Internal Assignment No.

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MBA 101 Business Environment

Q1)i)Enternal Environment of Organization

1. Owners: Owners are people who invested in company and have property rights and claims on the
organization. Owners can be an individual or group of person who started the company; or who bought a share of
the company in the share market. They have the right to change the companys policy at any time.
2. Board of Directors: The board of directors is the governing body of the company who are elected by
stockholders, and they are given the responsibility of overseeing a firm's top managers such as general manager.

ii) A multinational corporation or worldwide enterprise[1] is an organization that owns or controls production of goods or
services in one or more countries other than their home country.[2]It can also be referred as an international corporation,
a "transnational corporation", or a stateless corporation.[
iii) (1) Equitable Allocation of Raw Materials, Imported Components andEquipment:
The small scale industrial units should be given adequate degree of priority in the allocation pattern of essential, but
scarce, raw materials, imported components and equipment.
(2) Improvement in the Methods and Techniques of Production:
The small scale industrial units should be encouraged to replace their outmoded equipment with that incorporating an up-
to-date technology, and facilities and incentives should be provided wherever required.
Up-dating the methods and techniques of production of quality goods conforming to standards. The role of the Government
in this respect is quite significant. Standardisation of certain products should be ensured, the quality of products should be
guaranteed, and malpractices like adulteration, misrepresentation, etc., need to be curbed drastically.
iv) Privatization is the transfer of ownership of property or businesses from a government to a privately owned entity. 2.
The transition from a publicly traded and owned company to a company which is privately owned and no longer trades
publicly on a stock exchange.
v) In economics and political science, fiscal policy is the use of government revenue collection (mainly taxes)
and expenditure (spending) to influence the economy.[1] According to Keynesian economics, when the government
changes the levels of taxation and governments spending, it influences aggregate demand and the level of economic
activity. Fiscal policy can be used to stabilize the economy over the course of thebusiness cycle.[2]
The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in
various sectors. These changes can affect the following macroeconomic variables, amongst others, in an economy:
Aggregate demand and the level of economic activity;
Savings and Investment in the economy
The distribution of income
Q2) Technology is the collection of techniques,skills, methods and processes used in the production
of goods or services or in the accomplishment of objectives, such as scientific investigation. Technology can be
the knowledge of techniques, processes, etc. or it can be embedded in machines, computers, devices and factories, which
can be operated by individuals without detailed knowledge of the workings of such things.
Customer Relations. Technology affects the way companies communicate and establish relations with their clients. In a
fast moving and business environment, it is vital for them to interact with clients regularly and quickly to gain their trust and
to obtain customer loyalty. With the use of Internet and online social networks, firms interact with consumers and answer
all their queries about the product. Establishing effective communication with customers not only creates rapport with them,
but it also creates strong public image. It allows business enterprises to reduce and to cut carbon dioxide emissions.
Business Operations. With the use of technological innovations, business owners and entrepreneur understand their
cash flow better, how to manage their storage costs well and enables you to save time and money.
Corporate Culture. Technology lets employees communicate and interact with other employees in other countries. It
establishes clique and prevents social tensions from arising.
Security. Modern security equipment enables companies to protect their financial data, confidential business information
and decisions.
Research Opportunities. It provides a venue to conduct studies to keep themselves ahead of competitors. It allows
companies to virtually travel into unknown markets.
Corporate Reports. With technology, business enterprises communicate effectively with their branch offices to deliver
quality financial and operational reports.
Industrial Productivity. Through the use of business software programs or software packages, it automated traditional
manufacturing process, reduces labor costs and enhances manufacturing productivity. It enables companies to increase
efficiency and production output.
Business mobility. Technological innovations improved companies' sales, services, shorted lead time on receiving and
delivering goods and services. Enables them to penetrate multiple markets at least costs.
Research capacity. It enables them to conduct studies on various companies to gain knowledge on the new trends in
the market and way on avoiding them.

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Q3) Monetary policy consists of the decisions made by a government concerning the money supply and interest rates. In
the United States, the Federal Reserve (the Fed) determines and implements monetary policy.
Borrowing
The Federal Reserve sets the interest rate at which banks borrow money from them. When the Fed lowers interest rates,
they make it cheaper for banks to access money, which in turn makes banks more likely to lend to businesses and
consumers. Your business's ability to borrow or establish a line of credit can be largely affected by how expensive or cheap
it is for banks to get money.
Interest Rates
The primary thing the Fed controls is the interest rate for banks to borrow money. Not surprisingly, banks turnaround and
pass the savings or cost on to their borrowers. When the real interest rate is set low for banks, commercial and consumer
interest rates also tend to run lower, making loans more affordable.
Foreign Exchange
Interest rates and the value of the dollar have a distinct relationship. When the Federal Reserve makes the cost of
borrowing cheaper, more money starts flowing in the economy. The more dollars that are out there, the less each one is
worth. The dollar value drops. Often, when the Fed drops interest rates, it intends to lower the dollar's value in order to
make U.S. goods more affordable, and therefore, increase U.S. exports, which can foster growth in business and jobs.
Inflation
During a time of low interest rates and increased money flowing through the economy, inflation can occur if economic
production and employment do not increase. Stagnant business, despite increased cash, means that more money is
chasing fewer goods and prices rise. One of the goals of monetary policy is to prevent excessive inflation while fostering
economic growth.
Internal Assignment No. 2
i) (1) Competition: competition refers to the numbers of similar competitive product brands marketers in your industry,
their size and market capitalizations. You as a marketer might not have direct influence on them, but its important that you
monitor their activities, and then design effective strategies using your controllable variables.
(2) Governmental policies: the government policies refers to the laws and legality that guilds the land, they go a long
way to affect your business operations as a marketer. For instance, government restriction on the importation of a
particular product might hinder the marketers playing in that particular field.
ii) Globalization (or globalisation) is the process of international integration arising from the interchange of world views,
products, ideas and mutual sharing, and other aspects of culture.[1][2] Advances in transportation, such as the steam
locomotive, steamship, jet engine, container ships, and intelecommunications infrastructure, including the rise of
the telegraph and its modern offspring, the Internet, and mobile phones, have been major factors in globalization,
generating further interdependence of economic and cultural activities.[3][4][5] Though scholars place the origins of
globalization inmodern times, others trace its history long before the European Age of Discovery and voyages to the New
World. Some even trace the origins to the third millennium BCE.[6][7] Large-scale globalization began in the 19th
century.[8] In the late 19th century and early 20th century, the connectivity of the world'seconomies and cultures grew very
quickly.
iii) Monetary policy is the process by which the monetary authority of a country controls the supply of money, often
targeting an inflation rate orinterest rate to ensure price stability and general trust in the currency.[1][2][3]
Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and
to maintain predictableexchange rates with other currencies.
Monetary economics provides insight into how to craft optimal monetary policy.
Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the
total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more
slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in
a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary
policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values.
iv) Disinvestment refers to the use of a concerted economic boycott to pressure a government, industry, or company
towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s,
most commonly in the United States, to refer to the use of a concerted economic boycott designed to pressure the
government of South Africainto abolishing its policy of apartheid. The term has also been applied to actions
targeting Iran, Sudan, Northern Ireland, Myanmar, and Israel
v) International trade is the exchange of capital, goods, and services across international borders or territories, which
could involve the activities of the government and individual.[1] In most countries, such trade represents a significant share
of gross domestic product (GDP). While international trade has been present throughout much of history
(see Uttarapatha, Silk Road, Amber Road, salt road), its economic, social, and political importance has been on the rise in
recent centuries. It is the presupposition of international trade that a sufficient level ofgeopolitical peace and stability are
prevailing in order to allow for the peaceful exchange of trade and commerce to take place between nations.

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Q3) Fiscal policy involves the decisions that a government makes regarding collection of revenue, through taxation and
about spending that revenue. It is often contrasted with monetary policy , in which a central bank (like the Federal
Reserve in the United States) sets interest rates and determines the level of money supply.
Effects on Economy
Fiscal policy and monetary policy can have dramatic effects on the economy. Let's discuss those effects in more detail.
Government Spending
The single largest consumer of goods and services in the United States is the United States government. Let's take a look
at some numbers. Total government spending in 2011 consisted of about $3.6 trillion in federal spending, $1.5 trillion in
state spending and $1.6 trillion in local government spending - that's 6.1 trillion dollars! If the government actually stopped
spending, our economy would collapse.
Government spending affects nearly every sector of the economy. The federal government spends money on such things
as national defense, entitlement programs (such as Social Security and Medicare), interest on the national debt and
discretionary spending that ranges from purchasing paper clips and funding scientific research, to building infrastructure
and subsidizing farms. State and local governments spend money on roads, schools and infrastructure. The best way to
look at the scope of government spending is to take a look at the federal budget:
As you can see, government spending pumps tremendous amounts of money into the hands of citizens through
entitlement programs where they can spend it on goods and services that are purchased from regular businesses. The
government also pumps a tremendous amount of money into the hands of private businesses when it purchases goods
and services, ranging from pencils to multi-billion dollar aircraft carriers. All this economic activity helps grow the economy
and create jobs, and ideally, it will improve the lives of citizens.
Government spending has also been considered a paramount tool during times of economic hardships, such as during
periods of high unemployment, recessions and depressions. According to one school of thought, known as Keynesian
economics, a government should spend money during times of economic downturns to stave off recessions and
depressions.
The idea is that government spending helps offset the drop in private sector spending by consumers and businesses to
stimulate growth. If the government is buying, then businesses can sell and employees can work, which increases the
money available for both business and consumer spending. Eventually, the private sector spending will pick-up and
government spending can decline. The greatest example of this approach is the Great Depression era 'New Deal.'
Taxation
The other half of the fiscal policy is taxation. First, the government is like any other consumer - it can't buy anything without
money or credit. The government generates revenue primarily through a system of taxes. Taxes can be generated from
income, sales, property and transfers of property at death, for example. Here's a chart showing the government tax
revenue in 2011:
When the government collects taxes from businesses and individuals, it leaves less money in their pockets for spending,
saving and investment. This means that the more the government taxes, the more the economy must rely on the
government
Q4) Definition of Disinvestment
At the very basic level, disinvestment can be explained as follows:
Investment refers to the conversion of money or cash into securities, debentures, bonds or any other claims on money. As
follows, disinvestment involves the conversion of money claims or securities into money or cash. .
Objectives of Disinvestment
The new economic policy initiated in July 1991 clearly indicated that PSUs had shown a very negative rate of return on
capital employed. Inefficient PSUs had become and were continuing to be a drag on the Governments resources turning
to be more of liabilities to the Government than being assets. Many undertakings traditionally established as pillars of
growth had become a burden on the economy. The national gross domestic product and gross national savings were also
getting adversely affected by low returns from PSUs. About 10 to 15 % of the total gross domestic savings were getting
reduced on account of low savings from PSUs. In relation to the capital employed, the levels of profits were too low. Of the
various factors responsible for low profits in the PSUs, the following were identified as particularly important:
Price policy of public sector undertakings
Underutilisation of capacity
Problems related to planning and construction of projects
Problems of labour, personnel and management
Lack of autonomy
Hence, the need for the Government to get rid of these units and to concentrate on core activities was identified. The
Government also took a view that it should move out of non-core businesses, especially the ones where the private sector
had now entered in a significant way. Finally, disinvestment was also seen by the Government to raise funds for meeting
general/specific needs.
In this direction, the Government adopted the 'Disinvestment Policy'. This was identified as an active tool to reduce the
burden of financing the PSUs. The following main objectives of disinvestment were outlined:
To reduce the financial burden on the Government
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 To improve public finances
To introduce, competition and market discipline
To fund growth
To encourage wider share of ownership
To depoliticise non-essential services
Importance of Disinvestment
Presently, the Government has about Rs. 2 lakh crore locked up in PSUs. Disinvestment of the Government stake is, thus,
far too significant. The importance of disinvestment lies in utilisation of funds for:
Financing the increasing fiscal deficit
Financing large-scale infrastructure development
For investing in the economy to encourage spending
For retiring Government debt- Almost 40-45% of the Centres revenue receipts go towards repaying public
debt/interest
For social programs like health and education
Internal Assignment No. 1
Organization Behaviour102
ANS1)i) As a process, management refers to a series of inter-related functions. It is the process by which
management creates, operates and directs purposive organization through systematic, coordinated and co-
operated human efforts, according to George R. Terry, Management is a distinct process consisting of
planning, organizing, actuating and controlling, performed to determine and accomplish stated objective by the
use of human beings and other resources. As a process, management consists of three aspects:
1. Management is a social process - Since human factor is most important among the other factors,
therefore management is concerned with developing relationship among people. It is the duty of
management to make interaction between people - productive and useful for obtaining organizational
goals.
2. Management is an integrating process - Management undertakes the job of bringing together human
physical and financial resources so as to achieve organizational purpose. Therefore, is an important
function to bring harmony between various factors.
3. Management is a continuous process - It is a never ending process. It is concerned with constantly
identifying the problem and solving them by taking adequate steps. It is an on-going process.
ii)1. Establishing Standards:Standards are criteria against which results are measured. They are norms to
achieve the goals. Standards are usually measured in terms of output. They can also be measured in non-
monetary terms like loyalty, customer attraction, goodwill etc
2. Measuring PerformanceMeasurement involves comparison between what is accomplished and what was
intended to be accomplished. The measurement of actual performance must be in the units similar to those of
predetermined criterion. The unit or the yardstick thus chosen be clear, well-defined and easily identified, and
should be uniform and homogenous throughout the measurement process.
3. Comparing the Actual Performance with Expected PerformanceThis is the active principle of the process.
The previous two, setting the goals and the measurement format are the preparatory parts of the process. It is
the responsibility of the management to compare the actual performance against the standards established.
4. Correcting Deviations:The final element in the process is the taking corrective action. Measuring and
comparing performance, detecting shortcomings, failures or deviations, from plans will be of no avail if it does
point to the needed corrective action.
iii)
For Line organization
1. Line managers are generalists.
2. The line of authority is vertical as it follows the principle of
scalar chain
3. There is strict discipline
4. It is not based upon planned specialization
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 5. There is unity of command
6. It is suitable for small scale operations
7. It is quite economical
For Line and staff organization
1. There are experts known as staff to advise and assist the line
officials
2. Line authority and staff people with advisory authority
3. Loose discipline
4. It is based upon planned specialization
5. Unity of command observed to a great extent
6. Suitable for medium scale operations
7.Little costlier
iv)a) In personality psychology, locus of control refers to the extent to which individuals believe they
can control events affecting them. Understanding of the concept was developed by Julian B. Rotter in 1954,
and has since become an aspect of personality studies.
b)Machiavellianism is "the employment of cunning and duplicity in statecraft or in general conduct".[1] The
word comes from the Italian Renaissance diplomat and writer Niccol Machiavelli, who wrote Il Principe (The
Prince), among other works.
In modern psychology, Machiavellianism is one of the dark triad personalities, characterized by a duplicitous
interpersonal style associated with cynical beliefs and pragmatic morality.
v)1. Meaning Maslow's theory is based on the concept of human needs and their satisfaction.
Hertzberg's theory is based on the use of motivators which include achievement, recognition and opportunity
for growth.
2. Basis of Theory Maslow's theory is based on the hierarchy of human needs. He identified five sets of
human needs (on priority basis) and their satisfaction in motivating employees.
Hertzberg refers to hygiene factors and motivating factors in his theory. Hygiene factors are dissatisfiers while
motivating factors motivate subordinates. Hierarchical arrangement of needs is not given.
3. Nature of Theory Maslow's theory is rather simple and descriptive. The theory is based long experience
about human needs.Hertzberg's theory is more prescriptive. It suggests the motivating factors which can be
used effectively. This theory is based on actual information collected by Hertzberg by interviewing 200
engineers and accountants.
4. Applicability of Theory Maslow's theory is most popular and widely cited theory of motivation and has
wide applicability. It is mostly applicable to poor and developing countries where money is still a big motivating
factor.Herzberg's theory is an extension of Maslow's theory of motivation. Its applicability is narrow. It is
applicable to rich and developed countries where money is less important motivating factor.
5. Descriptive or Prescriptive Maslow's theory or model is descriptive in nature.Herzberg's theory or model is
prescriptive in nature.
6. Motivators According to Maslow's model, any need can act as motivator provided it is not satisfied or
relatively less satisfied.In the dual factor model of Hertzberg, hygiene factors (lower level needs) do not act as
motivators. Only the higher order needs (achievement, recognition, challenging work) act as motivators.
ANS3) To learn is to acquire knowledge or skill. Learning also may involve a change in attitude or behavior.
Children learn to identify objects at an early age; teenagers may learn to improve study habits; and adults can
learn to solve complex problems. Pilots and aviation maintenance technicians (AMTs) need to acquire the
higher levels of knowledge and skill, including the ability to exercise judgment and solve problems. The
challenge for the aviation instructor is to understand how people learn, and more importantly, to be able to

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apply that knowledge to the learning environment. This handbook is designed as a basic guide to educational
psychology. This chapter addresses that branch of psychology directly concerned with how people learn.
1. Learning Focus: curriculum area and learning level.
2. Knowledge Objectives: intended learning outcomes and links to mandated standards.
3. Knowledge Processes: activities, marked up for the kind of knowledge making required of the learner
(below), sequenced appropriately and with a range that accommodates learner diversity.
4. Knowledge Outcomes: assessment processes: formative and summative.
5. Learning Pathways: recommended follow-on activities such as other Learning Elements.
ANS4) Group decision-making (also known as collaborative decision-making) is a situation faced
when individuals collectively make a choice from the alternatives before them. The decision is then no longer
attributable to any single individual who is a member of the group. This is because all the individuals and social
group processes such as social influence contribute to the outcome. The decisions made by groups are often
different from those made by individuals. Group polarization is one clear example: groups tend to make
decisions that are more extreme than those of its individual members, in the direction of the individual
inclinations.[1]
There is much debate as to whether this difference results in decisions that are better or worse. According to
the idea ofsynergy, decisions made collectively tend to be more effective than decisions made by a single
individual. However, there are also examples where the decisions made by a group are flawed, such as the Bay
of Pigs invasion, the incident on which the groupthink model of group decision-making is based.[2]
Factors that impact other social group behaviours also affect group decisions. For example, groups high
in cohesion, in combination with other antecedent conditions (e.g. ideological homogeneity and insulation
from dissenting opinions) have been noted to have a negative effect on group decision-making and hence on
group effectiveness.[2] Moreover, when individuals make decisions as part of a group, there is a tendency to
exhibit a bias towards discussing shared information (i.e. shared information bias), as opposed to unshared
information.
Internal Assignment No. 2
Organization Behaviour102
ANS1)i)The synchronization and integration of activities, responsibilities, and command
and control structures to ensure that the resources of an organization are used most efficiently in pursuit of the
specified objectives. Along with organizing, monitoring, and controlling, coordinating is one of the
key functions of management.
ii) Planning is Looking Ahead is true because it contributes heavily to success and gives us some control over
the future. By, planning we set aside our tasks and deadlines so we can enlarge our mental focus and seeing
the bigger picture. By, planning we can set our Personal or organizational goals and for this defiantly we have
to look ahead.But, Planning is not ending with such strategies or guidelines. It has relation with Implementation
and controls. Because plans are not always proceed as conceived. The control process measures progress
towards goal attainment and indicate corrective action if too much deviation is
detected.Controlling investigates whether planning was successful. Controlling referred to as terminal
management function, takes place after the other functions have been completed. And for this process we
have to look back and have to analyze the performance of our planning, organizing and leading. And therefore
we have to look back also.So, yes we can say Control is looking back for Investigation, Analysis, and
Understandings and for checking our effectiveness and efficiency.
iii)Organizational behavior studies human behavior in the workplace and the interaction between people and
the organization. When applied to understanding organizational culture, the set of understandings or meanings
share by a group of people, and diversity, the differences that exist between individuals, organizational
behavior helps a company gain competitive advantage. It does so by improving access to and retention of labor
as well as worker productivity and company. Based on theories that behavior is generally predictable, there are

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differences between individuals, there are fundamental consistencies and that there are a set of rules in almost
every organizational setting, organizational behavior explores relations in an attempt to determine causes and
effects and draws conclusions based on scientific evidence. Two of the many areas of study include
organizational culture and diversity.
iv)Perception management is a term originated by the US military. The US Department of Defense (DOD) gives
this definition:Actions to convey and/or deny selected information and indicators to foreign audiences to
influence their emotions, motives, and objective reasoning as well as to intelligence systems and leaders at all
to influence official estimates, ultimately resulting in foreign behaviors and official actions favorable to the
originator's objectives. In various ways, perception management combines truth projection, operations
security, cover and deception, and psychological operations.[1]"Perception" is defined as the "process by which
individuals select, organize, and interpret the input from their senses to give meaning and order to the world
around them" [2] Components of perception include the perceiver, target of perception, and the situation.
Factors that influence the perceiver:Schema: organization and interpretation of information based on past
experiences and knowledge
Motivational state: needs, values, and desires of a perceiver at the time of perception
Mood: emotions of the perceiver at the time of perception
v) When discussing social groups, a group is said to be in a state of cohesion when its members possess bonds
linking them to one another and to the group as a whole. Although cohesion is a multi-faceted process, it can
be broken down into four main components: social relations, task relations, perceived unity, and
emotions.[1] Members of strongly cohesive groups are more inclined to participate readily and to stay with the
group.
ANS2)1) Division of Work:This principle of Fayol tells us that as far as possible the whole work should be
divided into different parts and each individual should be assigned only one part of the work according to his
ability and taste rather than giving the whole work to one person.
(2) Authority and Responsibility:According to this principle, authority and responsibility should go hand in
hand. It means that when a particular individual is given a particular work and he is made responsible for the
results, this can be possible only when he is given sufficient authority to discharge his responsibility.
(3) Discipline:Discipline is essential for any successful work performance. Fayol considers discipline to mean
obedience, respect for authority, and observance of established rules.
Discipline can be established by providing good supervision at all levels, clearly explaining the rules, and
implementing a system of reward and punishment. A manager can present a good example to his subordinates
by disciplining himself.
(4) Unity of Command:According to the principle of unity of command, an individual employee should receive
orders from only one superior at a time and that employee should be answerable only to that superior. If there
are many superiors giving orders to the same employee, he will not be able to decide as to which order is to be
given priority. He thus finds himself in a confused situation.
(5) Unity of Direction:Unity of direction means that there should be one head for one plan for a group of
activities having the same objective. In other words, there should be one plan of action for a group of activities
having the same objective and there should be one manager to control them.
For example, suppose an automobile company is manufacturing two products, namely, scooters and cars,
hence having two divisions.
(6) Subordination of Individual Interest to General Interest:This principle can be named Priority to General
Interest over Individual Interest. According to this principle, the general interest or the interest of the
organisation is above everything. If one is asked to place individual interest and the general interest in order of
priority, definitely the general interest will be placed at the first place.
(7) Remuneration to Employees:Fayol is of the opinion that the employees should get a fair remuneration so
that the employees and the owners find equal amount of satisfaction. It is the duty of the manager to ensure

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that employees are being paid remuneration according to their work. If, however, they are not paid properly
for their work, they will not do their work with perfect dedication, honesty and capacity.
(8) Centralisation and Decentralisation:According to this principle, the superiors should adopt effective
centralisation instead of complete centralisation and complete decentralisation. By effective centralisation,
Fayol does not mean that authority should be completely centralised.
He feels that the superiors should keep the authority of taking important decisions in their own hands, while
the
(9) Scalar Chain:(i) Meaning of Scalar Chain:It refers to a formal line of authority which moves from highest to
the lowest ranks in a straight line,
(ii) Fayols Opinion:This chain must be followed in a strict manner. It means each communication must move
from top to bottom and vice versa in a straight line. The important condition here is that no step (post) should
be overlooked during communication.
(10) Order:According to the principle of order, a right person should be placed at the right job and a right thing
should be placed at the right place. According to Fayol, every enterprise should have two different orders-
Material Order for Physical Resources and Social Order for Human Resources.
(11) Equity:This principle tells that the managers should treat their subordinates in a just and kind manner so
that they develop a feeling of dedication and attachment for their work. All the employees should be treated
equally and impartially.Fayol tells us in connection with this principle that there should not be any equality of
treatment between a person whose work is really good and a person who is a shirker by nature.
Rather, the latter should be treated sternly. Doing so would be equitable. It is because of this point of view that
Taylor has presented his differential remuneration method.
(12) Stability of Personnel:From the point of view of management it is absolutely harmful to change the
employees frequently as it is a reflection of inefficient management. Therefore, according to this principle
there should be stability of tenure of the employees so that the work continues efficiently.
Fayol thinks that instability in the tenure of employees is a cause of poor management and results. High rate of
labour turnover will result in increased expenses because of selecting them time and again, and giving them
training afresh.
(13) Initiative:Initiative means the capacity to work while expressing ones thoughts. According to Fayol, it is
the duty of the manager to encourage the feeling of initiative among his employees for doing some work or
taking some decision but within the limits of authority and discipline.
(14) Esprit de corps:As per this principle, a manager should continuously make efforts to develop a team spirit
among the subordinates. To do this, he/she should use the word We instead of during the conversation with
subordinates.
ANS4)It may seem that theres nothing you can do about stress. The bills wont stop coming, there will never
be more hours in the day, and your career and family responsibilities will always be demanding. But you have
more control than you might think. In fact, the simple realization that youre in control of your life is the
foundation of stress management. Managing stress is all about taking charge: of your thoughts, emotions,
schedule, and the way you deal with problems.
Identify the sources of stress in your life
Stress management starts with identifying the sources of stress in your life. This isnt as easy as it sounds. Your
true sources of stress arent always obvious, and its all too easy to overlook your own stress-inducing
thoughts, feelings, and behaviors. Sure, you may know that youre constantly worried about work deadlines.
But maybe its your procrastination, rather than the actual job demands, that leads to deadline stress.
To identify your true sources of stress, look closely at your habits, attitude, and excuses:
Do you explain away stress as temporary (I just have a million things going on right now) even though
you cant remember the last time you took a breather?

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 Do you define stress as an integral part of your work or home life (Things are always crazy around
here) or as a part of your personality (I have a lot of nervous energy, thats all).
Do you blame your stress on other people or outside events, or view it as entirely normal and
unexceptional?
Until you accept responsibility for the role you play in creating or maintaining it, your stress level will remain
outside your control.
hese coping strategies may temporarily reduce stress, but they cause more damage in the long run:
Using pills or drugs to relax
Smoking Sleeping too much
Drinking too much Procrastinating
Overeating or undereating Filling up every minute of the day to avoid
Zoning out for hours in front of the TV or facing problems
computer Taking out your stress on others (lashing out,
Withdrawing from friends, family, and activities angry outbursts, physical violence)

Internal Assignment No. 1

Managerial Economics103
ANS1)i) The main differences between an elastic demand and an inelastic demand have been explained in
details as follows:
Elastic Demand:
When a small change in price brings about more than proportionate change in demand, it is known as
the elastic demand.
The demand curve is flatter.
Luxuries and comforts have elastic demand.
Examples of elastic demand are Color T.V. sets, Prestige goods, etc.
Perfectly elasticity of demand is not practical, while relative elasticity is seen in case of moderately
priced goods.
The coefficient of elasticity of demand is greater than 1, that it ed > 1.
Inelastic Demand:
When a big change in price brings about less than proportionate change in demand, it is known as inelastic
demand.
The demand curve is steeper.
Necessary items can be termed as inelastic demand.
Examples of Inelastic demand are salt, rice, food grains, etc.
Perfectly inelasticity of demand is seen in the demand of necessary goods, while relative inelasticity is
seen in case of very expensive goods.
The coefficient of elasticity of demand is less than 1, that is ed < 1.
ii) 'Marginal Revenue - MR' The increase in revenue that results from the sale of one additional unit of
output. Marginal revenue is calculated by dividing the change in total revenueby the change in output
quantity.iii) 1. The cost of an alternative that must be forgone in order to pursue a certain action. Put another
way, the benefits you could have received by taking an alternative action.
2. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest
in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the
opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your
opportunity costs are 4% (6% - 2%).

9
 iv)In economics and marketing, product differentiation (or simply differentiation) is the process of
distinguishing a product or service from others, to make it more attractive to a particular target market. This
involves differentiating it from competitors' products as well as a firm's own products. The concept was
proposed by Edward Chamberlin in his 1933 Theory of Monopolistic Competition. A marketing process that
showcases the differences between products. Differentiation looks to make a product more attractive by
contrasting its unique qualities with other competing products. Successful product differentiation creates a
competitive advantage for the seller, as customers view these products as unique or superior.
v)DEFINITION of '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.
1. ANS2) Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness,
or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus.Different
types of Elasticity of Demand
After knowing what is demand and what is law of demand, we can now come to elasticity of demand. Law of
demand will tell you the direction i.e. it tells you which way the demand goes when the price changes. But the
elasticity of demand tells you how much the demand will change with the change in price to demand to the
change in any factor.
Different types of Elasticity of Demand:
1. Price Elasticity of Demand
2. Income Elasticity of Demand
3. Cross Elasticity of Demand
4. Advertisement Elasticity of Demand
1. Price Elasticity of Demand:
We will discuss how sensitive the change in demand is to the change in price. The measurement of this
sensitivity in terms of percentage is called price Elasticity of Demand. According to Marshall, Price Elasticity of
Demand is the degree of responsiveness of demand to the change in price of that commodity.
2. Income elasticity of demand:
In economics, the income elasticity of demand measures the responsiveness of the quantity demanded of a
good to the change in the income of the people demanding the good. It is calculated as the ratio of the percent
change in quantity demanded to the percent change in income. For example, if, in response to a 10% increase
in income, the quantity of a good demanded increased by 20%, the income elasticity of demand would be
20%/10% = 2.
3. Cross elasticity of demand:
In economics, the cross elasticity of demand and cross price elasticity of demand measures the responsiveness
of the quantity demand of a good to a change in the price of another good.
It is measured as the percentage change in quantity demanded for the first good that occurs in response to a
percentage change in price of the second good. For example, if, in response to a 10% increase in the price of
fuel, the quantity of new cars that are fuel inefficient demanded decreased by 20%, the cross elasticity of
demand would be -20%/10% = -2.
4. Advertisement Elasticity of Demand:
The degree of responsiveness of quantity demanded to the change in the advertisement expense of
expenditure.
Ea= Change in quantity demanded x original advertisement expenses
Change in advertisement expenses original quantity demanded
Degrees
1. Unit Elasticity:
Demand is unit elastic when percentage change in quantity demand and percentage in price are equal.

10
In case of unit elastic demand the demand curve is a Rectangular Hyperbola. In practice it is difficult to find
such commodities as have a demand curve whose elasticity is unit throughout.
2. Relatively elastic demand (ed > 1):
The demand is relative elastic or more than unity when relative change in quantity demanded is more than the
relative change in price. In such cases the demand curve is of less slope.
3. Relatively inelastic demand (ed < 1):
Demand is said to be relatively inelastic or less than unity when proportionate change in demand is less than
proportionate change in price. In such cases the slope of demand curve falls rapidly.
4. Perfectly inelastic demand (ed = 0):
When there is no change in demand as a result of increase or decrease in price then the demand is perfectly
inelastic. The demand curve is vertical on OX axis
5. Perfectly elastic demand (ed = oc):
The demand is perfectly elastic when even a small change in price cause an infinite large change in amount
demanded.
A small rise in price on the part of a seller reduces the demand to zero. In such cases the demand curve is
parallel to OX axis.
ANS3) The Law of Variable Proportions (explained with diagram)!
The behaviour of the law of variable proportions or of the short-run production function when one factor is
constant and the other variable, can also be explained in terms of isoquant analysis. Suppose capital is a fixed
factor and labour is a variable factor.
In Figure 7, OA and OB are the ridge lines and it is in between them that economically feasible units of labour
and capital can be employed to produce 100, 200, 300, 400 and 500 units of output. It implies that in these
portions of the isoquants, the marginal product of labour and capital is positive.

On the other hand, where these ridge lines cut the isoquants, the marginal product of the inputs is zero. For
instance, at point H the marginal product of capital is zero, and at point L the marginal product of labour is
zero. The portion of the isoquant that lies outside the ridge lines, the marginal product of that factor is
negative. For instance, the marginal product of capital is negative at G and that of labour at R.
The law of variable proportions says that, given the technique of production, the application of more and more
units of a variable factor, say labour, to a fixed factor, say capital, will, until a certain point is reached, yield
more than proportional increases in output, and thereafter less than proportional increases in out-put.
Since the law refers to increases in output, it relates to the marginal product. To explain the law, capital is
taken as a fixed factor and labour as a variable factor. The isoquants show different levels of output in the fig-
ure. is the fixed quantity of capital which there fore forms a horizontal line CD. As we move from to D
towards the right on this line, the different points show the effects of the combinations of successively
increasing quantities of labour with fixed quantity of capital .

11
To begin with, as we move from to G and to H, it shows the first stage of increasing marginal returns of the
law of variable proportions. When CG labour is employed with capital, output is 100. To produce 200 units
of output, labour is increased by GH while the amount of capital is fixed at .
The output has doubled but the amount of labour employed has not increased proportionately. It may be
observed that GH < CG, which means that smaller additions to the labour force have led to equal increments in
output. Thus to H is the first stage of the law of variable proportions in which marginal product increases
because output per unit of labour increases as more output is produced.
The second stage of the law of variable proportions is the portion of the isoquants which lies in between the
two ridge lines OA and OB. It is the stage of diminishing marginal returns between points R and L. As more
labour is employed, output increases less than proportionately to the increase in the labour employed. To raise
output to 300 units from 200 units, HJ labour is employed.
Further, JK quantity of labour is required to raise output from 300 to 400 and KL of labour to raise output from
400 to 500. So, to increase output by 100 units successively, more and more units of the variable factor (labour)
are required to be applied along with the fixed factor (capital), that is, KL>JK> HJ. It implies that the marginal
product of labour continues to decline with the employment of larger quantities to it. Thus as we move from
point H to K, the effect of increasing the units of labour is that output per unit of labour diminishing as more
output is produced. This is known as the stage of diminishing returns.
If labour is employed further, we are outside the lower ridge line OB and enter the third stage of the law of
variable proportions. In this region which lies beyond the ridge line OB, there is too much of the variable factor
(labour) in relation to the fixed factor (capital). Labour is thus being overworked and its marginal product is
negative. In other words, when the quantity of labour is increased by LR and RS, the output declines from 500
to 400 and to 300. This is the stage of negative marginal returns.
We arrive at the same conclusion that a firm will find it profitable to produce only in the second stage of the
law of variable proportions for it will be uneconomical to produce in the regions to the left or right of the ridge
lines which form the first stage and the third stage of the law respectively.
Internal Assignment No. 2
Managerial Economics103
ANS1)i) Two Indifference Curves Cannot Touch or Intersect Each Other
Intersection of two indifference curves representing different levels of satisfaction is a logical contradiction. It
would mean that indifference curves representing different levels of satisfaction are showing the same level of
satisfaction at the point of intersection or contact. We can prove this property of indifference curves through
contradiction. Suppose, two indifference curves IC1 and 1C2 meet (Fig (a)), intersect (Fig. (b)) or touch (Fig. (c))
each other at point 'A' in Fig. Point 'C' is taken just above point 'B', such that it contains same amount of
commodity 'X' and more amount of commodity' Y'. Consider points 'B' and 'A' on IC 1. Consumer is indifferent
between these points, as both lie on the same indifference curve IC. Further, points 'A' and 'C lie on the same
indifference curve IC implying same level of satisfaction to the consumer. Now, by the assumption of
transitivity, points 'B' and 'C' yield same level of satisfaction to the consumer. But, point 'C' lies on a higher
indifference curve having more amount of commodity' Y'. It must be preferred to point 'B' by the assumption of
non-satiety. Further, intersection of two indifference curves also violates the assumption of positive
marginal utilities of the two commodity. In Fig., intersection of IC1 and IC2 means additional amount of BC has
zero utility. Therefore, indifference curves can never intersect or touch each other.
ii)Elasticity of substitution is the elasticity of the ratio of two inputs to a production (or utility) function with
respect to the ratio of their marginal products (or utilities).[1] It measures the curvature of an isoquant and
thus, the substitutability between inputs (or goods), i.e. how easy it is to substitute one input (or good) for the
other.[2] In the modern period, John Hicks is considered to have formally introduced this concept in 1932,
however he had, by his own admission, introduced the inverse of the elasticity of substitution, or the elasticity
of complementarity. The credit then, also by Hicks' own admission, should go to Joan Robinson.

12
iii) Research and Development. Monopolies can make supernormal profit; this can be used to fund high cost
capital investment spending. Successful research can be used for improved products and lower costs in the
long term. This is important for industries like telecommunications, aeroplane manufacture and
Pharmaceuticals. Without monopoly power that a patent gives, there may be less development of medical
drugs.
Economies of scale. Increased output will lead to a decrease in average costs of production. These can
be passed on to consumers in the form of lower prices.
iv) A homogeneous product is one that cannot be distinguished from competing products from different
suppliers. In other words, the product has essentially the same physical characteristics and quality as similar
products from other suppliers. One product can easily be substituted for the other. To a buyer, this means that
you cannot tell the difference between a product from ABC Company and one from XYZ Company.
When you are shopping for product that happens to be homogenous, that means all versions of the product
serve exactly the same purpose, and you likely don't care which one you use. Therefore, if you were shopping
to buy the 'best' product, the only difference would be price. The term is usually applied to agricultural
products, metal and energy-based commodities. For example, when you buy a bag of green apples, you likely
don't know where they came from or who grew them (and you probably don't care). You base your selection
on price alone.
v)The 4 Stages of the Business Cycle
There are four phases that describe the business cycle. At any point in time you are in one of these stages:
1. Contraction - When the economy starts slowing down. It's usually accompanied by abear market.
2. Trough - When the economy hits bottom, usually in arecession.
3. Expansion - When the economy starts growing again. It's usually signaled by abull market.
4. Peak - When the economy is overheated, and is in a state of "irrational exuberance." This is when
inflation rears its ugly head.
ANS2) Law of diminishing marginal utility (DMU) states that as we consume more and more units of a
commodity, the utility derived from each successive unit goes on decreasing.

In making choices, most people spread their incomes over different

kinds of goods. People prefer a variety of goods because consuming more and more of any one good reduces
the marginal satisfaction derived from further consumption of the same good. This law expresses an important
relationship between utility and the quantity consumed of a commodity. Let us understand this law with the
help of an example:
Suppose your father has just come from work and you offer him a glass of juice. The first glass of juice will give
him great satisfaction. The satisfaction with the second glass of juice will be relatively lesser. With further
consumption, a stage will come, when he would not need any more glass of juice, i.e. when the marginal utility
drops to zero. After that point, if he is forced to consume even one more glass of juice, it will lead to disutility.
Such a decrease in satisfaction with consumption of successive units occurs due to Law of diminishing marginal
utility.Law of DMU has universal applicability and applies to all goods and services. This law was first given by a
German economist H.H. Gossen. That is why, it is also known as Gossens first law of consumption.
13
Assumptions of Law of Diminishing Marginal Utility:
The law of DMU operates under certain specific conditions. Economists call them the assumptions of this law.
These are as follows:
1. Cardinal measurement of utility:
It is assumed that utility can be measured and a consumer can express his satisfaction in quantitative terms
such as 1, 2, 3, etc.
2. Monetary measurement of utility:
It is assumed that utility is measurable in monetary terms.
3. Consumption of reasonable quantity:
It is assumed that a reasonable quantity of the commodity is consumed. For example, we should compare MU
of glassfuls of water and not of spoonfuls. If a thirsty person is given water in a spoon, then every additional
spoon will yield him more utility. So, to hold the law true, suitable and proper quantity of the commodity
should be consumed.
4. Continuous consumption:
It is assumed that consumption is a continuous process. For example, if one ice-cream is consumed in the
morning and another in the evening, then the second ice-cream may provide equal or higher satisfaction as
compared to the first one.
5. No change in Quality:
Quality of the commodity consumed is assumed to be uniform. A second cup of ice-cream with nuts and
toppings may give more satisfaction than the first one, if the first ice-cream was without nuts or toppings.
6. Rational consumer:
The consumer is assumed to be rational who measures, calculates and compares the utilities of different
commodities and aims at maximising total satisfaction.
7. Independent utilities:
It is assumed that all the commodities consumed by a consumer are independent. It means, MU of one
commodity has no relation with MU of another commodity. Further, it is also assumed that one persons utility
is not affected by the utility of any other person.
8. MU of money remains constant:
As a consumer spends money on the commodity, he is left with lesser money to spend on other commodities.
In this process, the remaining money becomes dearer to the consumer and it increases MU of money for the
consumer. But, such an increase in MU of money is ignored. As MU of a commodity has to be measured in
monetary terms, it is assumed that MU of money remains constant.
9. Fixed Income and prices:
It is assumed that income of the consumer and prices of the goods which the consumer wishes to purchase
remain constant.
It must be noted that Utility approach to Consumers Equilibrium is based on all these assumptions.
Diagrammatic Explanation of Law of DMU:
Let us understand the law with the help of Table 2.2 and Fig. 2.2:
Table 2.2: Law of Diminishing Marginal Utility
Units of Ice Total Utility (in
Cream utils) Marginal Utility (in utils)
1 20 20
2 36 16
3 46 10
4 50 4
5 50 0 (Point of Satiety)
6 44 -6

14
In the diagram, units of ice-cream are shown along the X-axis and MU along the Y-axis. MU from each
successive ice-cream is represented by points A, B, C, D and E. As seen, the rectangles (showing each level of
satisfaction) become smaller and smaller with increase in consumption of ice-creams.
MU falls from 20 to 16 and then to 10 utils, when consumption is increased from 1 st to 2nd and then to 3rd ice-
cream. 5th ice-cream has no utility (MU= 0) and this is known as the Point of satiety. When 6th ice-cream is
consumed, MU becomes negative. MU curve slopes downwards showing that MU of successive units is falling.

ANS3) The five determinants of demand are:

1. Price of the good or service.
1. Prices of related goods or services. These are either complementary, which are things that are usually
bought along with the product in demand. They could also be substitutes for the product in demand.
2. Income of those with the demand.
3. Tastes or preferences of those with the demand.
4. Expectations. These are usually about whether the price will go up.
For aggregate demand, the number of buyers in the market is a sixth determinant.
Internal Assignment No. 1
Financial Management109
ANS1)i)Return, Risk And The Security Market Line - Systematic And Unsystematic Risk. Unsystematic risk, also
known as "specific risk," "diversifiable risk" or "residual risk," is the type of uncertainty that comes with the
company or industry you invest in. Unsystematic risk can be reduced throughdiversification. Systematic risk
refers to the risk which affects the whole stock market and therefore it cannot be reduced or diversified away.
For example any global turmoil will affect the whole stock market and not any single stock, similarly any change
in the interest rates affect the whole market though some sectors are more affected then others. This type of
risk is called non diversifiable risk because no amount of diversification can reduce this risk.;Unsystematic risk is
the extent of variability in the stock or securitys return on account of factors which are unique to a company.
For example it may be possible that management of a company may be poor, or there may be strike of workers
which leads to losses. Since these factors affect only one company, this type of risk can be diversified away by
investing in more than one company because each company is different and therefore this risk is also called
diversifiable risk.

ii) The Miller and Orr model of cash management is one of the various cash management models in operation.
It is an important cash management model as well. It helps the present day companies to manage their cash
while taking into consideration the fluctuations in daily cash flow. Description of the Miller and Orr Model of
Cash ManagementAs per the Miller and Orr model of cash management the companies let their cash balance
move within two limits - the upper limit and the lower limit. The companies buy or sell the marketable
securities only if the cash balance is equal to any one of these. When the cash balances of a company touches

15
the upper limit it purchases a certain number of salable securities that helps them to come back to the desired
level.

iii) Existence of Large Near-Money Assets: A developed money market has a large number of near-money assets of
various types such a bills of exchange, promissory notes, treasury bills, securities, bonds, etc. The larger the number of
near-money assets, the more developed is the money market. Integrated Interest-Rate Structure:Another important
characteristic of a developed money market is that it has an integrated interest-rate structure. The interest rates
prevailing in the various sub-markets are integrated to each other. A change in the bank rate leads to proportional
changes in the interest rate prevailing in the sub-markets.
iv) International financial management, also known as international finance, is the management of finance in
an international business environment; that is, trading and making money through the exchange of foreign
currency.
v) The balance of payments, including the international investment position, forms an integral part of the
National Accounts, there is complete concordance between them in concept and classification, although the
extent of cross-classifications may differ between the two systems.
The balance of payments and National Accounts identify resident producers and consumers identically, and
both invoke the same concepts of economic territory and centre of economic interest. Both use market prices
as the primary concept of valuation of transactions and they adopt identical concepts of accrual accounting.
The systems use identical conversion procedures to convert transactions which take place in foreign currency
to UK currency.
ANS2) Financial management refers to the efficient and effective management of money (funds) in such a
manner as to accomplish the objectives of the organization. It is the specialized function directly associated
with the top management. The significance of this function is not seen in the 'Line' but also in the capacity of
'Staff' in overall of a company. It has been defined differently by different experts in the field.It includes how to
raise the capital, how to allocate it i.e. capital budgeting. Not only about long term budgeting but also how to
allocate the short term resources like current liabilities. It also deals with the dividend policies of the share
holders.
The financial management is generally concerned with procurement, allocation and control of financial
resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.

2. To ensure adequate returns to the shareholders which will depend upon the earning capacity, market
price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum
possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of
return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital so that a
balance is maintained between debt and equity capital.
ANS4) Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out
to shareholders. Some evidence suggests that investors are not concerned with a company's dividend
policy since they can sell a portion of their portfolio of equities if they want cash.
1. Stability of Earnings. The nature of business has an important bearing on the dividend policy. Industrial units
having stability of earnings may formulate a more consistent dividend policy than those having an uneven flow
of incomes because they can predict easily their savings and earnings. Usually, enterprises dealing in
necessities suffer less from oscillating earnings than those dealing in luxuries or fancy goods.
2. Age of corporation. Age of the corporation counts much in deciding the dividend policy. A newly established
company may require much of its earnings for expansion and plant improvement and may adopt a rigid
16
dividend policy while, on the other hand, an older company can formulate a clear cut and more consistent
policy regarding dividend.
3. Liquidity of Funds. Availability of cash and sound financial position is also an important factor in dividend
decisions. A dividend represents a cash outflow, the greater the funds and the liquidity of the firm the better
the ability to pay dividend. The liquidity of a firm depends very much on the investment and financial decisions
of the firm which in turn determines the rate of expansion and the manner of financing. If cash position is
weak, stock dividend will be distributed and if cash position is good, company can distribute the cash dividend.
4. Extent of share Distribution. Nature of ownership also affects the dividend decisions. A closely held
company is likely to get the assent of the shareholders for the suspension of dividend or for following a
conservative dividend policy. On the other hand, a company having a good number of shareholders widely
distributed and forming low or medium income group, would face a great difficulty in securing such assent
because they will emphasise to distribute higher dividend.
5. Needs for Additional Capital. Companies retain a part of their profits for strengthening their financial
position. The income may be conserved for meeting the increased requirements of working capital or of future
expansion. Small companies usually find difficulties in raising finance for their needs of increased working
capital for expansion programmes. They having no other alternative, use their ploughed back profits. Thus,
such Companies distribute dividend at low rates and retain a big part of profits.
Internal Assignment No. 2
Financial Management109
ANS1)i) What is the difference between Arbitrage and Speculation? The aim of both arbitrage and
speculation is to make some form of profit even though the techniques used are quite different to each other.
Arbitrage traders take lower levels of risk, and benefit from the natural market inconsistencies by buying at a
lower price from one market and selling at a higher price at another market. Speculation is done by trading
instruments such as stocks, bonds, currency, commodities, and derivatives, and a speculator looks to make a
profit through the rising and falling of the prices in these assets.

ii) Marginal Cost of Capital (MCC) Schedule is a graph that relates the firm's weighted average cost of each unit
of capital to the total amount of new capital raised.

iii) Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota production system
(TPS), is a methodology aimed primarily at reducing flow times within production as well as response times
from suppliers and to customers. Following its origin and development in Japan, largely in the 1960s and 1970s
and particularly at Toyota,[1][2] JIT migrated to Western industry in the 1980s, where its features were put into
effect in many manufacturing companiesas is attested to in several books[3][4][5][6] and compendia of case
studies and articles from the 1980s.[7][8][9][10]As is often the case with management initiatives, some firms,
consultancies, and writers have posed alternate terms for JIT manufacturing. Motorola's choice was short-cycle
manufacturing (SCM).[11][12] IBM's was continuous-flow manufacturing (CFM),[13][14] and demand-flow
manufacturing (DFM), a term handed down from consultant John Constanza at his Institute of Technology in
Colorado.[15] Still another alternate was mentioned by Goddard, who said that "Toyota Production System is
often mistakenly referred to as the 'Kanban System,'" and pointed out that kanban is but one element of TPS,
as well as JIT production.

iv) Before going to redeem the preference shares as per section 80 of the Companies Act, 1956, a company
should have to follow the conditions: i) There must be a provision in the Articles of Association regarding the
redemption of preference shares. ii) The redeemable preference shares must be fully paid up. If there is any
partly paid share, it should be converted in to fully paid shares before redemption. iii) The redeemable
preference shareholders should be paid out of undistributed profit/ distributable profit or out of fresh issue of
shares for the purpose of redemption. iv) If the shares are redeemed at a premium, it should be should be
17
provided out of securities premium or profit and loss account or general reserve account. v) The proceeds from
fresh issue of debentures cannot be utilized for redemption. vi) The amount of capital reserve cannot be used
for redemption of preference shares. vii) If the shares are redeemed out of undistributed profit , the nominal
value of share capital, so redeemed should be transferred to Capital Redemption Reserve Account. This is also
known as capitalization profit.So, you may understand that a company must follow the above conditions for
the purpose of redemption of its redeemable preference shares. In the next section we shall discuss about the
Capital Redemption Reserve account.

v) Cash dividends are the most common form of payment and are paid out in currency, usually via electronic
funds transferor a printed paper check.
Stock or scrip dividends are those paid out in the form of additional stock shares of the issuing corporation, or
another corporation (such as its subsidiary corporation).
Stock dividend distributions are issues of new shares made to limited partners by a partnership in the form of
additional shares. Nothing is split, these shares increase the market capitalization and total value of the
company at the same time reducing the original cost basis per share.
Property dividends or dividends in specie (Latin for "in kind") are those paid out in the form of assets from the
issuing corporation or another corporation,
Interim dividends are dividend payments made before a company's Annual General Meeting (AGM) and final
financial statements. This declared dividend usually accompanies the company's interim financial statements.
ANS6) DEFINITION of 'Cash Management' The corporate process of collecting,managing and (short-term)
investing cash. A key component of ensuring a company's financial stability and solvency. Frequently corporate
treasurers or a business manager is responsible for overall cash management.
Nature of business:The working capital requirement of a firm is closely related to the nature of its business. A
service firm, like an electricity undertaking or a transport corporation which has a short operating cycle and
which sells predominantly on cash basis, has a modest working capital requirement. On the other hand, a
manufacturing concern likes a machine tools unit, which has a long operating cycle and which sells largely on
credit, has a very substantial working capital requirement.
Seasonality of operations:Firms which have marked seasonality in their operations usually have highly
fluctuating working capital requirements. To illustrate, consider a firm manufacturing ceiling fans. The sale of
ceiling fans reaches a peak during the summer months and drops sharply during the winter period. The working
capital need of such firm is likely to increase considerably in summer months and decrease significantly during
the winter period. On the other hand, a firm manufacturing product like lamps, which have even sales round
the year, tends to have stable working capital needs.
Production policy:A firm marked by pronounced seasonal fluctuation in its sales may pursue a production
policy which may reduce the sharp variations in working capital requirements. For example, a manufacturer of
ceiling fans may maintain a steady production throughout the year rather than intensify the production activity
during the peak business season. Such a production policy may dampen the fluctuations in working capital
requirements.
Market conditions The degree of competition prevailing in the market has an important bearing on working
capital needs. When competition is keen, a larger inventory of finished is required to promptly serve customers
who may not be inclined to wait because other manufacturers are ready to meet their needs.
ANS8)a) A fund which exists both on the financial statements of a company and also as part of
the company's internal accounts. A business with a capital redemption reserve fund is legally mandated by the
U.S. Securities and Exchange Commission to make capital redemptions for certain transactions acting as
a hedge against capital reductions.
b) The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to
all its security holders to finance its assets.

18
c) In supply chain, ABC analysis is an inventory categorization method which consists in dividing items into
three categories, A, B and C: A being the most valuable items, C being the least valuable ones. This method
aims to draw managers' attention on the critical few (A-items) and not on the trivial many (C-items).
d) Economic order quantity (EOQ) is the order quantity that minimizes the total inventory holding costs and
ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine
this order quantity is also known as Wilson EOQ Model or Wilson Formula. The model was developed by Ford
W. Harris in 1913,[1] but R. H. Wilson, a consultant who applied it extensively, is given credit for his in-depth
analysis
Internal Assignment No. 1
Indian Ethos & Management110
ANS1)i) Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines
ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of
business conduct and is relevant to the conduct of individuals and entire organizations. [1]Business ethics
has normative and descriptive dimensions. As a corporate practice and a career specialization, the field is
primarily normative. Academics attempting to understand business behavior employ descriptive methods. The
range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-
economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both
within major corporations and within academia. For example, most major corporations today promote their
commitment to non-economic values under headings such as ethics codes and social responsibility charters.
Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some contrivance to raise prices." [2] Governments
use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics
implicitly regulates areas and details of behavior that lie beyond governmental control. The emergence of large
corporations with limited relationships and sensitivity to the communities in which they operate accelerated
the development of formal ethics regimes.[

ii) ValuesThe word "value" refers to the perceived worth of a thing. An expensive sports car has financial value
because people are willing to pay money to own it. Honesty has moral value because many people see those
who are honest as having more worth than those who are not, and because some people are willing to make
personal sacrifices to achieve honesty. Because values are always defined by perceived worth, a company's
values depend on what the owner sees as having worth. An employee's values are defined by what the
employee perceives as having worth. If the owner of a car dealership values integrity but his top salesperson
values victory in competition, the owner cannot necessarily count on the integrity of his salesperson.
VirtuesCompany mission statements and slogans often reference moral virtues based on the values the owner
of the company wants to promote. For instance, a car dealership might use the slogan, "Integrity, Loyalty,
Trust." Integrity, loyalty and trust are all virtues, so the purpose of the slogan is for all employees of the
dealership to be guided by those three virtues when making their decisions. Ethical systems based on abstract
virtues are referred to as "virtue ethics" systems. There are other systems for making ethical decisions, and
some of them produce very different results, depending on the situation.
iii) Corporate Social Responsibility is a management concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders.
iv) Total Quality Management (TQM) is a comprehensive and structured approach to organizational
management that seeks to improve the quality of products and services through ongoing refinements in
response to continuous feedback. TQM requirements may be defined separately for a particular organization
or may be in adherence to established standards, such as the International Organization for
Standardization's ISO 9000 series. TQM can be applied to any type of organization; it originated in the
manufacturing sector and has since been adapted for use in almost every type of organization imaginable,

19
including schools, highway maintenance, hotel management, and churches. As a current focus of e-business,
TQM is based on quality management from the customer's point of view.
v) Unethical behavior in the workplace can be defined as any action that does not conform with the standards
of conduct established by the organization. Unethical behavior can occur in the relationships between
employees, in the way an employee goes about his business or how he uses company resources. Unethical
behavior can even break the law in some situations.

Inappropriate Computer Use

Employees may use company computers to engage in unethical behavior. For example, an employee who is not
permitted to use the Internet for personal reasons commits an unethical act by shopping online while at work.
Random Internet surfing takes away from the time she spends on work-related activities. Employees
sometimes use company email to spread inappropriate websites or videos to co-workers, some of which could
be deemed offensive by the recipients.

Time MisuseUnethical behavior can include "stealing" time from the company, as the company is compensating
employees and receiving no productivity in return. In addition to time spent on aimless Internet surfing, time
misuse can consist of extending breaks beyond the allotted time, congregating around the water cooler or
engaging in lengthy gossip sessions during working time, falsifying time sheets, coming into work late or leaving
early and running personal errands while traveling on company business.
ANS2) Rights and responsibilities of employers and employeesEmployers and employees have responsibilities
to each other, they should also expect their rights to be upheld. These rights and responsibilities relate to areas
such as Health and Safety, the provision of Terms and Conditions of Employment, Equal Opportunities and the
right to be paid a Minimum Wage. The Health and Safety at Work Acts set out responsibilities and rights for
both employees and employers. Employees are expected to carry out their work in a way that has regard to the
safety of others. Employers are expected to abide by a range of requirements governing such aspects as
providing safe machinery and equipment, carrying out regular health and safety checks, ensuring the training of
employees in health and safety issues, and carrying out a risk assessment to assess the dangers of particular
work activities. There are also specific regulations about the way in which potentially harmful substances
should be used and stored. There are a number of requirements about the minimum temperature at work, and
other aspects of working conditions.
Employees are expected to receive the terms and conditions of their work setting out when their work
commences, what their main duties are, who they are accountable to, rates of pay, and other entitlements.
Equal Opportunities legislation sets out that all employees should receive the same pay and conditions for
carrying out the same or broadly similar work. There are also laws against sexual, racial and disability
discrimination.

The Minimum Wage Act sets out the Minimum Wage that workers can expect to receive which today is more
than 5 an hour. The Minimum Wage is regularly reviewed and will increase over time. There are also
European Union requirements governing the maximum number of hours that workers will be expected to work
in a typical week which is currently set at 48 hours.

Employers and employees are expected to meet minimum legal requirements for such areas as Health and
Safety at Work, and minimum standards and conditions related to hours, and the treatment of people in the
workplace. Along with rights for employees there are corresponding responsibilities such as the expectation to
work in a safe way and to have regard for the safety of work colleagues.

20
ANS4) BASIC PRINCIPLES OF MANAGEMENT AS PER ANCIENT INDIAN WISDOM AND INSIGHT Each Soul is a
Potential God Holistic Approach Equal importance to Subjectivity/Objectivity Karma yoga Yoga
Karmasu Kaushalam Co-operation
3. Each Soul is a Potential God Every Human being has a Spark of Divine Divine means perfection in
knowledge, wisdom and power Immense Potential Energy for Self Development Make Impossible a Reality
or Perform Miracles and bring Prosperity to his organization along with Harmony, Happiness and Personal
Devpt
4. Holistic Approach Based on Spiritual Principle of Unity, Oneness, Non-dual or Advaita concept Entire
Humanity is One Atmano Mokshartham Jagat Hitya Cha. (For gaining perfection in individual life, as well as
for the welfare of the world.)
5. Equal Importance to Subjectivity / Objectivity Subject is subtle and intangible Object is concrete and
tangible or visible Qualities such as courage, vision, social awareness, fearlessness, integrity, pure and clear
mind, truth, etc. are subjective and has equal importance to that of Tangible things like Money, Material etc.
Internal Assignment No. 2
Indian Ethos & Management110
ANS1)i) The holistic management decision-making framework uses six key steps to guide the management of
resources: Define in its entirety what you are managing. No area should be treated as a single-product system.
By defining the whole, people are better able to manage. This includes identifying the available resources,
including money, that the manager has at his disposal.Define what you want now and for the future. Set the
objectives, goals and actions needed to produce the quality of life sought, and what the life-nurturing
environment must be like to sustain that quality of life far into the future.Watch for the earliest indicators of
ecosystem health. Identify the ecosystem services that have deep impacts for people in both urban and rural
environments, and find a way to easily monitor them. One of the best examples of an early indicator of a poorly
functioning environment is patches of bare ground. An indicator of a better functioning environment is newly
sprouting diversity of plants and a return or increase of wildlife.Don't limit the management tools you use. The
eight tools for managing natural resources are money/labor, human creativity, grazing, animal impact, fire,
rest, living organisms and science/technology. To be successful you need to use all these tools to the best of
your ability.Test your decisions with questions that are designed to help ensure all your decisions are socially,
environmentally and financially sound for both the short and long term.Monitor proactively, before your
managed system becomes more imbalanced. This way the manager can take adaptive corrective action quickly,
before the ecosystem services are lost. Always assume your plan is less than perfect and use a feedback
loop that includes monitoring for the earliest signs of failure, adjusting and re-planning as needed. In other
words use a "canary in a coal mine" adaptive approach.

ii) Unethical Business Practices The financial sector is abuzz with acts of violation of norms to amass wealth in
an unethical manner. Following are some of the activities that come under the ambit of unethical practice.
Resorting to dishonesty, trickery or deception.
Distortion of facts to mislead or confuse.
Manipulating people emotionally by exploiting their vulnerabilities.
Greed to amass excessive profit.
Creation of false documents to show increased profits.
Avoiding penalty or compensation for unlawful act.
Lack of transparency and resistance to investigation.
Harming the environment by exceeding the government prescribed norms for pollution.
Invasion of privacy used as leverage, for obtaining personal or professional gains.
Sexual discrimination
iii) common external factors fall into several categories, including socio-economic, legal or ethical, political and
21
technological. Socio-economic factors relate to the values, attitudes and concerns of your target customers and
their economic abilities to afford your products. The legal, ethical and political environments generally relate to
your need to abide by business laws and to meet the ethical or social responsibility standards of your
customers and communities. In some industries, technological evolution drives the need for companies to
adapt and constantly research for improvements.
iv) Quality of Working Life" (QWL) is a term that had been used to describe the broader job-related experience
an individual has Quality of work life (QWL) refers to the favourableness or unfavourableness of a job
environment for the people working in an organisation. The period of scientific management which focused
solely on specialisation and efficiency, has undergone a revolutionary change. The traditional management (like
scientific management) gave inadequate attention to human values. In the present scenario, needs and aspirations
of the employees are changing. Employers are now redesigning jobs for better QWL.

v) Trusteeship is a socio-economic philosophy that was propounded by Mahatma Gandhi[1] . It provides a

means by which the wealthy people would be the trustees of trusts that looked after the welfare of the people
in general. This concept was condemned by socialists as being in favor of the landlords, feudal princes and the
capitalists, opposed to socialist theories.Gandhi believed that the rich people could be persuaded to part with
their wealth to help the poor. Putting it in Gandhiji's words "Supposing I have come by a fair amount of wealth
either by way of legacy, or by means of trade and industry I must know that all that wealth does not belong
to me; what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of
others. The rest of my wealth belongs to the community and must be used for the welfare of the
community." [1] Gandhiji along with his followers, after their release from the prison formulated a "simple" and
a "practical" formula where Trusteeship was explained.
ANS2) The issue of the relationships between law and ethics is a long standing one in the sphere of philosophy
and law. Indeed there are evidences to show that there are convergences between law and ethics. From time
immemorial, today s society is also a testimony to attest to the fact that we as humans live in the complexities
and pluralism of cultures, backgrounds, ethnicities, individual believes and perceptions of the environment in
which we are domiciled. More so, one can imagine chaos, rowdiness, unruliness, entropy, anarchy, tyranny,
dictatorship and all sort of abuses to pervade the land in the absence of the instruments to inform us all about
which acts are wrong and which are not.However, most crucial of the instruments capable of ensuring societal
harmony, socio-political integration, and respect for human dignity, relative peace and economic prosperity is
the major concern of this essay. And these potent instruments are law and ethics. I will discuss the subsisting
relationships between the interwoven and mind-widening concepts of law and ethics and the way the society
we live today is affected by them.

ANS4) Bhagavad Gta And Managerial Effectiveness

Now let us re-examine some of the modern management concepts in the light of theBhagavad Gta which is a
primer of management by values.

Utilisation of Available Resources The first lesson in the management science is to choose wisely and utilise
optimally the scarce resources if one has to succeed in his venture. During the curtain raiser before the
Mahabharata War Duryodhana chose S'r Krishna's large army for his help while Arjuna selected S'r Krishna's
wisdom for his support. This episode gives us a clue as to who is an Effective Manager.

Attitude Towards WorkThree stone-cutters were engaged in erecting a temple. As usual a H.R.D. Consultant
asked them what they were doing. The response of the three workers to this innocent-looking question is
illuminating. 'I am a poor man. I have to maintain my family. I am making a living here,' said the first stone-
cutter with a dejected face.
22
 'Well, I work because I want to show that I am the best stone-cutter in the country,' said the second one with a
sense of pride. 'Oh, I want to build the most beautiful temple in the country,' said the third one with a visionary
gleam. Their jobs were identical but their perspectives were different. What Gta tells us is to develop the
visionary perspective in the work we do. It tells us to develop a sense of larger vision in one's work for the
common good.Work CommitmentThe popular verse 2.47 of the Gta advises non- attachment to the fruits or
results of actions performed in the course of one's duty. Dedicated work has to mean 'work for the sake of
work'. If we are always calculating the date of promotion for putting in our efforts, then such work cannot be
commitment-oriented causing excellence in the results but it will be promotion-oriented resulting in inevitable
disappointments. By tilting the performance towards the anticipated benefits, the quality of performance of
the present duty suffers on account of the mental aGtations caused by the anxieties of the future. Another
reason for non-attachment to results is the fact that workings of the world are not designed to positively
respond to our calculations and hence expected fruits may not always be forthcoming . So, the Gta tells us not
to mortgage the present commitment to an uncertain future. If we are not able to measure up to this height, then
surly the fault lies with us and not with the teaching.

Internal Assignment No. 1

FUNDAMENTAL OF INFORMATION TECHNOLOGY111
ANS1)i) Main frame computers are large scale general purpose computers systems. The word main frame has
its origin in early computers which were big in size and required large frame work in house. Main frame
computers have large storage capacities in several million words. Secondary storage devices are directly
accessible by these computers. These computers systems have more than one CPU and can support a large
number of terminals.
These computers are fast in operations and accept all types of high level languages.
Mini computers are general purpose computer system with reduced storage capacity and performance as
compare to main frame computers. These computers operate a CPU speed of few million instructions per
second. These computers accept all types of high level languages and word length in these computers is 16 or
32 bits. These computers can support more than 20 terminals.
Micro computers are available are small in size which utilize micro processors. The CPU of micro computers is
usually contained in one chip. Micro computers have low storage capacity and slow operation rate than mini
computers and main frame computers. Micro computers are provided with video display unit, printer and
secondary storage devices such as CD Drive, hard disk.
ii)
RAM ROM

Random Access Memory or RAM is a form of data Read-only memory or

storage that can be accessed randomly at any time, in ROM is also a form of
any order and from any physical location., allowing data storage that can
quick access and manipulation. not be easily altered
or
Definition reprogrammed.Stores
instuctions that are
not nescesary for re-
booting up to make
the computer
operate when it is
switched off.They are

23
 RAM ROM

hardwired.

Stands for Random Access Memory Read-only memory

RAM allows the computer to readdata quickly to run ROM stores the
applications. It allows reading and writing. program required to
Use initially boot the
computer. It only
allows reading.

RAM is volatile i.e. its contents are lost when the It is non-volatile i.e.
device is powered off. its contents are
Volatility retained even when
the device is powered
off.

The two main types of RAM are static RAM and The types of ROM
Types dynamic RAM. include PROM,
EPROM and EEPROM.

iii) Simplicity : A good programming language must be simple and easy to learn and use. It should provide a
programmer with a clear, simple and unified set of concepts, which can be easily grasped. The overall simplicity
of a programming language strongly affects the readability of the programs written in that language, and
programs, which are easier to read and understand, are also easier to maintain. It is also easy to develop and
implement a compiler or an interpreter for a programming language, which is simple. However, the power
needed for the language should not be sacrificed for simplicity.
Naturalness:- A good language should be natural for the application area, for which it has been designed. That
is, it should provide appropriate operators, data structures, control structures, and a natural syntax to facilitate
the users to code their problem easily and efficiently.
Abstraction:- Abstraction means the ability to define and then use complicated structures or operations in
ways that allow many of the details to be ignored. The degree of abstraction allowed by a programming
language directly effects its writ ability. Object oriented language support high degree of abstraction. Hence,
writing programs in object oriented language is much easier. Object oriented language also support re usability
of program segments due to this features.
Efficiency :- Programs written in a good programming language are efficiently translated into machine code,
are efficiently executed, and acquire as little space in the memory as possible. That is a good programming
language is supported with a good language translator which gives due consideration to space and time
efficiency.
Structured:- Structured means that the language should have necessary features to allow its users to write
their programs based on the concepts of structured programming. This property of a moreover, it forces a
programmer to look at a problem in a logical way, so that fewer errors are created while writing a program for
the problem.
Compactness :- In a good programming language, programmers should be able to express intended operations
concisely. A verbose language is generally not liked by programmers, because they need to write too much.
24
 Locality :- A good programming language should be such that while writing a programmer concentrate almost
solely on the part of the program around the statement currently being worked with.
iv) An agreed-upon format for transmitting data between two devices. The protocol determines the following:
the type of error checking to be used

ANS2) Network topology is the arrangement of the various elements (links, nodes, etc.) of a computer
network.[1][2] Essentially, it is the topological[3] structure of a network and may be depicted physically or
logically. Physical topology is the placement of the various components of a network, including device location
and cable installation, while logical topology illustrates how data flows within a network, regardless of its
physical design. Distances between nodes, physical interconnections, transmission rates, or signal types may
differ between two networks, yet their topologies may be identical.
An example is a local area network (LAN): Any given node in the LAN has one or more physical links to other
devices in the network; graphically mapping these links results in a geometric shape that can be used to
describe the physical topology of the network. Conversely, mapping the data flow between the components
determines the logical topology of the network.
ANS4) A computer network consists of two or more computing devices connected by a medium allowing the
exchange of electronic information. These computing devices can be mainframes, workstations, PCs, or
specialized computers; they can also be connected to a variety of peripherals, including printers, modems, and
CD-ROM towers. Most networks are supported by a host of specialized software and hardware that makes
these connections possible, including routers, bridges, and gateways, which help accommodate traffic between
unlike systems.
Many different types of computer networks exist. Some, such as local area networks (LANs), metropolitan area
networks (MANs), and wide area networks (WANs), are defined by their geographic layout and the differing
technologies that support such layouts. LANs are by far the most common, and in most cases, the fastest.
Networks may be public, such as the Internet; semi-public, such as subscription networks (including
subscription-based Internet service providers and other content-based networks); or private, such as internal
corporate LANs, WANs, intranets, and extranets. Most networks are private, but of course the relatively few
public ones, like the Internet, support a very large user base. Networks may also be open, or linked to other
networks, or closed, which means they are self-contained and do not allow connectivity with outside resources.
Most modern corporate networks are somewhere in between; they often allow access to the outside, but
tightly restrict access from the outside. "Open" can also describe whether network technology is based on
widely accepted standards that multiple hardware/software vendors support, versus a closed or proprietary
system that is dependent on a single developer (or very few).
Internal Assignment No. 2
FUNDAMENTAL OF INFORMATION TECHNOLOGY111
ANS1)i) Secondary storage does not directly interact with a computer application and operates outside of the
direct control of a computer CPU. Secondary storage devices are typically backup versions of primary storage
data and can include formats such as external hard drives or cloud backup applications. In a business setting,
older storage technology such as tape libraries or storage area network are also used
ii) Data transmission, digital transmission, or digital communications is the physical transfer
of data (a digital bit streamor a digitized analog signal[1]) over a point-to-point or point-to-multipoint
communication channel. Examples of such channels are copper wires, optical fibers, wireless communication
channels, storage media and computer buses. The data are represented as an electromagnetic signal, such as
an electrical voltage, radiowave, microwave, or infrared signal.
iii) A computer device, such as a CD-ROM drive or printer, that is not part of the essential computer, i.e., the
memory and microprocessor. Peripheral devices can be external -- such as a mouse, keyboard, printer,
monitor, external Zip drive or scanner -- or internal, such as a CD-ROM drive, CD-R drive or internal modem.

25
iv)In telecommunications and computer networks, multiplexing (sometimes contracted to muxing) is a method
by which multiple analog message signals or digital data streams are combined into one signal over a shared
medium. The aim is to share an expensive resource. For example, in telecommunications, several telephone
calls may be carried using one wire. Multiplexing originated intelegraphy in the 1870s, and is now widely
applied in communications. Intelephony, George Owen Squier is credited with the development of telephone
carrier multiplexing in 1910.The multiplexed signal is transmitted over a communication channel, which may be
a physical transmission medium (e.g. a cable). The multiplexing divides the capacity of the low-level
communication channel into several high-level logical channels, one for each message signal or data stream to
be transferred. A reverse process, known as demultiplexing, can extract the original channels on the receiver
side.A device that performs the multiplexing is called a multiplexer (MUX), and a device that performs the
reverse process is called a demultiplexer (DEMUX or DMX)
v) For instance, a good backup might include the data on the computer, an external drive that has the data and
is kept with the computer, an onlinebackup of very important files, and also DVD's or another external hard
drive kept in a safety deposit box.
ANS2) Desktop publishing (abbreviated DTP) is the creation of documents using page layout skills on a personal
computer. Desktop publishing software can generate layouts and produce typographic quality text and images
comparable to traditional typography and printing. This technology allows individuals, businesses, and other
organizations to self-publish a wide range of printed matter. Desktop publishing is also the main reference for digital
typography. When used skillfully, desktop publishing allows the user to produce a wide variety of materials,
frommenus to magazines and books, without the expense of commercial printing.
Desktop publishing combines a personal computer and WYSIWYG page layout software to
create publication documents on a computer for either large scale publishing or small scale local multifunction
peripheral output and distribution. Desktop publishing methods provide more control over design, layout, and
typography than word processing. However, word processing software has evolved to include some, though by no
means all, capabilities previously available only with professional printing or desktop publishing. The same DTP skills
and software used for common paper and book publishing are sometimes used to create graphics forpoint of sale
displays, promotional items, trade show exhibits, retail package designs and outdoor signs. Although what is
classified as "DTP software" is usually limited to print and PDF publications, DTP skills aren't limited to print. The
content produced by desktop publishers may also be exported and used for electronic media. The job descriptions
that include "DTP", such as DTP artist, often require skills using software for producing e-books, web content,
and web pages, which may involve web design or user interface design for any graphical user interface.
ANS3)

Application
Subject Software System Software
Application software is
computer software designed
to help the user to perform System software is computer software designed to operate the computer
Definition specific tasks. hardware and to provide a platform for running application software.

26
 It is specific purpose
Purpose software. It is general-purpose software.

Package Program,
Classification Customized Program
Time Sharing,
Resource Sharing,
Client Server
Batch Processing Operating System
Real time Operating System
Multi-processing Operating System
Multi-programming Operating System
Distributed Operating System

Application Software
performs in a environment
which created by System Software Create his own environment to run itself and run other
Environment System/Operating System application.

Execution It executes as and when

Time required. It executes all the time in computer.

Application is not essential

Essentiality for a computer. System software is essential for a computer

The number of application

software is much more than
Number system software. The number of system software is less than application software.
Internal Assignment No. 1
104Consumer Behaviour
Q1)i) Learning is the act of acquiring new, or modifying and reinforcing, existing knowledge, behaviors, skills, values,
or preferences and may involve synthesizing different types of information. The ability to learn is possessed by humans,
animals, plants[1] and some machines. Progress over time tends to follow a learning curve. It does not happen all at once,
but builds upon and is shaped by previous knowledge. To that end, learning may be viewed as a process, rather than a
collection of factual and procedural knowledge. Learning produces changes in the organism and the changes produced are
relatively permanent.
1. Learning Focus: curriculum area and learning level.
2. Knowledge Objectives: intended learning outcomes and links to mandated standards.
3. Knowledge Processes: activities, marked up for the kind of knowledge making required of the learner (below),
sequenced appropriately and with a range that accommodates learner diversity.
4. Knowledge Outcomes: assessment processes: formative and summative.
5. Learning Pathways: recommended follow-on activities such as other Learning Elements.
ii) Characteristics/Features of Motivation:
1. Interaction between the individual and the situation:
Motivation is not a personal trait but an interaction between the individual and the situation.
2. Goal-directed behaviour:
Motivation leads to an action that is goal oriented. Motivation leads to accomplishment of organizational goals and
satisfaction of personal needs.
3. Systems oriented:
Motivation is influenced by two forces:
a. Internal forces:
These forces are internal to the individual, i.e., their needs, wants and nature.
b. External forces:
These forces are external to the individual, which may be organizational related such as management philosophy,
organizational structure, and superior-subordinate relationship, and also the forces found in the external environment such
as culture, customs, religion and values.
4. Positive or negative:
Positive motivation or the carrot approach offers positive incentives such as appreciation, promotion, status and incentives.
Negative motivation or stick approach emphasizes penalties, fines and punishments.
27
5. Dynamic and complex in nature:
Human behaviour is highly complex, and it becomes extremely difficult to understand people at work. Motivation is a
dynamic and complex process.
iii) Relationship marketing was first defined as a form of marketing developed from direct response marketing campaigns
which emphasizescustomer retention and satisfaction, rather than a dominant focus on sales transactions. [ As a practice,
relationship marketing differs from other forms of marketing in that it recognizes the long term value of customer
relationships and extends communication beyond intrusive advertising and sales promotional messages With the growth of
the internet and mobile platforms, relationship marketing has continued to evolve and move forward as technology opens
more collaborative and social communication channels. This includes tools for managing relationships with customers that
goes beyond simple demographic and customer service data. Relationship marketing extends to include inbound
marketing efforts, (a combination of search optimization and strategic content), PR, social media and application
development.
iv) Factors Affecting Perception:
There are individual differences in perceptual abilities. Two people may perceive the same stimulus differently.
The factors affecting the perceptions of people are:
a. Perceptual learning:
Based on past experiences or any special training that we get, every one of us learns to emphasise some sensory inputs
and to ignore others. For example, a person who has got training in some occupation like artistry or other skilled jobs can
perform better than other untrained people. Experience is the best teacher for such perceptual skills.
For example, blind people identify the people by their voice or by sounds of their footsteps.
b. Mental set:
Set refers to preparedness or readiness to receive some sensory input. Such expectancy keeps the individual prepared
with good attention and concentration. For example, when we are expecting the arrival of a train, we listen to its horn or
sound even if there is a lot of noise disturbance.
c. Motives and needs:
Our motives and needs will definitely influence our perception. For example, a hungry person is motivated to recognise
only the food items among other articles. His attention cannot be directed towards other things until his motive is satisfied.
d. Cognitive styles:
People are said to differ in the ways they characteristically process the information. Every individual will have his or her
own way of understanding the situation. It is said that the people who are flexible will have good attention and they are less
affected by interfering influences and to be less dominated by internal needs and motives than or people at the constricted
end.
v) Stage 1 Need recognition: Its sunday night. Youre hungry (internal physiological stimuli) and there is nothing in the
fridge. You will order food (statement of need).
Stage 2 Information search: You already have ordered to the Indian restaurant in your street last month (internal
information). A friend recommended a pizzeria in your neighbourhood (external information from environment). And this
morning youve found a flyer for a sushi restaurant in your mailbox (external information from advertising).
Stage 3 Alternative evaluation: You have a bad opinion of the Indian restaurant since youve been sick the last time
(inept set). The pizzeria is both recommended by your friend and also happens to be a well-known brand (positive
perception evoked set). As for the sushi restaurant, it got good reviews on Tripadvisor (positive perception evoked set).
Stage 4 Purchase decision: After evaluating the possibilities, youve decided to choose the well-known pizza delivery
chain. In addition, a new episode of your favorite TV show is broadcasted tonight on TV.
Stage 5 Post-purchase behavior: The pizza was good (positive review). But you know there was too many calories and
you regret a little bit (mixed feelings about yourself). The next time you will choose the sushi restaurant. There is less fat in
sushi than pizza (next purchase behavior
Q2) Howard-Sheth model is one of models that represent consumer behaviour on the market. It attempts to explain the
rationality of choice of the product by the consumer under conditions of incomplete information and reduced processing
capability. It analyses the external symptoms of behaviour, reactions and thought processes that cannot be subject to
direct observation.
Howard and Sheth model of consumer behaviour variables
Howard-Sheth model (fig. 1) is based on the assumption that the consumer behaves rationally during purchase, process is
repeatable and is result of incentives which have their source in the environment (input variables). It consists of four main
groups of variables:
I. Input variables, i.e. stimuli arising from the marketing activities and social environment of the consumer. Include three
different types of stimuli, which are:
significant incentives - physical characteristics and the attributes of a product, such as price, quality, originality and
accessibility,
symbolic incentives - verbal or visual characteristics of the product,
social stimuli - whose source is the social consumer environment, family, reference groups, and social class.

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II. Hypothetical constructs, including the psychological variables influencing consumer behaviour during the decision-
making process. It is regarded by the authors as abstract, not defined and not intended directly.
III. Output variables: purchase intention, attitude, brand perception and attention. They are noticeable effects of internal
processes, for example: decision to implement the purchase, disclosure of customer view and interest, as well as the
declaration of other activities. The most important output variable from the point of view of marketing is actual purchase,
because it involves carrying out activity based on consumer preferences.
IV. External variables that have not been presented in the Howard and Sheth model and are not direct part of the
decision-making process, however, have a significant impact on consumer decisions and are used in marketing activities
as a criterion for segmentation. These include such variables as: value of purchase for the buyer, the character traits of the
consumer, membership of a social group, the financial status of a consumer, the pressure of time.
Q3) A reference group is a group to which an individual or another group is compared.
Sociologists call any group that individuals use as a standard for evaluating themselves and their own behavior a reference
group.
Reference groups are used in order to evaluate and determine the nature of a given individual or other group's
characteristics and sociological attributes. It is the group to which the individual relates or aspires to relate himself or
herself psychologically. It becomes the individual's frame of reference and source for ordering his or her experiences,
perceptions, cognition, and ideas of self. It is important for determining a person's self-identity, attitudes, and social ties. It
becomes the basis of reference in making comparisons or contrasts and in evaluating one's appearance and performance.
Types of Reference Groups
Reference groups can be divided into two major types:
A normative reference group influences your norms, attitudes and values through direct interaction. Examples of
your normative reference groups include your parents, siblings, teachers, peers, associates and friends.
A comparative reference group is a group of individuals whom you compare yourself against and may strive to
be like. Examples include celebrities and heroes.
Internal Assignment No.2
104 Consumer Behaviour
Q1)i) Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of
their wants. There are different processes involved in the consumer behavior. Initially the consumer tries to find what
commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting
the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer
analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume.
Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and
psychological. The explanation of these factors is given below.
1. Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.
2. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family,
role and status.
3. Personal Factors
Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying
behavior are: lifestyle, economic situation, occupation, age, personality and self concept.
4. Psychological Factors
There are four important psychological factors affecting the consumer buying behavior. These are: perception, motivation,
learning, beliefs and attitudes.
ii) Definition of Reference Groups
A reference group includes individuals or groups that influence our opinions, beliefs, attitudes and behaviors. They often
serve as our role models and inspiration. Marketers view reference groups as important because they influence how
consumers interpret information and make purchasing decisions. Reference groups influence what types of products you
will purchase and which brand of product you choose.
iii) There is widespread agreement as to the nature of our emotional needs. The following are fundamental to mental
health:
A sense of security safe territory and an environment which allows us to relax and develop fully
Attention a form of nutrition. To give and receive good quality attention fuels the healthy development of each
individual, family and human group. It is also the means by which knowledge is passed on and cultures grow
Sense of autonomy and control having volition to make responsible choices (When we feel out of control,
especially of important elements of our lives, we become increasingly anxious and even depressed.)
Emotional intimacy to know that at least one other person accepts us totally for who we are, warts n all
Feeling part of a wider community a sense of belonging

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iv) Social stratification is a society's categorization of people into socioeconomic strata, based upon
their occupation and income, wealth andsocial status, or derived power (social and political). As such, stratification is the
relative social position of persons within a social group, category, geographic region, or social unit. In modern Western
societies, social stratification typically is distinguished as three social classes: (i) the upper class, (ii) the middle class, and
(iii) the lower class; in turn, each class can be subdivided into strata, e.g. the upper-stratum, the middle-stratum, and the
lower stratum.[1] Moreover, a social stratum can be formed upon the bases of kinship or caste, or both.

v) The Family Life Cycle

1. Unattached Adult
The main issue occurring in this first stage is accepting parent-offspring separation.
2. Newly Married Adults
The main in issue in this stage is commitment to the marriage. Rob is 23, and he has just gotten married. He is learning
how to no longer act for himself, and now act for the welfare of his wife and their relationship
3. Childbearing Adults
Rob's wife, Penny, has just given birth to their first child and named her Becky. They are now accepting new members into
the system.
4. Preschool-age Children
Becky has just entered a preschool and is full of energy, joy, and curiosity. And while adored by her parents, she is also a
bit draining..
5. School-age Child
Becky is 8 years old, and the issue at hand now is for Rob and Penny to allow their child to establish relationships outside
the family.
6. Teenage Child
This is a challenging time for Rob and Penny. Becky is now 15 years old and wanting more independence. 7. Launching
Center
Rob and Penny find it hard to believe, but it is actually time for Becky to head off for college and live on her own. 8. Middle-
aged Adults
It is a strange feeling for Rob and Penny to be alone in the house again after all those years. They are now letting go of
children and facing each other again.
9. Retired Adults
Rob and Penny have just moved to Florida because they thought it would be a great change of pace for their retirement.
Q2) Nicosia Model!
Stage 1:
Problem Recognition:
The buying process starts when the buyer recognizes a problem or need. This need can be triggered by internal stimuli
(such as feeling hungry or thirsty) or external stimuli (such as seeing an advertisement) that then becomes a drive.
By gathering information from a number of consumers, markets can identify the most frequent stimuli that spark interest in
a product category. They can then develop marketing strategies that triggers consumer interest and lead to the second
stage in the buying process. An aroused customer who recognizes a problem will be inclined to search for more
information. We can distinguish between two levels of arousal.
At the milder search strategy heightened attention, a person simply becomes more receptive to information about a
product. At the active information search level, a person surfs the internet, talks with friends and visits stores to learn more
about the product.
Consumer Sources:
Family, friends, neighbors and acquaintances.
Commercial Sources:
Advertising, web sites, sales persons, dealers, packaging, displays.
Public Sources:
Mass Media, consumer-rating, organizations.
Experimental Sources:
Handling, examining, using the product.
The consumer usually receives the most information from commercial (marketer-dominated) sources, although the most
influential information comes from personal sources.
Stage 2:

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Stage 3:
Evaluation of Alternatives:
Once the consumer has conducted an information search, how does he process competitive brand information and make a
final judgment? There are several evaluation processes; the most current models view the process as being cognitively
oriented, meaning that consumers form judgments largely on a conscious and rational basis.
When the consumer tries to satisfy a need, he seeks certain benefits from the product and he sees each product as a
bundle of attributes with varying abilities of delivering the benefits to satisfy this need. A person wanting to buy a camera
may like to see picture sharpness, camera size, and price etc.
Knowing that customers pay, the most attention to attributes that deliver the benefits they seek, many successful marketers
segment their markets according to the attributes that are salient to different consumer groups.
In the course of evaluating alternatives the consumer develops a set of brand beliefs about where each brand stands on
each attribute. The set of beliefs about a particular brand, which make up the brand image, will vary with the customers
experiences as filtered by the effects of selective perception, selective distortion and selective retention. Ultimately,
consumers develop attitudes towards various brand alternatives through an attribute evaluation procedure.
Stage 4:
Purchase Decision:
In the evaluation stage, the consumer forms preferences among the brands in the choice set and may also form an
intention to buy the most preferred brand. However, two factors can intervene between the purchase intention and the
purchase decision.
The first factor is the attitudes of others i.e., family members or friends. The second factor is unanticipated situational
factors, i.e., sudden death or birth in the family, sudden loss of job etc. Smart marketers study, the factors that provoke a
feeling of risk in consumers and then provide information and support to reduce the perceived risk.
Stage 5:
Post Purchase Behaviour:
After purchasing the product, the consumer moves into the final stage of the consumer buying process, in which he will
experience some level of satisfaction or dissatisfaction. This is why the marketers job does not end when the product is
bought.
In particular, marketers must monitor post purchase satisfaction, post-purchase action and post purchase product uses.
Satisfied customers tend to say good things about the brand to others, which is why many marketers say our best
advertisement is a satisfied customer. Dissatisfied customers, on the other hand, may abandon or return the product, seek
information that confirms its high value, take public action by complaining to the company or taking the course of law.
Marketers use post purchase communications to buyers as a way to reduce product returns or order cancellations. They
seek customer suggestions for improvements and providing channels for speedy resolution of customer complaints.
The following diagram shows: How consumers use or dispose of products?

Q4) Consumer behavior involves the psychological processes that consumers go through in recognizing needs, finding
ways to solve these needs, making purchase decisions (e.g., whether or not to purchase a product and, if so, which brand
and where), interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or
actually purchasing a product). onsumer Behaviour refers to the study of buying tendencies of consumers. An individual
who goes for shopping does not necessarily end up buying products. There are several stages a consumer goes through
before he finally picks up things available in the market. Various factors, be it cultural, social, personal or psychological
influence the buying decision of individuals.

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Marketers need to understand the buying behaviour of consumers for their products to do well. It is really important for
marketers to understand what prompts a consumer to purchase a particular product and what stops him from
buying.
What marketers need to understand ?

The psychology of consumers (what they feel about a particular product and their brand on the whole).
How consumers are influenced by their immediate surroundings, family members, friends, co workers and so on.
A consumer is the ultimate user of a product or service. The overall consumer market consists of all buyers of goods and
services for personal or family use, more than 270 million people (including children) spending trillions of dollars in the
United States as of the late 1990s.
Consumer behavior essentially refers to how and why people make the purchase decisions they do. Marketers strive to
understand this behavior so they can better formulate appropriate marketing stimuli that will result in increased sales and
brand loyalty. There are a vast number of goods available for purchase, but consumers tend to attribute this volume to the
industrial world's massive production capacity. Rather, the giant known as the marketing profession is responsible for the
variety of goods on the market. The science of evaluating and influencing consumer behavior is foremost in determining
which marketing efforts will be used and when.
To understand consumer behavior, experts examine purchase decision processes, especially any particular triggers that
compel consumers to buy a certain product. For example, one study revealed that the average shopper took less than 21
minutes to purchase groceries and covered only 23 percent of the store, giving marketers a very limited amount of time to
influence consumers. And 59 percent of all supermarket purchases were unplanned. Marketers spend a great deal of time
and money discovering what compels consumers to make such on-the-spot purchases. Market researchers obtain some of
the best information through in-store research, and will often launch new products only in select small venues where they
expect a reasonable test of the product's success can be executed. In this manner, they can determine whether a product's
success is likely before investing excessive company resources to introduce that product nationally or even internationally.

Internal Assignment No. 1

105 Sales and Promotion Management

Q1)i) Sales Organisation:

Selling is one of the most pertinent and expensive functions of marketing today. In many cases the selling price of product
consists of 50% or more of distribution cost. For performing selling functions efficiently, it is necessary to have a good sales
organisation which is a foundation for effective execution of sales policy and sales programme.
A sales organisation must be planned in detail and all activities should be well co-ordinated and integrated to secure united
efforts and maximum efficiency. A sales organisation is the medium to execute a sales plan.
The object of sales organisation is not merely to sell goods to distributors but to get them consumed or get them
into use. The responsibility of the manager, therefore, extends much beyond the selling of goods.
ii) Limitations:
However, all is not well with process of personal selling. There are certain limitations which one should take into account
before giving the conclusion as to its real worth.
These limits are:
1. It is expensive:
Personal selling as a method of promotion is quite expensive. Getting salesman is one thing and retaining him for long is
another. Further, there are no definite correlations between his stay and cost of retaining and the contributions of his, in
return, to the firm, for such costs.
2. Difficulty of getting right kind of salesmen:
Though, theoretically certain guidelines are prescribed for getting right kind of salesmen from the potential candidates, it is
really very difficult to get suitable salesmen from companys point of view. The potential salesmen so selected, trained and
placed, do not guarantee loyal service to the company.
3. Stake in consumer loyalty:
Personal selling is such a process-direct and close between the customer and salesman that the consumer loyalty
depends on the presence of such a salesman. The firms fortunes are tied to the loyalty of consumers which, in turn,
depends on the very presence of salesman. The moment the salesman moves out, the clientele drops down to the
detriment of the firm.
4. More administrative problems:
Personal selling involves more of administrative problems than impersonal selling. Since, the firm is to deal with manpower
a driving force behind sales the company has to meet the challenges in the areas of manpower-planning, organizing,
directing, coordinating, motivating and controlling. The solutions to these problems, even if found out, are not everlasting
because, human content in management is unique.

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iii)

Everyone, at some time or the other, must surely have been sold a product that
he or she did not need. Selling is a profession that has been widely criticized
for the unethical dimensions associated with it. Ethics is the set of rules or
standards that govern the conduct of a person or members of a profession.
Ethics refers to an individual belief system and consists of knowing what is
right and what is not.
It forms a very important part of sales and is essential for lending integrity to a
salesperson's behavior. No discussion on ethics is complete without a
reference being made to social responsibility. Social responsibility exemplifies
ethical behavior and is defined as an individual's or institution's concern for the
consequences of his/its actions as these might affect the interests of others in
the society.
Companies doing business with no regard to social responsibility run the risk of
attracting the attention of environmental groups, earning negative publicity, and
losing the goodwill of society.
Therefore, companies try to instill a sense of ethics in their employees and conduct business in a socially responsible way.
Indian companies are now more concerned with corporate social responsibility than ever before. Companies in the past
were concerned more about making profits than anything else.
iv) In order to address the difference between Sales Management and Marketing Management, the different between sales
and marketing must first be addressed. Marketing and sales are two different things that are part of a companys strategy.
Sales is quite straight forward. It incorporates actually selling the companys products or service to its customers. Whereas,
marketing has a much bigger scope; it incorporates how a company places itself in the market and in the eyes of its
customers and potential customers. It also incorporates what products the company sells. In short, marketing ensures that
sales take place; that the customers are confident enough to buy from the company. Hence, it can also be said that sales
is in fact a part of marketing.
Marketing is the process of communicating the value of a product or service to customers, so that the product or service
sells. Its job is to attract the customers so that the sales team can sell the products. In order to do this effectively,
marketing requires the 4 Ps, i.e. Product, Price, Place and Promotion. Marketing is the first and the broadest step to make
sales effective.
v) 1) Information Provider:
Middlemen have a role in providing information about the market to the manufacturer. Developments like changes in
customer demography, psychography, media habits and the entry of a new competitor or a new brand and changes in
customer preferences are some of the information that all manufacturers want. Since these middlemen are present in the
market place and close to the customer they can provide this information at no additional cost.
2) Price Stability:
Maintaining price stability in the market is another function a middleman performs. Many a time the middlemen absorb an
increase in the price of the products and continue to charge the customer the same old price. This is because of the intra-
middlemen competition. The middleman also maintains price stability by keeping his overheads low.
3) Promotion:
Promoting the product/s in his territory is another function that middlemen perform. Many of them design their own sales
incentive programmes, aimed at building customers traffic at the other outlets.
4) Financing:
Middlemen finance manufacturers operation by providing the necessary working capital in the form of advance payments
for goods and services. The payment is in advance even though the manufacturer may extend credit, because it has to be
made even before the products are bought, consumed and paid for by the ultimate consumer.
5) Title:
Most middlemen take the title to the goods, services and trade in their own name. This helps in diffusing the risks between
the manufacturer and middlemen. This also enables middlemen to be in physical possession of the goods, which in turn
enables them to meet customer demand at very moment it arises.
6) Help in Production Function:
The producer can concentrate on the production function leaving the marketing problem to middlemen who specialize in
the profession. Their services can best utilized for selling the product. The finance, required for organising marketing can
profitably be used in production where the rate of return would be greater.
7) Matching Demand and Supply:
The chief function of intermediaries is to assemble the goods from many producers in such a manner that a customer can
affect purchases with ease. The goal of marketing is the matching of segments of supply and demand.
The matching process is undertaken by performing the following functions:
i) Contractual:

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Finding out buyers and sellers.
ii) Merchandising:
Producing goods that will satisfy market requirements.
iii) Pricing:
Process of attaching value to the product in monetary terms.
iv) Propaganda:
Sales promotion activities.
v) Physical Distribution:
Distribution activities.
vi) Termination:
Settlement of contract, i.e., paying the value and receiving the goods.
8) Pricing:
In pricing a product, the producer should invite the suggestions from the middlemen who are very close to the ultimate
users and know what they can pay for the product. Pricing may be different for different markets or products depending
upon the channel of distribution.
9) Standardizing Transactions:
Standardizing transactions is another function of marketing channels. Taking the example of the milk delivery system, the
distribution is standardized throughout the marketing channel so that consumers do not need to negotiate with the sellers
on any aspect, whether it is price, quantity, method of payment or location of the product.
By standardizing transactions, marketing channels automate most of the stages in the flow of products from the
manufacturer to the customers.
10) Matching Buyers and Sellers:
The most crucial activity of the marketing channel members is to match the needs of buyers and sellers. Normally, most
sellers do not know where they can reach potential buyers and similarly, buyers do not know where they can reach
potential sellers. From this perspective, the role of the marketing channel to match the buyers and sellers needs becomes
very vital. For example, a painter of modern art may not know where he can reach his potential customers, but an art
dealer would surely know.
Q3) Factors for Designing a Sales Compensation Plan
1) A simple plan is better than a thorough plan
Avoid mapping out all intricacies of the compensation plan in order to avoid confusion. Stick to the basics if a rep cant
calculate their expected commission at any given point, the plan is not effectively motivating behavior.
2) Set comp metrics that align with your business model and stage of growth
While this may seem like a no-brainer, it can be challenging. No company is alike, so be sure to build out compensation
plans based on the type of organization you are and where you are in your stage of growth. Incentivize for your
organizational goals. Operating at the expansion stage? Incentivize for market share and new customers rather than cash
flow.
3) Design your comp plan document like a marketing asset, not a contract
The purpose of a compensation package is to inspire and motivate your team. Rather than intimidating them with a
verbose contract, use this as an opportunity to incorporate your communication strategy.
4) Ensure you can accurately track your quota metrics
Be sure to establish a process for tracking metrics prior to rolling out your compensation plan. Also make sure you are
avoiding metrics that are subjective, estimated, and incomplete! Reps spend 5-10% of their time fixing their comp plan, and
organizations can avoid that by compensating on quality metrics.
5) Provide real-time visibility
Provide a live dashboard indicating attainment to quota so that reps know where they stand and their activity against goals
(and be sure to then use this dashboard in one-on-ones as a point of reference).
6) Anticipate staffing challenges
Things happen. Aim to have the total quota for all reps to equal 110-120% of the company target, giving you some wiggle
room for any unexpected challenges.
7) Reserve a compensation budget for ad-hoc SPIFFs
When you are planning for 2014 budgets be sure to account for spiffs and competitions on the sales team, rather than
scrambling for resources to support a competition mid year.
Q4) Transport or transportation is the movement of people, animals and goods from one location to another. Modes of
transport include air, rail, road,water, cable, pipeline and space. The field can be divided
into infrastructure, vehicles and operations. Transport is important because it enables trade between persons, which is
essential for the development of civilizations.
A Diversity of ModesTransport modes are the means by which people and freight achieve mobility. They fall into one of
three basic types, depending on over what surface they travel land (road, rail and pipelines), water (shipping), and air.
Each mode is characterized by a set of technical, operational and commercial characteristics:

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 Road transportation Road infrastructures are large consumers of space with the lowest level of physical
constraints among transportation modes. However, physiographical constraints are significant in road construction
with substantial additional costs to overcome features such as rivers or rugged terrain.
Rail transportation (Concept 3). Railways are composed of a traced path on which wheeled vehicles are bound.
In light of more recent technological developments, rail transportation also include monorails and maglev. They
have an average level of physical constrains linked to the types of locomotives and a low gradient is required,
particularly for freight.
Maritime transportation (Concept 4). Because of the physical properties of water conferring buoyancy and limited
friction, maritime transportation is the most effective mode to move large quantities of cargo over long distances.
Air transportation (Concept 5). Air routes are practically unlimited, but they are denser over the North Atlantic,
inside North America and Europe and over the North Pacific.
Intermodal transportation (Concept 6). Concerns a variety of modes used in combination so that the respective
advantages of each mode are better exploited.
Telecommunications. Cover a grey area in terms of if they can be considered as a transport mode since unlike
true transportation, telecommunications often does not have a physicality.
2. Modal CompetitionEach transportation mode has key operational and commercial advantages and properties. However,
contemporary demand is influenced by integrated transportation systems that require maximum flexibility in the
respective use of each mode. As a result, modal competition exists at various degrees and takes several dimensions.
Modes can compete or complement one another in terms of cost, speed, accessibility, frequency, safety, comfort, etc.
There are three main conditions that insure that some modes are complementing one another:
Different geographical markets. It is clear that if different markets are involved, modes will permit a continuity within the
transport system, particularly if different scales are concerned, such as between national and international transportation.
Different transport markets. The nature of what is being transported, such as passengers or freight, often indicates a
level of complementarity.
Different levels of service. For a similar market and accessibility, two modes that offer a different level of service will tend
to complement another. The most prevailing complementarity concerns costs versus time.
Modal usage. Competition that involves the comparative advantage of using a specific or a combination of modes.
Infrastructure usage. Competition resulting from the presence of freight and passenger traffic on the same itineraries
linking the same nodes.
Market area. Competition being experienced between transport terminals for using new space (terminal relocation or
expansion) or capturing new markets (hinterland).
Internal Assignment No. 2
105 Sales and Promotion Management
Q1)i) To those who struggle with test anxiety, responding to questions through email can turn up the volume of stress. In
his case, he was given a couple of days to ponder the questions and respond, yet he still spent hours reviewing his
answers and often second-guessed himself.
When answering pre-interview questions it helps to have a strategy in mind and a positive perspective. Developingrapport
and sending the message you want to convey often takes more effort due to the lack of sensing non-verbal reactions.
Once you send your answers its difficult to recant them; therefore, it helps to review them a couple of times while making
sure you are sending a positive perception.
ii) Causes of channel conflict are: -Goal incompatibilityPosition, Role and Domain IncongruencyCommunication
BreakdownDifferent Perceptions of RealityIdeological Differences
iii) Wholesalers generally buy a large quantity of products directlyfrom distributors. High-volume purchase orders typically
improve awholesalers buying power. Many distributors provide discounts for acertain number of items purchased or the
total amount spent onmerchandise. Wholesalers acquire merchandise, such as telephones,computers, bicycles, clothing,
televisions and furniture. The goods arefrequen Retailers consist of small and large for-profit businesses that sellproducts
directly to consumers. To realize a profit, retailers search forproducts that coincide with their business objectives and find
supplierswith the most competitive pricing. Generally, a retailer can buy smallquantities of an item from a distributor or a
wholesaler. For instance, aretail merchant who wanted to purchase a dozen lamps could contactlighting distributors to
inquire about pricingtly destined for retaile
iv) A good salesman can be made. Explain.Ans.Being a salesman takes special skills that not every personpossesses.
There are personality and attitude traits that make it easy forsome people to be successful in the sales business. Others
have towork a little harder. That's why it's good to know exactly what is requiredof a good salesperson. One of the most
important characteristics of asuccessful salesman is the ability to like people. A good salesman trulycares for people - want
they want, what they need and what they need toknow before they can make a purchase. A salesperson needs to be
kind,compassionate and understanding. While a commission is obviouslyimportant, it's more important to have satisfied
customers that will returnand tell their friends about you and your company. So we can say thatsalespersons can be made.

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v) Basis which sales managers use to establish sales territories are: -Geographic Location: - One factor in determining
territories isgeographic location. A territory can be divided by states,counties,cities or even several territories within a city.
The size ofthe territory depends on how often the salesperson has tophysically visit the customer. a smaller size in order to
make thispossible.Sales Potential: - The number of potential customers within aparticular area can determine the size of
the territory. If you are
marketing a product that is used by only one customer in a givencity, your territory would need to be expanded to cover
severalcities.Workload: - The number of accounts, the average size of each
Q2) The path through which goods and services travel from the vendor to the consumer or payments for
those products travel from the consumer to the vendor. A distribution channel can be as short as a direct transaction from
the vendor to the consumer, or may include several interconnected intermediaries along the way such as wholesalers,
distributers, agents and retailers. Each intermediary receives the item at one pricing point and movies it to the next higher
pricing point until it reaches the final buyer. Coffee does not reach the consumer before first going through a
channel involving the farmer, exporter, importer, distributor and the retailer.

Important factors affecting the choice of channels of distribution by the manufacturer are:
(A) Considerations Related to Product
When a manufacturer selects some channel of distribution he/she should take care of such factors which are related to the
quality and nature of the product. They are as follows:
1. Unit Value of the Product:
When the product is very costly it is best to use small distribution channel. For example, Industrial Machinery or Gold
Ornaments are very costly products that are why for their distribution small distribution channel is used. On the other hand,
for less costly products long distribution channel is used.
2. Standardised or Customised Product:
Standardised products are those for which are pre-determined and there has no scope for alteration. For example: utensils
of MILTON. To sell this long distribution channel is used.
On the other hand, customised products are those which are made according to the discretion of the consumer and also
there is a scope for alteration, for example; furniture. For such products face-to-face interaction between the manufacturer
and the consumer is essential. So for these Direct Sales is a good option.
3. Perishability:
A manufacturer should choose minimum or no middlemen as channel of distribution for such an item or product which is of
highly perishable nature. On the contrary, a long distribution channel can be selected for durable goods.
4. Technical Nature:
If a product is of a technical nature, then it is better to supply it directly to the consumer. This will help the user to know the
necessary technicalities of the product.
(B) Considerations Related to Market
Market considerations are given below:
1. Number of Buyers:
If the number of buyer is large then it is better to take the services of middlemen for the distribution of the goods. On the
contrary, the distribution should be done by the manufacturer directly if the number of buyers is less.
2. Types of Buyers:
Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers of the product belong to general
category then there can be more middlemen. But in case of industrial buyers there can be less middlemen.
3. Buying Habits:
A manufacturer should take the services of middlemen if his financial position does not permit him to sell goods on credit to
those consumers who are in the habit of purchasing goods on credit.
4. Buying Quantity:
It is useful for the manufacturer to rely on the services of middlemen if the goods are bought in smaller quantity.
5. Size of Market:
If the market area of the product is scattered fairly, then the producer must take the help of middlemen.
(C) Considerations Related to Manufacturer/Company
Considerations related to manufacturer are given below:
1. Goodwill:
Manufacturers goodwill also affects the selection of channel of distribution. A manufacturer enjoying good reputation need
not depend on the middlemen as he can open his own branches easily.
2. Desire to control the channel of Distribution:
A manufacturers ambition to control the channel of distribution affects its selection. Consumers should be approached
directly by such type of manufacturer. For example, electronic goods sector with a motive to control the service levels
provided to the customers at the point of sale are resorting to company owned retail counters.
3. Financial Strength:

36
A company which has a strong financial base can evolve its own channels. On the other hand, financially weak companies
would have to depend upon middlemen.
(D) Considerations Related to Government
Considerations related to the government also affect the selection of channel of distribution. For example, only a license
holder can sell medicines in the market according to the law of the government.
In this situation, the manufacturer of medicines should take care that the distribution of his product takes place only through
such middlemen who have the relevant license.
(E) Others
1. Cost:
A manufacturer should select such a channel of distribution which is less costly and also useful from other angles.
2. Availability:
Sometimes some other channel of distribution can be selected if the desired one is not available.
3. Possibilities of Sales:
Such a channel which has a possibility of large sale should be given weight age.
Q4) Prospecting:
Searching for prospects is prospecting. Here, prospect is a person or an institution who is likely to be benefited by the
product the salesman wants to sell and can afford to buy it.
Prospecting is the work of collecting the names and addresses or persons who are likely to buy the firms products and
services. Provide encompasses even the discovery of special needs and multiplying the sales with existing clientele.
While collecting the details, suspects must be separated from prospects to avoid or reduce waste of time, treasure and
talent. There are definite methods of prospecting.
The most popular ones are:
1. Endless chain method,
2. Centre of influence method,
3. Personal observation method,
4. Spotters method,
5. Cold-canvas method;
6. Direct mail and
7. Telephone method.
2. Pre-approach:
Pre-approach is to get more detailed facts about a specific individual to have effective sales appeals on him or her. It is a
record round effort to get details regarding the prospect such as his ability, need, authority, accessibility to buy; it is a
closer look of prospects, likes and dislikes, tastes, habits, financial status, social esteem, material status, family
background and the like.
The objectives of pre-approach are to providing additional qualifying information; to design an effective approach strategy;
to better the planning information; to avoid serious errors and to build-up confidence.
The sources of information are his fellow salesmen, customers, local newspapers, special investigators, sales office,
directories, observation and the prospect.
Presentation and demonstration:
Presentation implies an array and decoration of articles in the shop. It is the heart of selling process. Effective presentation
has the capacity to convince the customer of his sales proposition. It creates and holds the interest of customers towards
the products. It would be wrong to assume that all those who enter the shop do buy the products.
Normally, most of the prospects visit the shop to see prior to their decision to buy. This casual visit can be a commitment
visit provided products are displayed, presented and demonstrated by the salesmen in an appealing manner.
Demonstration is a part of presentation because, more description is not enough.
Demonstration is the crucial task of providing the proofs and providing the statements about quality, utility, performance
and service of a product by evidences of experiment, operation or a test.
The significance of demonstration lies in reducing the sales talk, facilitating the comparison, appealing to senses, fortifying
the sales talks and convincing the fastidious customers. Here, A-I-D-A approach works wonders.
Internal Assignment No. 1
106 Service Marketing

37
Q1)i) It is not enough to simply state a firms goal as maximizing the present value of total profit since this does not
differentiate it from other firms and says nothing about how this objective is to be achieved. Instead, a business and
marketing plan should suggest how the firm can best put its unique resources to use to maximize stockholder value. A
number of resources come into playe.g.,
Distinctive competenciesknowledge of how to manufacture, design, or market certain products or services
effectively;
Financialpossession of cash or the ability to raise it;
Ability and willingness to take risk;
The image of the firms brand;
People who can develop new products, services, or other offerings and run the needed supports;
Running facilities (no amount of money is going to get a new microchip manufacturing plant started tomorrow); and
Contacts with suppliers and distributors and others who influence the success of the firm.
ii) Zone of tolerance
It seems that customers have two levels of expectation:
adequate - what they find acceptable
desired -what they hope to receive.
The distance between the adequate and the desired levels is known as the 'zone of tolerance' (figure below, Parasuraman
et al. 1991, p. 42) .
The two levels may vary from customer to customer, and from one situation to another for the same customer. You can
probably remember situations in which you have accepted services or products that, in other circumstances, you would
have refused or been disappointed by. Click on the picture below for a discussion of expectations.
Ideally businesses, and more particularly their employees, will always try to operate within a customer's zone of tolerance.
iii) Customers Are Active, Not Passive, and Must Be Enticed
Traditional advertising media such as magazines and television consider the customer a passive receiver of their
messages. If the customer is reading an article or watching a television program, he will most likely see the advertisement.
While we know that not all customers stay in the room for a television advertisement, most of us see hundreds of ads a day
and accept this as an inevitable by-product of consuming entertainment and informational media. The user of the Web,
however, is different: It's not that Web users aren't interested in learning about new products and services or getting a
great buy on an old standby, but they want to learn on their own terms. They want the choice to click or not, to view or not,
and anything more than the gentlest form of persuasion from an advertiser is likely to be construed as an intrusion.
Lack of Control of the Electronic Environment
It did not take long for the Internet to face the challenges of unregulated media. As soon as the network became popular,
pornographic and other controversial material started to appear. When a service's advertising or information appears in
proximity to such material, the result can be a negative spillover effect. It is similar to the challenge advertisers face in
using print media such as TV Guide-the advertiser has to be careful to separate its advertising for banking from the ever-
present ads on balding-concealment devices and quick weight-loss programs. With the TV Guide, however, the advertiser
could request or pay for the right positioning, something not possible on the Internet at this time.

Price Competition
One of the traditional differences between goods and services has been the difficulty of directly comparing features and
prices of services with each other. Whereas goods can typically be compared in retail settings, few retail settings exist that
offer services from multiple sources. The Internet has changed all that. Services such as CompareNet and Priceline.com
make it simple for customers to compare prices for a wide variety of services. Compare Net is a broker that will compare
products and services feature for feature and price for price in an online version of information similar to Consumer
Reports. Priceline.com is even more revolutionary. It allows customers to name their price for a service such as an airline
ticket, wait until Priceline.com finds anairline willing to accept it, then purchase the ticket. Never has the customer has such
ability to bid on prices for services. In a later chapter, we describe another type. of price competition spawned by the
Internet: the Internet auction as presented by such companies as eBay, which sells more than one million products and
services in more than 1,000 categories.

Inability to Customize with Highly Standardized Electronic Services

Some of you have experienced learning basic college courses through large, video-transmitted courses. If you consider
what you missed in learning that way compared with learning directly from a professor, you will understand this challenge.
In mass sections, you cannot interact directly with the professor, ask questions, raise points for clarification, or experience
the connection that you receive in person. In electronic classes-as in videoconferences that are springing up in many
businesses-the quality of the service can also be impeded by the way the audience reacts (or doesn't react) in those
situations. People talk among themselves, leave, laugh, and criticize, among other behaviors.
Lack of Consistency because of Customer Involvement
While electronic channels are very effective in minimizing the inconsistency from employees or providers of service,
customer variability still presents a problem. Many times the customer produces the service himself using the technology,
38
leading to errors or frustration unless the technology is highly user-friendly. Maneuvering online can sometimes be
overwhelming, and not all Websites are currently easy to use. Furthermore, a large percentage of customers do not have
computers and, even if they do, may be reluctant to try or continue using the medium
iv) Service quality(SQ) is a comparison of expectations (E) with performance (P) SQ=P-E.[1]
A business with high service quality will meet customer needs whilst remaining economically competitive.[2] Improved
service quality may increase economic competitiveness.
This aim may be achieved by understanding and improving operational processes; identifying problems quickly and
systematically; establishing valid and reliable service performance measures and measuring customer satisfaction and
other performance outcomes.
v) 1) Red Tape
In China, many administrative and bureaucratic tasks that have been simplified in the West can still be quite time-
consuming. Everything from opening a bank account, to registering your company, to gaining product approval, can drag
on for months. The lack of a strong rule of law and an inconsistent application of regulations means that such processes
are not always designed for your companys convenience.
2) Communications
Cultural misunderstandings arising from miscommunication are one of the biggest challenges which foreign companies
face in China. Although there are an increasing number of Chinese people highly proficient in English, it is uncommon to
find someone who understands the subtleties of the language and possesses a strong enough understanding of both
Chinese and western culture to navigate delicate business negotiations.
3) Human Resources
Year in and year out, western companies in China rate human resources as among the biggest challenges of doing
business here. While western employees tend to delegate responsibility and have flexible lines of authority, Chinese
workers are accustomed to a more hierarchical structure in which each person has a clearly defined role.
4) Business Culture
Youre not in Kansas anymore. To succeed in China, your company must realize that it cannot take the same business
model, which may have served you well in your own country, and simply apply it to the Chinese market.
5) Relationships (Guanxi)
One Chinese word you will hear constantly while doing business in China is guanxi. Translated into English, the word
means, roughly, relationship. The importance of building strong relationships in business is not a novel concept for western
businesses.
Q2) MARKETING --MIX FOR INSURANCE COMPANIES:
The marketing mix is the combination of marketing activities that an organisation engages in so as
to best meet the needs of its targeted market. The Insurance business deals in selling services and
therefore due weight-age in the formation of marketing mix for the Insurance business is needed.
The marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price, place,
promotion, people, process & physical attraction. The above mentioned 7 P's can be used for
marketing of Insurance products, in the following manner:
1. PRODUCT:
A product means what we produce. If we produce goods, it means tangible product and when we
produce or generate services, it means intangible service product. A product is both what a seller
has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore
services are their product.
In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC)
are the two leading companies offering insurance services to the users. Apart from offering life
insurance policies, they also offer underwriting and consulting services.
When a person or an organisation buys an Insurance policy from the insurance company, he not
only buys a policy, but along with it the assistance and advice of the agent, the prestige of the
insurance company and the facilities of claims and compensation.
It is natural that the users expect a reasonable return for their investment and the insurance
companies want to maximize their profitability. Hence, while deciding the product portfolio or the
product-mix, the services or the schemes should be motivational. The Group Insurance scheme is
required to be promoted, the Crop Insurance is required to be expanded and the new schemes and
policies for the villagers or the rural population are to be included.
The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural
savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme
has been found instrumental in inducing the rural prospects but the process is at infant stage and
requires more professional excellence. The policy makers are required to activate the efforts. It
would be prudent that the LIC is allowed to pursue a policy of direct investment for rural
development.
Investment in Government securities should be stopped and the investment should be channelized
in private sector for maximizing profits. In short, the formulation of product-mix should be in the
39
face of innovative product strategy. While initiating the innovative process it is necessary to take
into consideration the strategies adopted by private and foreign insurance companies.
2. PRICING:
In the insurance business the pricing decisions are concerned with:
i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities.
3. PLACE:
This component of the marketing mix is related to two important facets --
i) Managing the insurance personnel, and
ii) Locating a branch.
4. PROMOTION:
The insurance services depend on effective promotional measures. In a country like India, the rate
of illiteracy is very high and the rural economy has dominance in the national economy. It is
essential to have both personal and impersonal promotion strategies. In promoting insurance
business, the agents and the rural career agents play an important role. Due attention should be
given in selecting the promotional tools for agents and rural career agents and even for the branch
managers and front line staff. They also have to be given proper training in order to create impulse
buying.
5. PEOPLE:
Understanding the customer better allows to design appropriate products. Being a service industry
which involves a high level of people interaction, it is very important to use this resource efficiently
in order to satisfy customers. Training, development and strong relationships with intermediaries are
the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both
at the staff and agent level, is one of the important areas to look into.
6. PROCESS:
The process should be customer friendly in insurance industry. The speed and accuracy of payment
is of great importance. The processing method should be easy and convenient to the customers.
Installment schemes should be streamlined to cater to the ever growing demands of the customers.
IT & Data Warehousing will smoothen the process flow.
IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can
either complement or supplement the channels of distribution cost effectively. It can also help to
improve customer service levels. The use of data warehousing management and mining will help to
find out the profitability and potential of various customers product segments.
7. PHYSICAL DISTRIBUTION:
Distribution is a key determinant of success for all insurance companies. Today, the nationalized
insurers have a large reach and presence in India. Building a distribution network is very expensive
and time consuming. If the insurers are willing to take advantage of India's large population and
reach a profitable mass of customers, then new distribution avenues and alliances will be necessary.
Initially insurance was looked upon as a complex product with a high advice and service component.
Buyers prefer a face-to-face interaction and they place a high premium on brand names and
reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf
commodity products. Today, various intermediaries, not necessarily insurance companies, are selling
insurance. For example, in UK, retailer like Marks & Spencer sells insurance products
Q3) A type of economic activity that is intangible, is not stored and does not result in ownership. A service is consumed at
the point of sale. Services are one of the two key components of economics, the other being goods. Examples of
services include the transfer of goods, such as the postal service delivering mail, and the use of expertise or experience,
such as a personvisiting a doctor.
1. Intangibility:
Services cannot generally be seen, tasted, felt, heard or smelt before being bought. The potential customer is unable to
perceive the service before (and sometimes during and after) the service delivery. For many customers of car repair, for
example the service is totally intangible they often cannot see what is being done and many indeed are unable to
evaluate what has been done.
2. Inseparability:
There is a marked distinction between physical goods and services (Figure 2.3) in terms of the sequence of production and
consumption.Whereas goods are first produced, and then stored, and finally sold and consumed, services are first sold,
then produced and consumed simultaneously. For the production of many services (e.g. counselling, museums,
hairdressing, rail travel, hotels) the customer must be physically present.

40
3. Variability:
An unavoidable consequence of simultaneous production and consumption is variability in performance of a service. The
quality of the service may vary depending on who provides it, as well as when and how it is provided. One hotel provides a
fast efficient service and another short distance away delivers a slow, inefficient service. Within a particular hotel, one
employee is courteous and helpful while another is arrogant and obstructive. Even within one employee there can be
variations in performance over the course of a day.
4. Perishability:
Services cannot be stored for later sale or use. Hotel rooms not occupied, air line seats not purchased, and college places
not filled cannot be reclaimed. As services are performances they cannot be stored. If demand far exceeds supply it cannot
be met, as in manufacturing, by taking goods from a warehouse. Equally, if capacity far exceeds demand, the revenue
and/or value of that service is lost.
5. Heterogeneity:
Even though standard systems may be used, for example to handle a flight reservation, to book in a customers car for
service or to quote for insurance on his life. Each unit of a service may differ from other units. Franchise operations,
attempt to ensure a standard of conformity, but ultimately it is difficult to ensure the same level of output in terms of quality.
6. Lack of ownership:
Lack of ownership is a basic difference between a service industry and a product industry because a customer may only
have access to or use of a facility (e.g. a hotel room, a credit card). Payment is for the use of, access to or hire of items.
With the sale of a tangible good, barring restrictions imposed say by a hire purchase scheme, the buyer has full use of the
product.
Internal Assignment No. 2
106 Service Marketing
Q1)i) A type of economic activity that is intangible, is not stored and does not result in ownership. A service is consumed at
the point of sale. Services are one of the two key components of economics, the other being goods. Examples of
services include the transfer of goods, such as the postal service delivering mail, and the use of expertise or experience,
such as a personvisiting a doctor.
ii) Intensifier is a linguistic term (but not a proper lexical category) for a modifier that makes no contribution to
the propositional meaning of a clause but serves to enhance and give additional emotional context to the word it modifies.
Intensifiers are grammatical expletives, specifically expletive attributives (or, equivalently, attributive
expletives or attributive-only expletives; they also qualify as expressive attributives), because they function as
semantically vacuous filler. Characteristically, English draws intensifiers from a class of words called degree modifiers,
words thatquantify the idea they modify. More specifically, they derive from a group of words called adverbs of degree, also
known as degree adverbs. However, when used grammatically as intensifiers, these words cease to be degree adverbs,
because they no longer quantify the idea they modify; instead, they emphasize it emotionally. By contrast, the
words moderately, slightly, and barelyare degree adverbs, but not intensifiers. The other hallmark of prototypical
intensifiers is that they are adverbs which lack the primary characteristic of adverbs: the ability to modify verbs. Intensifiers
modify exclusively adjectives and adverbs. However, this rule is insufficient to classify intensifiers, since there exist other
words commonly classified as adverbs that never modify verbs but are not intensifiers, e.g. questionably.
iii) 1.Demand for a basic good (wanted not for its own sake but for the goods derived from it) such as textiles, that is due to
its use in the production of another good such as apparels.
2.Demand for an input to a production process, dependent on the output of a final or finished product. These inputs
include factors of production (capital, labor, land), raw materials, or intermediate (semi-finished) goods.
Customer service is the act of taking care of the customer's needs by providing and delivering professional, helpful, high
quality service and assistance before, during, and after the customer's requirements are met.
iv) Have you ever worked a job in customer service where you had to deal with a very rude person? Were you able to
control your emotions and still conduct your job? Harry works as a customer service agent for Spiro Airlines. Every day, he
has to handle dozens of customer requests - from the routine to disgruntled people.
No matter what personal and work issues and emotions Harry has to deal with, he has to put on a happy face for excellent
job reviews. He needs to be able to regulate his emotions, and this is called emotional labor. In other words, it is a way
of emotion regulation in which employees control their emotions and feelings at work.
Many customer ser
v) Challenges faced by service organizations as compared to goodsproducer are:-No InventoryDifficult
ValuationDemand CutbackIntangiblesTime
Q2) Customers generally have a tendency to compare the service they 'experience' with the service they 'expect' to
receive; thus, when the experience does not match the expectation, a gap arises.

41
 GAP 1:
Gap between consumer expectation and management perception: This gap arises when the management or service
provider does not correctly perceive what the customer wants or needs. For instance hotel administrators may think
guests want better food or in-house restaurant facilities, but guests may be more concerned with the responsiveness of the
staff or the cleanliness of their rooms.
GAP 2 :
Gap between management perception and service quality specification: This is when the management or service provider
might correctly perceive what the customer wants, but may not set a performance standard. An example here would be
that hospital administrators may tell the nurse to respond to a request fast', but may not specify how fast'.
GAP 3:
Gap between service quality specification and service delivery: This gap may arise in situations pertaining to the service
personnel. It could happen due to poor training, incapability or unwillingness to meet the set service standard. An example
would be when a doctor's office has very specific standards of hygiene communicated but the hired staff may have been
poorly trained on the need to follow these strict protocols.
GAP 4 :
Gap between service delivery and external communication: Consumer expectations are highly influenced by statements
made by company representatives and advertisements. The gap arises when these assumed expectations are not fulfilled
at the time of delivery of the service. For example a hospital printed on its brochure may have clean and furnished rooms
but in reality, it may be poorly maintained in this case the patient's expectations are not met.
GAP 5:
Gap between expected service and experienced service: This gap arises when the consumer misinterprets the service
quality. The physician may keep visiting the patient to show and ensure care, but the patient may interpret this as an
indication that something is really wrong.
Q4) Market segmentation is important for target markets andtarget markets are important for product positioning because
it:-Facilitates consumer-oriented marketing: Market segmentationfacilitates formation of marketing-mix which is more
specific anduseful for achieving marketing objectives. Segment-wise approachis better and effective as compared to
integrated approach for thewhole market.
In essence, the marketing objectives of segmentation analysis are:
To reduce risk in deciding where, when, how, and to whom a product, service, or brand will be marketed
To increase marketing efficiency by directing effort specifically toward the designated segment in a manner consistent with
that segment's characteristics
Market segmentation is a twofold process that includes:
1. Identifying and classifying people into homogeneous groupings, called segments
2. Determining which of these segments are viable target markets.
The Segmented Market
The premise of segmenting the market theorizes that people and/or organizations can be most effectively approached by
recognizing their differences and adjusting accordingly. By emphasizing a segmentation approach, the exchange process
should be enhanced, since a company can more precisely match the needs and wants of the customer.

42
While product differentiation is an effective strategy to distinguish a brand from competitors', it also differentiates one
product from another. For example, a company such as Franco-American Spaghetti has differentiated its basic product by
offering various sizes, flavors, and shapes. The objective is to sell more product, to more people, more often. The problem
is not competition; the problem is the acknowledgment that people within markets are different and that successful
marketers must respond to these differences.
Choosing a Target Market from within a Defined Segment
While it is relatively easy to identify segments of consumers, most firms do not have the capabilities or the need to
effectively market their product to all of the segments that can be identified. Rather, one or more target markets (segments)
must be selected. A company selects its target market because it exhibits the strongest affinity to a particular product or
brand. It is in essence the most likely to buy the product.
While the market is initially reduced to its smallest homogeneous components (perhaps a single individual), business in
practice requires the marketer to find common dimensions that will allow him to view these individuals as larger, profitable
segments.

Internal Assignment No. 1

107 Management of Marketing, Communication & Advertisement
Q1)i) (1) Sender:
The person who intends to convey the message with the intention of passing information and ideas to others is known as
sender or communicator.
(2) Ideas:
This is the subject matter of the communication. This may be an opinion, attitude, feelings, views, orders, or suggestions.
(3) Encoding:
Since the subject matter of communication is theoretical and intangible, its further passing requires use of certain symbols
such as words, actions or pictures etc. Conversion of subject matter into these symbols is the process of encoding.
(4) Communication Channel:
The person who is interested in communicating has to choose the channel for sending the required information, ideas etc.
This information is transmitted to the receiver through certain channels which may be either formal or informal.
(5) Receiver:
Receiver is the person who receives the message or for whom the message is meant for. It is the receiver who tries to
understand the message in the best possible manner in achieving the desired objectives.
(6) Decoding:
The person who receives the message or symbol from the communicator tries to convert the same in such a way so that
he may extract its meaning to his complete understanding.
(7) Feedback:
Feedback is the process of ensuring that the receiver has received the message and understood in the same sense as
sender meant it.
ii) Information Flow
Information flow in an organization in two ways:
1. Vertically - Flow up and down among managers
Example: Production supervisors constantly communicate with with production-line workers and their own
managers.

2. Horizontally - Flow sideways among departments

Example: Regional sales managers from the marketing department set their sales goals by coordinating
with production managers in the production departmen
iii) Types of communication barriers
Barriers to communication arise from a variety of sources such as complex organizational structure, sue of ambiguous
words, perceptual differences of sender and receiver, status difference etc. Theo Haimannhas classified the main barriers
to communication into four major groups. These are:
Barriers caused by organizational structure.
Barriers caused by status or positions.
Barriers caused by language.
Barriers resulting from the general inclination to resist change.
Ricky W. Griffin has classified the communication barriers into two broad groups such as (a) Individual barriers and (b)
Organizational barriers.
For convenience of discussion we can classify the barriers to communication in the following four categories:
Organizational barriers
Individual barriers
Semantic barrier
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 Other barriers
iv) Integrated Marketing Communication - Let us now understand what does integrated marketing communication mean?
Integrated marketing communication refers to integrating all the methods of brand promotion to promote a
particular product or service among target customers. In integrated marketing communication, all aspects of marketing
communication work together for increased sales and maximum cost effectiveness.
v) Advertising permeates the Internet, network television, daily newspapers and roadside billboards. Products, services
and ideas are sold through advertising, enabling businesses to attract customers for their wares. Internet advertising is
rapidly displacing print advertising, due its convenience of use, cost effectiveness, and ease of distribution.
Identifying Brands
Information
Persuasion
Previewing New Trends
Demand
Customer Base
Pricing
Q2) PLANNING YOUR ADVERTISING SHOULD BE SIMPLE
You choose your target customers, then decide on the product or service you know they need. You work out the
best way to reach them through advertising, advertise, and then wait for them to respond. You measure the return,
to ensure you made more profit than the cost of the ad.
But it doesnt always work like this. For many small businesses, advertising happens when a persuasive media
salesperson talks them into buying a series of ads, or when they are reminded they need to renew their directory
advertising.
HOW IT SHOULD WORK
You decide what advertising tactics fit a particular type of customer, product, or service.
For example, a sports shop might consider conducting an advertising campaign for their baseball equipment in
February, preceded by a direct mail campaign to customers in December.
THERE ARE FIVE STEPS TO EFFECTIVE ADVERTISING PLANNING:
1) Target your customer.
2) Select appropriate products and services.
3) Choose your form of advertising.
4) Fit tactics to targets.
5) Put someone in charge
5 TIPS ON ADVERTISING BASICS

1. Be consistent in your ad message and style including business cards, letterhead, envelopes, invoices, signs
and banners.
2. Newspapers, radio and TV stations are helpful in producing the advertising that you will be running with them.
3. While word-of-mouth advertising has been around a long time, it usually falls short of being able to attract the
number of customers needed to be successful in business.
4. Promote benefits rather than features. A benefit is the emotional satisfaction your product or service provides,
or a tangible performance characteristic.
5. Know your competitors. Knowing everything about your competitors is just as important as knowing everything
about your own business.
Q4) 1. Attracting clients
Advertising agency needs clients (advertisers). Without them, it cannot survive. Ad agency always tries to attract
clients usually by giving ads in trade journals. It also seeks their attention by offering them various services. It
offers expert, cheap and quick services. It maintains good relations with them. It tries to give them full
satisfaction. It strives harder to attain their goodwill and customer-loyalty.
2. Research function
Advertising agency gathers information related to the client's product.
It collects following information about a product under its research function:
Features, quality, advantages and limitations of a product,
Present and future market possibilities,
Competition in the market,
Situation in the market,
Distribution methods,
Buyers' preferences, so on.
Ad agency analyses (studies) all this collected information properly and draws conclusions for its research. It
helps in planning an advertising campaign, selecting proper media and creation function.
3. Advertising planning Advertising agency plans the entire ad campaign of its client.
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Advertising planning is a primary function of an ad agency. It is done when its research function is completed.
That is, after analyzing the client's product, its competitors, market conditions, etc. It is done by experts who use
their professional experience to make a result-oriented advertising-plan.
After making the advertising plan, it is shown to the client. If the client likes and approves it, then the plan is
executed (put into action).
4. Creative function
Advertising agency put the advertising-plan into action under its creative function.
Creation of ads is the most important function of an ad agency. Generally, it involves activities like:
Copy writing,
Drawing photographs,
Making illustrations, layouts, an effective ad message, etc.
These jobs are done by experts like copy writers, artists, designers, etc. These people are highly skilled and
creative. They make an advertisement more appealing. Attractive ads help to increase the sales of the product.
The ad agency must always use fresh ideas for creating ads. It must neither use old tactics nor copy the ad-
campaign of other products.
5. Media selection
Advertising agency helps an advertiser to select a proper media (ad platform) to promote his advertisement
effectively.
Media selection is a highly specialized function of an ad agency. It must select the most suitable media for its
client's ad. It must choose media, which has a potential to give best results for the lowest cost. It must select
more than one media for the ad. For example, an advertisement can be put on television, the Internet, newspapers,
magazines, etc. After selecting the media, the ad agency must maintain goods contacts with the media.6.
Advertising budget Advertising agency helps an advertiser to prepare his ad budget. It helps him to use his
budget economically and make the best use of it. Without a proper advertising budget, there is a risk of client's
funds getting wasted or lost. If an advertiser suffers a loss, he may not bring new projects. As a result, there is a
possibility of losing a potential client that can bring more business to an ad agency.
7. Coordination
Advertising agency brings a good coordination between the advertiser, itself, media and distributors. This is a
very important function. If coordination is proper, it will increase the sales of the product.
8. Sales promotion
Advertising agency performs sales promotion. It helps an advertiser to introduce sales promotion measures for
the dealers and consumers. This helps to increase the sales of the product.
9. Marketing research
Advertising agency helps its clients to solve their marketing problems. It does so by conducting a marketing
research for them.
10. Non-advertising functions
Advertising agency also performs many non-advertising functions:
It fixes the prices of the product,
It determines the discounts,
It designs the product,
It also designs its package, trade marks, labels, etc.
These non-advertising services help an advertiser to increase its sales.
11. Public relations
Advertising agency does the public relations (PR) work for its clients. It increases the goodwill between its clients
and other parties like consumers, employees, middlemen, shareholders, etc. It also maintains good relations
between the client and media owner.
Internal Assignment No. 2
107 Management of Marketing, Communication & Advertisement
Q1)i) Promotion is a critical element of the marketing process that involves the communication of brand or product
messages to target customers. Advertising is usually the most expensive part of promotion, because it includes messages
paid for and presented through mass media. Several other types of promotion are used to complement the promotional
effort.
Publicity
Publicity is actually a part of a broader promotional element known as public relations. It constitutes the bulk of PR and
includes unpaid for media exposure. Companies may pay for PR professionals or hire a PR firm, but the space or time
used for message delivery is unpaid
Sales Promotions
Sales promotions complement advertising from the perspective that they are short term in nature. Advertising is used to
develop a brand image over time. Sales discounts are used to attract customers and revenue immediately through price
inducements. They are effective in generating quick cash, growing a customer base or clearing out inventory.
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Personal Selling
Personal selling is the most interactive way to promote products and services to customers. It includes one-on-one
communication of product benefits and value. Retailers commonly use salespeople to sell products in stores. Business-to-
business sellers use them to convince businesses to buy goods.
Direct Marketing
A broader category of interactive promotion is direct marketing. This includes a mix of techniques where companies
contact prospects and customers directly and seek immediate feedback. Direct mail and email marketing are commonly
used to present product messages and offers.
ii) Marketing research is "the process or set of processes that links the producers, customers, and end users to the
marketer through information information used to identify and define marketing opportunities and problems; generate,
refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a
process. Marketing research specifies the information required to address these issues, designs the method for collecting
information, manages and implements the data collection process, analyzes the results, and communicates the findings
and their implications."
iii) Deciding on the advertising budget:
There are 5 specific factors to consider when setting the advertising budget
1. Stages in the life cycle:
Advertisement requirements are different for different product life cycle stages as shown below:
i. Introduction stage:
ii. Growth stage:
iii. Maturity stage:
iv. Decline stage:
2. Market share and consumer base:
The products, which are having high market share usually require low expenditures as a percentage of sales to maintain
share. Building market share by increasing market size requires large expenditures, on a cost per impression basis. It is
less expensive to reach consumers of a widely used brand than to reach consumers of low share brands.
3. Competition and clutter:
In a market with a large number of competitors and a high advertising spending, a brand must advertise more heavily to be
heard.
4. Advertising frequency:
The number of repetitions needed to put across the brands message to consumers has an important impact on the
advertising budget.
5. Product substitutability:
Brands in a commodity class such as cigarettes, soft drinks and liquor require heavy advertising to establish a differential
image. Advertising is also important when a brand can offer unique physical benefits or features.
iv) Planning and Managing Advertising Tasks
Advertising agency employees with various specializations come together to plan and execute advertising campaigns for
their clients. In the campaign planning stage, account executives outline a budget, set goals and identify the prospective
audience using market research. After initial planning stages, tasks are doled out to agency staff according to their
expertise.
Creative Work
Advertising agencies employ a range of staff to provide services to their clients. Graphic designers, photographers and
filmmakers create eye-catching art work to accompany the written elements of the campaign.
Branding
An advertising agency's primary goal is to establish or support strong branding for clients through their campaigns.
Branding refers to the message an audience internalizes and associates with a company and its products or services.
Marketing and Public Relations
Some advertising agencies handle complimentary services that are related to advertising campaigns, such as marketing
and public relations. When agencies handle public relations services, they manage the types of messages that pass
between a company, its public and other parties, such as employees and the media
v) In India, as in several advanced economies, there is only one body for Self-Regulation in Advertising the ASCI, which
is concerned with safeguarding the interests of consumers whilst monitoring/guiding the commercial communications of
Practitioners in Advertising on behalf of advertisers, for advertisements carried by the Media, in their endeavours to
influence buying decisions of the Consuming Public.
The Advertising Standards Council of India (ASCI) established in 1985 is a voluntary self-regulatory council, registered as
a not-for-profit Company under section 25 of the Indian Cos. Act with the objective of ensuring that all advertising should
be legal, decent, honest and truthful along with a sense of social responsibility to the consumer and to the rules of fair
competition.
Q1) Steps in Development of Media Plan
1. Market Analysis

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Every media plan begins with the market analysis or environmental analysis.Complete review of internal and external
factors is required to be done. At this stage media planner try to identifyanswers of the following questions:
Who is the target audience?
What internal and external factors may influence the media plan?
Where and when to focus the advertising efforts?
The target audience can be classified in terms of age, sex, income, occupation, and other variables. The classification of
target audience helps media planner to understand the media consumption habit, and accordingly choose the most
appropriate media or media mix.
2. Establishing Media Objective
Media objectives describes what you want the media plan to accomplish. There are five key media objectives that
a advertiser or media planner has to consider - reach, frequency, continuity, cost, and weight.
Reach - Reach refers to the number of people that will be exposed to to a media vehicle at least once during a
given period of time.
Frequency - Frequency refers to the average number of times an individual within target audience is exposed to a
media vehicle during a given period of time.
Continuity - It refers to the pattern of advertisements in a media schedule. Continuity alternatives are as follows:
Continuous: Strategy of running campaign evenly over a period of time.
Pulsing: Strategy of running campaign steadily over a period of time with intermittent increase in
advertising at certain intervals, as during festivals or special occasions like Olympics or World-Cup.
Discontinuous: Strategy of advertising heavily only at certain intervals, and no advertising in the interim
period, as in case of seasonal products.
Cost - It refers to the cost of different media
Weight - Weight refers to total advertising required during a particular period.
3. Determining Media Strategies
Media strategy is determined considering the following:
Media Mix - From the wide variety of media vehicles, the advertiser can employ one vehicle or a mix suitable
vehicles.
Target Market
Scheduling - It shows the number of advertisements, size of advertisements, and time on which advertisements to
appear.
Seasonal Pulse: Seasonal products like cold creams follows this scheduling.
Steady Pulse: According to this scheduling one ad is shown over a period of time, say one ad per week or
one ad per month.
Periodic Pulse: A regular pattern is followed in such scheduling, as in case of consumer durable, and
non durable.
Erratic Pulse: No regular pattern is followed in such scheduling.
Start-up Pulse: Such scheduling is followed during a new campaign or a launch of a new product.
Promotional Pulse: It is for short time, only for a promotional period.
Reach and frequency
Creative Aspects - Creativity in ad campaigns decides the success of the product, but to implement this
creativity firm must employ a media that supports such a strategy.
Flexibility - An effective media strategy requires a degree of flexibility.
Budget Considerations - In determining media strategy cost must be estimated and budget must be considered.
Media Selection - It covers two broad decisions - selection of media class, and selection of media vehicle within
media class.
4. Implementation of Media Plan
The implementation of media plan requires media buying. Media Buying refers to buying time and space in the selected
media. Following are the steps in media buying:
Collection of information: Media buying requires sufficient information regarding nature of target audience, nature
of target market, etc.
Selection of Media/Media Mix: Considering the collected information and ad-budget, media or media mix is
selected which suits the requirements of both - target audience and advertiser.
Negotiation: Price of media is negotiated to procure media at the lowest possible price.
Issuing Ad - copy to media: Ad-copy is issued to the media for broadcast or telecast
Monitoring performance of Media: Advertiser has to monitor whether the telecast or broadcast of ad is done
properly as decided.
Payment - Finally, it is the responsibility of advertiser to make payment of media bills on time.
5. Evaluation and Follow-up
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Evaluation is essential to assess the performance of any activity. Two factors are important in evaluation of media plan:
How successful were the strategies in achieving media objectives?
Was the media plan successful in accomplishing advertising objective?
Successful strategies help build confidence and serve as reference for developing media strategies in future, and failure is
thoroughly analysed to avoid mistakes in future.
Q2) Online Advertising
Posting ads on websites that receive heavy traffic is one way to get the word out about your business. Social networking
sites such as Facebook or MySpace have advertising programs with ads tailored to a particular demographic. These ads
show up only next to profiles that meet the specifications of your product's target market.
Newspaper Ads
A traditional form of advertising, daily and weekly newspaper ads allow you to target specific geographic neighborhoods.
Attaching an incentive, such as a coupon, to the ad can help track the ad's effectiveness. Purchasing an ad in a section
relevant to your business -- for example, a home improvement business ad in the home and garden section -- can also
help you to reach target clients.
Radio Advertising
A catchy jingle and quick tag line can enhance a radio ad's effectiveness. Matching the station you choose with your target
demographic is key. If you want to reach adults aged 35 to 64, an adult contemporary station is a good bet. An alternative
or urban station is good to reach youth aged 18 to 24. At the time of publication, radio ad provider Strategic Media reports
that those who buy products in response to a radio ad spend an average of $148 per purchase, compared to an average of
$98 for television infomercials.
Television Advertising
Television ads on local stations might require time and effort to produce, but can be especially effective if you sell a product
or service with a high price point. At the time of publication, strategic Media states that a TV ad can cost $50,000, while a
radio ad will cost only $1,500. However, you can justify the difference if a TV ad can reach customers who would not
respond to radio.
Public Speaking
If the product you sell relates to your own expertise, public speaking can be a great advertisement. Offer your services to
organizations that could benefit from one of your workshops or lectures. Bring business cards and promotional materials to
the event to encourage your audience to spread the word about your services.
Door Hangers and Flyers
Canvassing the neighborhood, placing flyers in mailboxes or hanging ads on doorknobs, is a good way to target a specific
area and to make sure your potential customers have seen your information. Even if most homeowners will discard the
information, gaining a handful of clients may be enough for a positive return on the marketing campaign investment.
Event Sponsorship
Advertising your product or service through event sponsorship can take many forms. You might receive an
acknowledgement in the event program, have an on-site location where you can give out sample product, or your company
logo might appear on the event posters. One option for events that require a hand-stamp for entry is to provide the venue
with a stamp that bears your company logo; the attendees will then have your logo close by for a day or two afterwards.
Word-of-Mouth Advertising
A non-traditional form of advertising, word-of-mouth advertising involves hiring people to talk about your product or service
in a public place in a way that other people overhear them. Hired marketers can go into coffee shops in pairs and talk
audibly about your bike shop on 3rd Avenue or your door-to-door leaf blowing service. The campaign is effective if the
essential information needed to send clients to your business is simple and easy to slip into conversation.

Internal Assignment No. 1

108 Retail Management
Q1)i) Features Of Retailing
1. Small quantities
Retailers buy and sell goods in small quantity.
2. Sell to ultimate consumers
Retailers sell goods to ultimate final consumers.
3. Varieties of goods
A retailer can sell various necessary goods to consumers.
4. Personal contact
A retailer establishes direct and personal contact with customers.
5. Shop display
Retailers decorate and display goods to attract customers.
6. Last link
Retailers work as the last link of distribution channel.

48
ii) Retailer also needs to understand the competitors and how the customers perceive them. This would help the firm
understand how they are perceived vis--vis the competition. It is also important to understand why consumers choose the
competition over your product. This analysis may reveal some startling facts, and provide direction for future differentiation
strategies. At the heart of every business strategy must be a deep understanding of consumers.
Why we buy The Science of Shopping brings out some key facts about how consumers buy and the various influences on
the same. The book brings out a key fact that most purchasing decisions are influenced and made on the shop floor itself.
Highlighted are the facts that various aspects like sign ages, shelf position, display space and fixtures, all influence the
shopper in his buying decision. The science of shopping is a hybrid discipline, part physical science and part social science
and only part science at all, because it is also an art. It is practical field concerned wit providing information that can
improve the retailer edge and reduce the odds of making a wrong decision. Much of the value of the science lies in the
ability to go beyond collecting data and making educated guesses about what it means an how best to respond.
iii) Merchandise mix is the total set of all products offered for sale by a retailer, including all product lines sold to all
consumer groups.
[gard group=1]
Further Discussion and Example of merchandise mix:
The retail industry covers everything from large supercenters (Big-box stores) to small vendors pedaling goods along the
roadside. The biggest dilemma a retail store owner faces, is what to sell, or what their merchandise mix should consist of. If
retailers stock too much of a variety of merchandise, they risk appearing like a jack-of-all-trades, potentially losing money in
the long run. If they stock a small merchandise mix (few items) they run the risk of losing business, especially to local brick-
and-mortar stores and online competitors.For retailers, deciding on their marketing mix is similar to deciding on their
market segments. Retailers need to decide who they are selling to and the needs of their market segment.
[gard group=1]
iv) Supply chain management (SCM) is the management of the flow of goods and services.[2] It includes the movement
and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.
Interconnected or interlinked networks, channels and node businesses are involved in the provision
of products and services required by end customers in a supply chain.[3] Supply chain management has been defined as
the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value,
building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring
performance globally."
v) Define Sales Promotion. Give examples.Ans.Sales promotion is any initiative undertaken by an organisation topromote
an increase in sales, usage or trial of a product or service (i.e.initiatives that are not covered by the other elements of the
marketingcommunications or promotions mix). Sales promotion is the processof persuading a potential customer to buy the
product. Sales promotionis designed to be used as a short-term tactic to boost sales it is rarelysuitable as a method of
building long-term customer loyalty.Some sales promotions are aimed at consumers. Others are targeted atintermediaries
and at the firms sales force.Some examples of sales promotion are: -Free giftsDiscounted pricesJoint promotionsFree
samplesVouchers and couponsCompetitions and prize draws.
Q2) These human resource functions are expressed as under:
1. Job analysis and job design:
Job analysis is the process of describing the operations, duties and responsibilities of the job. In order to recruit retail
employees on a scientific and rational basis, it becomes necessary to determine in advance a standard of personnel with
which interested candidate can be compared. This standard must establish the minimum acceptable qualities necessary
for the accomplishment of tasks by retail employees.
2. Recruitment and selection of retail employees:
The success of a retail organization largely depends upon the team of efficient store employees who are chosen out of a
number of applicants for the job. Recruitment is a very first step in the employment process, which aim at obtaining and
maintaining an efficient store staff (floor employees) as a means of achieving sales targets.
3. Training and development:
After selecting the most suitable and eligible candidates in the organization, the next step of HR department are to arrange
for their training. All types of jobs require some type of training for their efficient performance and therefore, all employees,
new or old should be trained or re-trained from time to time.
4. Performance Management:
After selected, training and motivation, the next task, a HR manager has to perform is to evaluate the personality and
performance of each employee by quantitative factors (such as targets achieved). In actual, with the help of performance
management, the management through HR department would like to find out how effective it has been hiring and placing
employees. Performance management allows retailers gain access to the reliable, timely information that drives better
decisions.
5. Compensation and Benefits:
Compensation and benefits represent a substantial part of total cost in most of the organizations. Compensation is not only
the concern of the organization but is equally important for the workers and employees to maintain their social image.

49
6. Labor Relations:
In modern days, retailing is carried on a large scale where hundreds of employees work together. The HR manager is
basically responsible for the control of labor (workers and employees) through human relation approaches. Employees
differ in nature and therefore, it is but natural that due to any communication gap, labor relations may spoil within the
organization. Therefore, the HR department should know the proper policies, rules and regulations with regard to labor
relations.
7. Managerial Relations:
The employment relationship, irrespective of nature of organization, usually has two parts: labour relations and managerial
relations. The former which covers the price of labour is more obvious. The labour relation is also known as market
relations. The managerial relations on the other side are the relationships that define how the process takes place.
Q3) Chain store(s) or retail chain are retail outlets that share a brand and central management, and usually have
standardized business methods and practices. In retail, dining, and many service categories, chain businesses have come
to dominate the market in many parts of the world. A franchiseretail establishment is one form of chain store. In 2004, the
world's largest retail chain, Wal-Mart, became the world's largest corporation based on gross sales.
The commercial marketplace has evolved to the point where retail sales no longer have a monopoly on the consumer
world. To elaborate, consumers once relied almost exclusively on retail outlets for their needed goods, but today you can
purchase from online stores, auction sites, wholesale outlets, liquidation centers, and in some cases, you can even go
straight to the manufacturer. If you sell any kind of merchandise, there are still advantages to using traditional retail outlets.
Customer Rapport
In a retail setting, customer rapport benefits both you as a buyer and as a seller. Retail outlets allow customers to see what
they are buying up close and, as opposed to online stores, they provide instant gratification, because the customer walks
away with their purchases immediately. A friendly and helpful staff also helps to build customer loyalty, ensuring that
customers return again and again. From a business standpoint, retail outlets allow you to reach a customer base that might
be put off by the online marketplace.
Greater Inventory Options
When considering wholesale vs. retail, retail sales provides you with greater inventory options, because not all
merchandise is available on the wholesale market. To provide a bit of perspective, wholesale goods come straight to the
manufacturer to a wholesaler, usually mass produced at a low cost. The wholesaler may sell to a retailer or sell to the
public directly. But because not all goods can be mass produced at a low cost, the wholesaler is limited in terms of
inventory. By contrast, a retail business can produce goods for itself, purchase from wholesalers, or directly from
manufacturers.
Greater Sales Potential
With a retail outlet, you can sell a variety of products and expose customers to items that they didn't even know they
needed. For instance, a customer might enter the outlet looking for a pair of jeans, but then wind up purchasing jeans,
three shirts, a belt and a tie. By consolidating a variety of merchandise in one central location, you dramatically increase
your sales potential.
Less Drama
If deciding whether to sell in a retail outlet vs. online, consider that a retail outlet spares you from having to charge shipping
costs and from having to deal with lost packages, tracking codes, customer addresses and complicated online sales
databases. With a retail outlet, you can make each sale with greater confidence and fewer conflicts.
Benefits from Consumers
If you are consumer and are considering reasons to shop at traditional retail outlets, as opposed to online, consider some
of the same benefits. You can save on shipping costs, receive instant gratification, inspect your items carefully before
making your purchase and not have to worry about packages getting lost in the mail. You also can have all of your
questions answered immediately by helpful staff, rather than having to rely on email messages and phone calls.

Internal Assignment No. 2

108 Retail Management
Q1)i) Functions performed by retailers:
(1) Buying and Assembling:
A retailer deals in different variety of goods which he purchases from different wholesalers for selling to the consumers.
He tries to locate best and economical source of the supply of goods.
(2) Warehousing or Storing:
After assembly of goods from different suppliers, the retailers preserve them in stores and supply these goods to the
consumers as and when required by them. The goods are kept as reserve stocks in order to ensure uninterrupted supply to
the consumers.
(3) Selling:
The end objective of the retailer is to sell the goods to consumers. He undertakes various methods to sell goods to the
ultimate consumers.

50
(4) Credit Facilities:
He caters to the needs of the customers even by supplying them goods on credit. He bears the risk of bad debts on
account of non-payment of amount by the customers.
(5) Risk Bearing:
A retailer has to bear different type of risks in relation to goods. While in stores, goods are exposed to various risks like
deterioration in quality, spoilage and perishability etc. The products are confronted to natural risks viz; fire, flood,
earthquake and other natural calamities. Other type of risks like change in customers tastes also adversely affects the
sales.
(6) Grading and Packing:
The retailer grades the goods which are left ungraded by the manufacturers and the wholesalers. He packs the goods in
small packages and containers for the convenience of the customers.
(7) Collection and Supply of Market Information:
The retailers are in direct touch with the consumers. They gather invaluable information with regard to likes dislikes tastes
and demands of the consumers and pass on this information to the wholesalers and the producers which are very helpful
to them.
(8) Helps In Introducing New Products:
Without the services of retailers, new products cannot be introduced properly in the market. This is so because a retailer
has a direct link with the consumer. He can explain nicely about the utility and the characteristics of a new product to the
customer.
(9) Window Display and Advertising:
The retailer displays the products in show windows in order to attract the customers. This leads to immense publicity for
the product.
ii) A hypermarket (hyper) is a superstore that stocks and sells a large number of FMCG, in bulk. A hyper stores layout is
more of a warehouse than a store. A hyper tends to have the appearance of being impersonal and somewhat cold. A
hypers stock is sold at a cheaper price than a supermarket, however more stock needs to be sold to make a profit. Hypers
position themselves on a no frills approach, limiting costs on extras. For example a hyper will not necessarily unpack
products from boxes before putting it on the shelf but leave the product in an open box. Also, a hyper will save expenditure
on in store servicescape, thus a store may not be tiled or have beautiful lights draped from the ceiling etc. An example of a
hypermarket would be a Shoprite or U-Save. The low-priced, no frills approach to shopping are hypermarkets competitive
advantage.
A supermarket, or commonly known as a grocery store, has a competitive advantage over a hypermarket in terms of
product variety. The supermarket store decour would also be more attractive and the staff are likely to be more helpful.
Lastly, a supermarkets main competitave advantage will occur over the Christmas season, when the store is transformed
into a wonderland of adventure and excitement, whereas a hypermarket (even if it tries to engage in the Christmas cheer),
will remain a glorified meat locker.
iii) In the field of inventory management, a stock keeping unit or SKU (/skeju/, /sku/ or /skju/) is a distinct type of
item for sale,[1] such as a product or service, and all attributes associated with the item type that distinguish it from other
item types. For a product, these attributes could include, but are not limited to, manufacturer, description, material, size,
color, packaging, and warranty terms. When a business takes an inventory, it counts the quantity it has of each SKU.
SKU can also refer to a unique identifier or code that refers to the particular stock keeping unit. These codes are not
regulated nor standardized. When a company receives items from a vendor, it has a choice of maintaining the vendor's
SKU or creating its own. Other entity tracking methods, with varying regulations, are the Universal Product
Code (UPC), International Article Number (EAN), Global Trade Item Number (GTIN), and Australian Product
Number (APN)
iv) India has miles to go but it will cover very briskly as per the various international studies. The overwhelming response
towards the organized retailing by the youth bears testimony to it. The youth are to be considered just for the reason that
the Indian population is a young population as approximately 60% of the total population is below 30 years of age. There
are various reasons that have lead to the change in the shift from traditional to modern. One of them being the STORE
AMBIENCE. The comfortable, happening, sophisticated calls the young mass. This article is an attempt to study the
importance of a good store ambience in organized retailing.
v) Customer Relationship management is the strongest and the most efficient approach in maintaining and creating
relationships with customers. Customer relationship management is not only pure business but also ideate strong personal
bonding within people. Development of this type of bonding drives the business to new levels of success.
Once this personal and emotional linkage is built, it is very easy for any organization to identify the actual needs of
customer and help them to serve them in a better way. It is a belief that more the sophisticated strategies involved in
implementing the customer relationship management, the more strong and fruitful is the business. Most of the
organizations have dedicated world class tools for maintaining CRM systems into their workplace. Some of the efficient
tools used in most of the renowned organization are BatchBook, Salesforce, Buzzstream, Sugar CRM etc.

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Q2) Store layout is the design of a store's floor space and the placement of items within thatstore. Store layout helps
influence a customer's behavior, which means when done right, it's a key strategy to a store'sprosperity.
Keeping in view the type of industry and volume of production, the type of layout to be selected is to be decided
from the following:
1. Product or Line Layout
2. Process or Functional Layout.
3. Fixed Position Layout.
4. Combination type of Layout.
1. Product or Line Layout:
If all the processing equipment and machines are arranged according to the sequence of operations of the product, the
layout is called product type of layout. In this type of layout, only one product of one type of products is produced in an
operating area. This product must be standardized and produced in large quantities in order to justify the product layout.
The raw material is supplied at one end of the line and goes from one operation to the next quite rapidly with a minimum
work in process, storage and material handling. Fig. 8.3 shows product layout for two types of products A and B.

Advantages offered by Product Layout:

(i) Lowers total material handling cost.
(ii) There is less work in processes.
(iii) Better utilization of men and machines,
(iv) Less floor area is occupied by material in transit and for temporary storages.
(v) Greater simplicity of production control.
(vi) Total production time is also minimized.
Limitations of Product Layout:
(i) No flexibility which is generally required is obtained in this layout.
(ii) The manufacturing cost increases with a fall in volume of production.
(iii) If one or two lines are running light, there is a considerable machine idleness.
(iv) A single machine break down may shut down the whole production line.
(v) Specialized and strict supervision is essential.
2. Process or Functional Layout:
The process layout is particularly useful where low volume of production is needed. If the products are not standardized,
the process layout is more low desirable, because it has creator process flexibility than other. In this type of layout, the
machines and not arranged according to the sequence of operations but are arranged according to the nature or type of
the operations. This layout is commonly suitable for non repetitive jobs.
Same type of operation facilities are grouped together such as lathes will be placed at one place, all the drill machines are
at another place and so on. See Fig. 8.4 for process layout. Therefore, the process carried out in that area is according to
the machine available in that area.

52
Advantages of Process Layout:
(i) There will be less duplication of machines. Thus, total investment in equipment purchase will be reduced.
(ii) It offers better and more efficient supervision through specialization at various levels.
(iii) There is a greater flexibility in equipment and man power thus load distribution is easily controlled.
(iv) Better utilization of equipment available is possible.
(v) Break down of equipment can be easily handled by transferring work to another machine/work station.
(vi) There will be better control of complicated or precision processes, especially where much inspection is required.
Limitations of Process Layout:
(i) There are long material flow lines and hence the expensive handling is required.
(ii) Total production cycle time is more owing to long distances and waiting at various points.
(iii) Since more work is in queue and waiting for further operation hence bottle necks occur.
(iv) Generally, more floor area is required.
(v) Since work does not flow through definite lines, counting and scheduling is more tedious.
(vi) Specialization creates monotony and there will be difficult for the laid workers to find job in other industries.
3. Fixed Position Layout:
This type of layout is the least important for todays manufacturing industries. In this type of layout the major component
remain in a fixed location, other materials, parts, tools, machinery, man power and other supporting equipments are
brought to this location.
The major component or body of the product remain in a fixed position because it is too heavy or too big and as such it is
economical and convenient to bring the necessary tools and equipments to work place along with the man power. This
type of layout is used in the manufacture of boilers, hydraulic and steam turbines and ships etc.
Advantages Offered by Fixed Position Layout:
(i) Material movement is reduced
(ii) Capital investment is minimized.
(iii) The task is usually done by gang of operators, hence continuity of operations is ensured
(iv) Production centers are independent of each other. Hence, effective planning and loading can be made. Thus total
production cost will be reduced.
(v) It offers greater flexibility and allows change in product design, product mix and production volume.
Limitations of Fixed Position Layout:
(i) Highly skilled man power is required.
(ii) Movement of machines equipments to production centre may be time consuming.
(iii) Complicated fixtures may be required for positioning of jobs and tools. This may increase the cost of production.
4. Combination Type of Layout:
Now a days in pure state any one form of layouts discussed above is rarely found. Therefore, generally the layouts used in
industries are the compromise of the above mentioned layouts. Every layout has got certain advantages and limitations.
Therefore, industries would to like use any type of layout as such.
Flexibility is a very important factory, so layout should be such which can be molded according to the requirements of
industry, without much investment. If the good features of all types of layouts are connected, a compromise solution can be
obtained which will be more economical and flexible.
Q4) Communication is an integral part of the retailers marketing strategy. Primarily, communication is used to inform the
customers about the retailer, the merchandise and the services. It also serves as a tool for building the store image. Retail
communication has moved on from the time when the retailer alone communicated with the consumers. Today, consumers
can communicate or reach the organizations. Examples of this include toll free numbers, which retailers provide for
customer complaints and queries. Another example is the section called Contact Us on the websites of many companies.
It is believed that every brand contact delivers an impression that can strengthen or weaken the customer view of the
company. The retailer can use various platforms / channels for communication. The most common tools are:

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1) Advertising
2) Sales Promotion
3) Public Relations
4) Personal Selling
5) Direct Marketing
The tools are illustrated in Figure below
Retail Communication Mix >>
Sales promotion>> Advertising >> Direct marketing>> Personal Selling >> Public Relations
Let us now examine each of these tools in detail:
Advertising can be defined as any paid form of non-personal presentation and communication through mass media. It is
popularly believed that one of the main aims of advertising is to sell to a wide mix of consumers and also to induce repeat
purchases. However, a retailer may use advertising to achieve any of the following objectives:
1) Creating awareness about a product or store
2) Communicate information in order to create a specific image in the customers mind in terms of the store merchandise
price quality benefits etc.
3) Create a desire to want a product.
4) To communicate the stores policy on various issues.
5) Help to identify the store with nationally advertised brands.
6) Help in repositioning the store in the mind of the consumer.
7) To increase sales of specific categories or to generate short term cash flow by way of a sale, bargain days, midnight
madness etc.
8) Help reinforce the retailers corporate identity.
The retailers for advertising may use any one or a combination oft the following mediums:
1) Press advertisements
2) Posters and leaflets, brochures booklets
3) Point of purchase displays
4) Advertising can also be done through mediums like radio, television, outdoor hoardings and the internet.
Determining the Advertising / Promotional budget
While there is no definite formula for determining the advertising or the overall promotion budget the following are the main
methods that may be employed to determine the advertising budget.
The percentage of Sales method:
This is perhaps the most commonly used method for determining the budget. Here, the budget is a fixed percentage of
sales. The biggest advantage of this method is that it is simple to apply and it allows he retailer to set an affordable limit on
promotional activity. This method however, takes little consideration of the market conditions of any special advertising
needs.
The Competitive Parity Method
Here the budget is based on the estimated amount spent by the competition. There is risk that it could be based on wrong
information and again there is little consideration for market conditions or growth opportunities.
The research approach or the Task and objective Method
The budget is determines on the basis of a study of the best forms of advertising media and the costs of each. The retailer
formulates advertising goals and then defines the tasks necessary to accomplish these goals. Next, the management
determines the cost for each task and adds up the total to arrive at the required budget. Here, he advertising expenses are
linked to the retailers objectives and the effectiveness of some forms of advertising can be measured and compared to
costs.
The incremental Method
The budget is simply based on the previous expenditure.
What can be afforded?
The budget allocated for advertising or for promotion is based on the basis of the money that can be allocated by the
retailer for this purpose.
While determining which method s to be adopted, a retailer needs to take into consideration the market that the firm is
operating in , its current market position and how important advertising is in that market.

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