Q4. Write a note on: (a) Capital Rationing (b) CAPM Q4.

Critically evaluate the M & M approach of capital structure. Q5. Discuss significance of Mergers and Takeovers highlighting its regulatory framework in India.
10.2 Meaning of Capital Rationing:
Because of the limited financial resources, firms may have to make a choice from among profitable investment opportunities. Capital rationing refers to a situation in which the firm is under a constraint of funds, limiting its capacity to take up and execute all the profitable projects. Such a situation may be due to external factors or due to the need to impose internal constraints, keeping in view of the need to exercise better financial control. Why Capital Rationing Reasons for Capital Rationing: Capital Rationing may be due to a. External factors b. b. Internal constraints imposed by management External Capital Rationing: External Capital Rationing is due to the imperfections of capital markets Imperfection may be caused by:a. Deficiencies in market information b. Rigidities that hamper the force flow of Capital between firms. When capital markets are not favourable to the company the firm cannot tap the capital market for executing new projects even though the projects have positive net present values. The following reasons attribute to the external capital rationing:1. Inability of the firm to procure required funds from Capital market because the firm does not command the required investors confidence. 2. National and international economic factors may make the market highly volatile and instable. 3. Inability of the firm to satisfy the regularity norms for issue of instruments for tapping the market for funds. 4. High Cost of issue of Securities I,e High floatation cost. Smaller firms smaller firms may have to incur high costs of issue of securities. This discourages small firms from tapping the capital markets for funds. Internal Capital Rationing: Impositions of restrictions by a firm on the funds allocated for fresh investment is called internal capital rationing. This decision may be the result of a conservative policy pursued by a firm. Restriction may be imposed on divisional heads on the total amount that they can commit on new projects. Another internal restriction for Capital budgeting decision may be imposed by a firm based on the need to generate a minimum rate of return. Under this criterion only projects capable of generating the managements expectation on the rate of return will be cleared. Generally internal capital rationing is used by a firm as a means of financial control.

Capital rationing is technique which is used with capital budgeting techniques. Capital rationing technique is used when company has limited fund for investing in profitable investment proposals. In other words Capital rationing is a strategy employed by companies to make investments based on the current relevant circumstances of the company.

Definition of 'Capital Asset Pricing Model - CAPM'

Introduction The Capital Asset Pricing Model, which was developed in the mid 1960's, uses various assumptions about markets and investor behavior to give a set of equilibrium conditions that allow us to predict the return of an asset for its level of systematic (or nondiversifiable) risk. The CAPM uses a measure of systematic risk that can be compared with other assets in the market. Using this measure of risk can theoretically allow investors to improve their portfolios and managers to find their required rate of return. In this paper, an empirical test is conducted using data from the S&P 500 to determine if the CAPM is valid.
The linear relationship between the return required on an investment (whether in stock market securities or in business operations) and its systematic risk is represented by the CAPM formula, Formulae Sheet: E(ri) = Rf + i(E(rm) - Rf) E(ri) = return required on financial asset i Rf = risk-free rate of return i = beta value for financial asset i E(rm) = average return on the capital market The CAPM is an important area of financial management. In fact, it has even been suggested that finance only became a fully-fledged, scientific discipline when William Sharpe published his derivation of the CAPM in 1986 ADVANTAGES OF THE CAPM The CAPM has several advantages over other methods of calculating required return, explaining why it has remained popular for more than 40 years: It considers only systematic risk, reflecting a reality in which most investors have diversified portfolios from which unsystematic risk has been essentially eliminated. It generates a theoretically-derived relationship between required return and systematic risk which has been subject to frequent empirical research and testing. It is generally seen as a much better method of calculating the cost of equity than the dividend growth model (DGM) in that it explicitly takes into account a companys level of systematic risk relative to the stock market as a whole. It is clearly superior to the WACC in providing discount rates for use in investment appraisal.

Q4. Critically evaluate the M & M approach of capital structure

Definition of 'Capital Structure'

A mix of a company's long-term debt, specific short-term debt, common equity and preferred equity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds. Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings. Short-term debt such as working capital requirements is also considered to be part of the capital structure.

A company's proportion of short and long-term debt is considered when analyzing capital structure. When people refer to capital structure they are most likely referring to a firm's debt-toequity ratio, which provides insight into how risky a company is. Usually a company more heavily financed by debt poses greater risk, as this firm is relatively highly levered. M & M approach of capital structure

The ModiglianiMiller theorem (of Franco Modigliani, Merton Miller) forms the basis for modern thinking on capital structure. The basic theorem states that, under a certain market price process (the classical random walk), in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed.[1] It does not matter if the firm's capital is raised by issuing stock or selling debt. It does not matter what the firm's dividend policy is. Therefore, the ModiglianiMiller theorem is also often called the capital structure irrelevance principle. Modigliani was awarded the 1985 Nobel Prize in Economics for this and other contributions. Miller was a professor at the University of Chicago when he was awarded the 1990 Nobel Prize in Economics, along with Harry Markowitz and William Sharpe, for their "work in the theory of financial economics," with Miller specifically cited for "fundamental contributions to the theory of corporate finance."

Criticisms

The main problem with the Modigliani and Miller (1958) is that they assume shareholders are the owners of the public corporations. This assumption has been refuted by legal scholars since Berle and Means (1932). Shareholders are neither the owners, residual claimants (i.e. owners of the profit), or the investors as 99.9% are in the secondary market. The formula's use of EBIT / Cost of Capital to calculate a company's value is extremely limiting. It also uses the weighted average cost of capital formula, which calculates the value based on E + D, where E = the value of equity and D = the value of debt. Modigliani and Miller are equating

two different formulas to arrive at a number which maximizes a firm's value. It is inappropriate to say that a firm's value is maximized when these two different formulas cross each other because of their striking differences. The formula essentially says a firm's value is maximized when a company has earnings * the discount rate multiple = book value. Modigliani and Miller equate E + D = EBIT / Cost of Capital. This seems to over-simplify the firm's valuation.

MBA (OC) 309 (Marketing Management)

Section A Attempt any one question: 10 1 = 10 Marks Q1. As a consumer, using examples from your own experience explain how the following have affected your purchasing behavior of below mentioned products and services: (a) Extensive problem solving. (b) Search for alternative solution and information. (c) Evaluation of alternatives. (d) Purchase and cognitive Dissonance. (i) Your dress (choose any one among Garments, shoes and perfumes). (ii) Services of Dentist/ Coaching Institute/ Diner Restaurant/ Beauty salon. Q2. As a marketer, build marketing campaign by using four Ps of marketing mix and keeping in view newer shifts in marketing trends which are taking place now-a-days for the following: (a) Document photo copying, printing solution, internet surfing and Coffee day shop. (b) Newly built Posh Apartments, Duplex and Bunglows offered by globally known builder in your city. OR (a) New touch screen mobile phone/ 3D High definition TV. (any one) (b) New diesel fuel efficient small size car/ Aeroplane or taxi operating service in your city. (any one) Section B Attempt any two questions: 5 2 = 10 Marks Q3. Describe market segmentation, product differentiation, product positioning, new product development phases and new product adoption phases in detail. Also explain internet marketing, effects of internet on markets, marketing strategy and the internet. Q4. Explain product, product types, product line, product mix, product life cycle, Brand and its significance, Branding strategy in detail. Q5. Explain advertising, sales promotion, personal selling, publicity and liaison, salesmanship in detail.

Q5. Explain advertising, sales promotion, personal selling, publicity and liaison, salesmanship in detail.

Advertising is a form of communication used to encourage or persuade an audience

(viewers, readers or listeners) to continue or take some new action. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common. The purpose of advertising may also be to reassure employees or shareholders that a company is viable or successful. Advertising messages are usually paid for by sponsors and viewed via various traditional media; including mass media such as newspaper, magazines, television commercial, radio advertisement, outdoor advertising or direct mail; or new media such as websites and text messages. Commercial advertisers often seek to generate increased consumption of their products or services through "Branding," which involves the repetition of an image or product name in an effort to associate certain qualities with the brand in the minds of consumers. Non-commercial advertisers who spend money to advertise items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public service announcement (PSA). Modern advertising developed with the rise of mass production in the late 19th and early 20th centuries.

Sales promotion is one of the seven aspects of the promotional mix. (The other six parts of
the promotional mix are advertising, personal selling, direct marketing, publicity/public relations, corporate image and exhibitions.) Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are considered gimmicks by many.

Personal selling is a promotional method in which one party (e.g., salesperson) uses skills
and techniques for building personal relationships with another party (e.g., those involved in a purchase decision) that results in both parties obtaining value. In most cases the "value" for the

salesperson is realized through the financial rewards of the sale while the customers "value" is realized from the benefits obtained by consuming the product. However, getting a customer to purchase a product is not always the objective of personal selling. For instance, selling may be used for the purpose of simply delivering information. Because selling involves personal contact, this promotional method often occurs through face-toface meetings or via a telephone conversation, though newer technologies allow contact to take place over the Internet including using video conferencing or text messaging (e.g., online chat).

Publicity is the deliberate attempt to manage the public's perception of a subject. The subjects
of publicity include people (for example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or entertainment. From a marketing perspective, publicity is one component of promotion which is one component of marketing. The other elements of the promotional mix are advertising, sales promotion, direct marketing and personal selling. Promotion But the publicist cannot wait around for the news to present opportunities. They must also try to create their own news.

Liaison is the pronunciation of a latent word-final consonant immediately before a following

vowel sound. In French, most written word-final consonants are no longer pronounced and are known as latent or mute. For example, the letter s in the word les, 'the', is generally silent (i.e., dead and phonologically null), but it is pronounced /z/ in the combination les amis /le.za.mi/, 'the friends'. In certain syntactic environments, liaison is impossible; in others, it is obligatory; in others still, it is possible but not obligatory and its realization is subject to wide stylistic variation.

Salesmanship is just persona selling - negotiating, emphasizing inducing and making the
prospective buyer to take a decision in favor of going for the product being offered to him. In the words of W.G. Carter, "salesmanship is an attempt to induce people to buy goods." Today salesmanship is ot only an effort to induce the people to buy. Thus, Salesmanship is an art of winning over the buyer's confidence so that a permanent goodwill may be built and a lasting satisfaction may be given to him when he goes the product offered to him.

Q4. Explain product, product types, product line, product mix, product life cycle, Brand and its significance, Branding strategy in detail.
In general, the product is defined as a "thing produced by labor or effort"[1] or the "result of an act or a process" In economics and commerce, products belong to a broader category of goods. In marketing, a product is anything that can be offered to a market that might satisfy a want or need.[5] In retailing, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods.

The product mix of a company, which is generally defined as the total composite of products offered by a particular organization, consists of both product lines and individual products. A product line is a group of products within the product mix that are closely related, either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. A product is a distinct unit within the product line that is distinguishable by size, price, appearance, or some other attribute. For example, all the courses a university offers constitute its product mix; courses in the marketing department constitute a product line; and the basic marketing course is a product item. Product decisions at these three levels are generally of two types: those that involve width (variety) and depth (assortment) of the product line and those that involve changes in the product mix occur over time.

A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below:

Product Life Cycle Diagram

Brand and its significance

The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers." [1] A brand is thus a product or service whose dimensions differentiate it in some ways from other products or

services designed to satisfy the same need. A brand can take many forms, including a name, sign, symbol, color combination or slogan.

Economies of scale (production and distribution) Lower marketing costs Laying the groundwork for future extensions worldwide Maintaining consistent brand imagery Quicker identification, recognition and integration of innovations (discovered worldwide) Preempting international competitors from entering domestic markets or locking you out of other geographic markets Increasing international media reach (especially with the explosion of the Internet) is an enabler Increases in international business and tourism are also enablers Possibility to charge premium prices Internal company benefits such as attracting and retaining good employees, and cohesive company culture

MBA (OC) 307 (Human Resource Management and Industrial Relations) Section A Attempt any one question: 10 1 = 10 Marks Q1. Define HRM. Explain its functions and importance in corporate world. What are new challenges for the executives? Q2. Explain the concept of performance appraisal. Give its objectives and methods. Also explain limitations of appraisal system. Section B Attempt any two questions: 5 2 = 10 Marks Q3. Write on recruitment and selection process in a business organization. Q4. Distinguish between training and development. Q5. Write a note on Collective Bargaining as a tool of industrial relations

Q4. Distinguish between training and development.

Training is a process of learning a sequence of programmed behavior. It is application of knowledge. It gives people an awareness of the rules and procedures to guide their behavior. It attempts to improve their performance on the currents job or prepare them for an intended job.

Development is a related process. It covers not only those activities, which improve job performance, but also those which bring about growth of the personality; help individuals in the progress towards maturity and actualization of

their potential capacities so that they become not only good employees but better men and woman. In organisational terms, it is intended to equip persons to earn promotion and hold greater responsibility. Training a person for higher and bigger job is development. And this may well include not only imparting specific skills and knowledge but also inculcating certain personality and mental attitudes.

Training is short term process utilizing a systematic and organised procedure by which non managerial personal learn technical knowledge and skills for a definite purpose. Development is a long term educational process utilizing a systematic and organised procedure by which managerial personnel learn conceptual and theoretical knowledge for general purpose.

Training helps to make the employee of a company to be more effective and efficient in the present role and responsibilities of the job i.e. fulfill short term needs of any company but development helps to improve the overall personality dimensions of an employee to take up any future assignments if any and better equipped to handle any critical situations might occur i.e. fulfill long term needs of any company.

Q5. Write a note on Collective Bargaining as a tool of industrial relations.

Collective bargaining is process of joint decision making and basically represents a democratic way of life in industry. It is the process of negotiation between firms and workers representatives for the purpose of establishing mutually agreeable conditions of employment. It is a technique adopted by two parties to reach an understanding acceptable to both through the process of discussion and negotiation. ILO has defined collective bargaining as, negotiation about working conditions and terms of employment between an employer and a group of employees or one or more employee, organization with a view to reaching an agreement wherein the terms serve as a code of defining the rights and obligations of each party in their employment/industrial relations with one another. Collective bargaining involves discussions and negotiations between two groups as to the terms and conditions of employment. It is called collective because both the employer and the employee act as a group rather than as individuals. It is known as bargaining because the method of reaching an agreement involves proposals and counter proposals, offers and counter offers and other negotiations. Thus collective bargaining:

is a collective process in which representatives of both the management and employees participate. is a continuous process which aims at establishing stable relationships between the parties involved.

not only involves the bargaining agreement, but also involves the implementation of such an agreement.

attempts in achieving discipline in the industry is a flexible approach, as the parties involved have to adopt a flexible attitude towards negotiations.

Q1. Define HRM. Explain its functions and importance in corporate world. What are new challenges for the executives?

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. HRM can also be performed by line managers. HRM is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. HRM is also a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and objectives. Human resources are one of the most important features of many businesses, especially in an economy where there is an increasing shift towards service-based industries.Human resources account for a large proportion of many businesses costs and it is the people that invariably drive a business.

Management of these resources therefore is an integral part of business success. The main aim of this unit is to develop an understanding of how management functions can affect the performance of business. The measure role of human resource management are as follows : 1. Reduce absenteeism : if staff are absent from work they are not able to carry out the function for which they have been employed. In many businesses, these functions have to be taken on by someone else- if not, the customer could suffer. Reducing absenteeism is an important feature of human resource management. 2. Motivate the staff : motivation is an important part in reducing staff turnover and minimizing

staff absenteeism. Motivation can be done by work environment and work atmosphere. Motivation is done by creating interest in the job of the staff by taking suggestion schemes, and giving out some gifts for best suggestion will definitely motivate the staff. 3. Team work : many business places gives more importance to team work. A good team consists of people with different skills, abilities and characters.

4. Recruitment and Selection : when candidate apply for a job, a business will have to make a shortlist and draw up plans for the interview process. After shortlisting their is psychometric tests conducted. Psychometric tests means 3 types of tests i.e ability test, personality test and interest test. Finally the selection is conducted. 5. Providing training programmes for the staff : the main role of human resource management is to provide its staff with training programmes on the current topics with which they can develop themselves with the present situation.

Globalisation:Many Indian firms are compelled to think globally, something which is