, a fact which businesses need to
take note of. Governments ask businesses to volunteer to help them solve their
problems.
Environmental concerns:
Environmental programmes of firms mainly result from standards established by
government agencies. The government of India, for example, enacted the environment
Protection act 1986. The main objective of the act is to protect and improve the
environment and the prevention of hazards to human beings, other living creatures,
plant and property.
Shareholder/Investors Pressures:
Large shareholders such as pension funds have long-range interests in the
financial success of their investments. Some of them, obviously, exert pressure on firms
to respond appropriately to community social interest. For example, shareholders of
Pepsi Co. launched a campaign to force the company to pull out of Myanmar because of
the human right violation of the military regime in that country. Pepsi Co. did oblige the
shareholders.
Competitive advantage:
Comprise four interdependent factors: -
Factors conditions, demand conditions, related and support industries, and context for
strategy and rivalry.
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Social responsibility of business to its owners or shareholders includes the following:
It should give a fair and regular return on their investment in the form of
dividends.
It should use the resources provided by them effectively and for the purpose as
mentioned in the memorandum.
It should make every effort for appreciation of their capital so that the enterprise
can attract new capital from the market very easily.
It should give full regular and accurate information on the progress and financial
position of the company.
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The business in order to strengthen the hand of government has the following
responsibilities towards the government.
The management of the business should strictly follow the rules and regulations
and the laws passed by the government.
It should pay taxes and dues to the government honestly and regularly.
It should not indulge incorrupt practices such as corrupting the public servants
through bribery and donations.
It should maintain fair trade practices and policies.
It should help in tacking problems like unemployment, poverty, price raising,
import substitutions etc.
INTRODUCTION
The Monopolistic and Restrictive Trade Practices MRTP Act, 1969,was enacted
To ensure that the operation of the economic system does not result in the
concentration of economic power in hands of few,
To provide for the control of monopolies, and
To prohibit monopolistic and restrictive trade practices.
The MRTP Act extends to the whole of India except Jammu and Kashmir. Unless the
Central Government otherwise directs, this act shall not apply to:
Any undertaking owned or controlled by the Government,
Any undertaking owned or controlled by a corporation (not being a company
established by or under any Central, Provincial or State Act,
Any trade union or other association of workmen or employees formed for their
own reasonable protection as such workmen or employees,
Any undertaking engaged in an industry, the management of which has been
taken over by any person or body of persons under powers by the Central
Government,
Any undertaking owned by a co-operative society formed and registered under
any Central, Provincial or state Act,
Any financial institution.
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INQUIRY INTO RESTRICTIVE PRACTICES
RELIEF AVAILABLE
The commission shall if after making an inquiry it is of the opinion that the practice is
prejudicial to the public interest, or to the interest of any consumer it may direct that–
1. any agreement between buyers relating to goods which are bought by the
buyers for consumption and not for ultimate resale;
2. A trade practice which is expressly authorized by any law in force.
An unfair trade practice means a trade practice, which, for the purpose of promoting
any sale, use or supply of any goods or services, adopts unfair method, or unfair or
deceptive practice.
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Giving to public any warranty, guarantee of performance that is not based on
an adequate test or making to public a representation which purports to be
such a guarantee or warranty.
False and misleading claims with respect to the price of goods or services.
Unfair practices may be categorized as under:
1. FALSE REPRESENTATION
7. RELIEF AVAILABLE
After making an inquiry into the unfair trade practice if the Commission is of the
opinion that the practice is prejudicial to the public interest, or to the interest of any
consumer it may direct that–
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However no order shall be made in respect a trade practice which is expressly
authorized by any law in force.
RELIEF AVAILABLE
1. Where the inquiry by the Commission reveals that the trade practice inquired
into operates or is likely to operate against public interest, the Central
Government may pass such orders as it thinks fit to remedy or present any
mischief resulting from such trade practice.
2. On an inquiry report of the Commission, the Central Government may-
i. Prohibit the owner(s) of the concerned undertaking(s) from continuing to
indulge in a monopolistic trade practice; or
ii. Prohibit the owner of any class of undertakings or undertakings
generally, from continuing to indulge in any monopolistic trade practice
in relation to the goods or services.
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3. The Central Government may also make an order:
i. Regulating the production, storage, supply, distribution, or control of any
goods or services by an undertaking and fixing the terms of their sale
(including prices) or supply;
ii. Prohibit any act or practice or commercial policy which prevents or
lessens competition in the production, storage, supply or distribution of
any goods or services;
iii. Fixing standards for the goods used or produced by an undertaking;
iv. Declaring unlawful the making or carrying out of the specified
agreement;
v. Requiring any party to the specified agreement to determine the
agreement within the specified time, either wholly or to specified extent;
vi. Regulating the profits which may be derived from the production,
storage, supply, distribution or control of any goods or services; or
vii. Regulating the quality of any goods or services so that their standard
does not deteriorate.
1. Power of Civil Court under the Code of Civil Procedure, with respect to:
i. Summoning and enforcing the attendance of any witness and examining
him on oath;
ii. Discovery and production of any document or other material object
producible as evidence;
iii. Reception of evidence on affidavits;
iv. Requisition of any public record from any court or office.
v. Issuing any commission for examination of witness; and
vi. Appearance of parties and consequence of non-appearance.
2. Proceedings before the commission are deemed as judicial proceedings within
the meaning of sections 193 and 228 of the Indian Penal Code.
3. To require any person to produce before it and to examine and keep any books
of accounts or other documents relating to the trade practice, in its custody.
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4. To require any person to furnish such information as respects the trade practice
as may be required or such other information as may be in his possession in
relation to the trade carried on by any other person.
5. To authorize any of its officers to enter and search any undertaking or seize any
books or papers, relating to an undertaking, in relation to which the inquiry is
being made, if the commission suspects that such books or papers are being or
may be destroyed, mutilated, altered, falsified or secreted.
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MODULE 4: BUSINESS POLICY:
INTRODUCTION:
Policies are standing plans which provide a board frame work within which
decisions are to be taken. They are guide to action.
Business policy basically deals with decisions regarding the future of an ongoing
enterprise. Such policy decisions are taken at the top level after carefully evaluating the
organizational strengths and weakness in terms of product, price, quality, leadership
position, resources etc., in relation to its environment.
In other words, business policy is the study of the roles and responsibilities of
top- level management, the significant issues affecting organizational success and the
decisions affecting organizational in the long run.
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To understand the complex inter linkages operating within an organization
through the use of systems approach to decision making and relating them to
changes taking place in the external environment.
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1. Top level management policies
These policies are derived from the top management planning.
The top management comprises of the Board of Directors,
Chairmen/President, Managing Directors, etc.
The top level management frame policies by themselves and responsible
for these.
The Top level management policies are concerned with the decision
regarding investment, determination of site and location, machine
selection, long range product selection, sales forecasting, sizing of
enterprises, acquisition and merger of two or more units, settlement of
problems of executives regarding their promotion, transfer, retirement,
etc. and accomplishment of the organization objectives/goals.
They set the objectives, define the goals, establish the policies these
policies are put into effect and judge the results.
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workers, issuing of orders, maintaining of quality, improving working
conditions, and moral maintaining discipline etc.
1. Production policies:
These policies are framed and concerned with:
i. The product to be produced(product line, type of product)
ii. The type of technology, processes, equipments and tools, to be used
iii. The selection of factory/office/plant site, location and layout
iv. The decision regarding the scale of production
v. Making of production budget, manufacturing costs and deciding about
total cost and cost of installation and its maintenance
vi. The selection of junior executives
vii. The organization and co-ordination of their activities
viii. Inventory control
ix. Collective bargaining and labor relations
x. Selection of system of quality, cost and production control
Production policies are the basic determination of the total policy making
procedure.
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Factors governing integration of production:
i. Coordination of activities
ii. Saving of costs
iii. Safeguard against uncertainty or restricted supply
iv. Limited flexibility
v. Optimum scale and economy of production
vi. Financial strength and capability
vii. Limitations of management capabilities
i. Coordination of activities
Manufacture of raw material and components for the product to be sold ensures
supplies in accordance with their required quality, quantity and timely availability. It
also provides for flexibility and adjustment to changes in needs.
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vi. Financial strength and capability
A company with strong financial positions may be able to expand through vertical
integration of activities and these by make substantial improvements in the
manufacturing of components or raw materials.
a. Technology to be used
The technology to be used is uniquely given in case of certain industries.
Example: manufacturing of paper, cotton and woolen textiles etc. but it may not be so
with respect to many other products on the choice of technology, depends the decisions
regarding equipments, personnel, methods of operational and organization so, the
organization must adopt a suitable technology as required by the production process.
b. Division of labor
Division of labor has been the characteristics feature of large scale
manufacturing units job enlargement is recognized as a superior means of securing
higher productivity and efficiency. Thus, in deciding how much emphasis to give to
division of labor, management has to take into account the policies bearing on
standardization of products, mechanization, and type of labor to be employed and style
of motivation.
c. Mechanization of operations
Technological advances have enlarged the scope of mechanization and
automation in many industries. Automatic electrical appliances are fast replacing
electrical equipment’s. The recent policy of government of India to allow import of
foreign technology in certain industries to improve the competitive ability of Indian
enterprise is a factor which is likely to influence management decision.
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d. Size and location of production units
For large enterprises, the decision with respect to size of plant needs to be
examined with two alternatives in view,
Large size with centralized location
Dispersal of operating units with small size of plant capacity.
Centralized location of a large size plant has both positive and negative implications
large size offers advantages of large scale production, economics of scale centralized
location also facilitates top management control from the corporate headquarters. But
there are limiting factors which do not permit large size and centralized location one
limiting factors is the cost of transportation of raw material of finished products which
may reduce the economies of large-scale production the high cost location in urban and
metropolitan centers is another constraint industrial concentration is regulated by
government.
Smaller plants have distinct advantages if located in suburban area employees do
not have to face the urban problems of community to and from the workplace. There is
greater scope for face to face interaction among the executives and operatives and the
managers have firsthand knowledge of operations.
Meaning:
Marketing policies relate to policies in market analysis, business laws, display,
salesmanship, advertising etc. they are concerned with the technical process of
marketing carrying both product mix and market mix.
The product mix includes decisions regarding the type, quality and quantity of product,
product design, contents, shape, methods and techniques of production etc.
Marketing mix covers the issues of channels of distribution, advertising policies,
packaging and branding decisions, consumer psychology and behavior, pricing of
product etc.
Since, the modem concept of market treat “consumer as king”, every product is brought
to satisfy his needs. Hence this concept is very vast.
Marketing is a social and managerial process by which individual and groups obtain
what they need through creating, offering and exchanging products of value in the
market.
Marketing management is the process of planning and executing the conception,
pricing, promotion and distribution of goods, services and ideas to create exchange with
target groups that satisfy customer and organizational objectives.
Customers are values maximizes, a customer satisfaction is a function of the
products perceived performance and the budget expectation and strong companies
management.
Four core business processes are:
a. The new product realization process
b. The inventory management process
c. The order to remittance process and
d. The customer service process
Customer influence the company’s profitability significantly therefore, companies
cannot afford to lose a customer, it is estimated that the cost of attracting a new
customer is five times the cost of keeping a current customer satisfied therefore, the
marketers wants to retain the customer by adding financial and social benefits to the
product, quality of the product plays a vital role in retaining the customer.
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purpose of strategic planning is to shape the company’s business and its products so
that they yield target profit and growth.
Then the company estimates the demand for the product, estimates the costs
behavior at different levels of output. Then it examines the competitor’s price, costs and
offers and selects a pricing method. The pricing method include, costs plus or markup
pricing, target return pricing, perceived value pricing, value pricing, going pricing and
sealed pricing. Then the company selects the final price, taking into account the
psychological factors, the influence of other three ps and the influence of non-price
factors.
Companies normally set more than one price taking into consideration the
geographical demand, costs, market segment requirements, purchase timing, order
levels etc. the price adoption strategies include:
a. Geographical pricing
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b. Price discounts and allowances
c. Promotional pricing
d. Discriminating pricing
e. Product mix pricing
7. Market channels/place:
Most of the firms sell the product through middlemen, agents, dealers etc. rather
than selling the product directly to the end users. The host market intermediaries
perform a variety of functions and help the manufacturers. The company’s decision of
selecting channels affected other decision.
Channels decision is based on analyzing customers need, establishing channel
objectives and identifying and evaluating the benefits of major channels should be
developing long term relationship with the market intermediaries.
9. Electronic markets:
Electronic marketing are sponsored information utilities that describe the product
and services offered by marketers and allow customer to get information, identify their
needs and place order. Then the product is delivered to the customer electronic
markets permit fast price changes based on yield management and change the role of
place in market mix.
3. Financial policies
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