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Lesson Posted on 18 Mar Tuition/MCom Tuition CBSE/Class 11/Commerce/Economics

Concept of Disequilibrium in Balance of Payments. Measures adopted for Disequilibrium restoration in B.O.P

Educator Titir S

I am a talent consultant with around 9 years into the Human resource industry. My job has been cultivating...

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Lesson Posted on 31/07/2017 Tuition/Class XI-XII Tuition (PUC) Tuition/BCom Tuition Tuition/BBA Tuition +2 Exam Coaching/MBA Entrance Coaching Tuition/MCom Tuition less

The Golden Rule of Accounting

Kousiki C.

Teaching is my hobby and not my profession. I have around 16 years teaching experience. I started my...

The Golden Rule of Accounting: Debit The Receiver, Credit The Giver: This principle is used in the case of personal accounts. When a person gives something to the organization, it becomes an inflow and therefore the person must be credit in the books of accounts. The converse of this is also... read more

The Golden Rule of Accounting:

  • Debit The Receiver, Credit The Giver:

This principle is used in the case of personal accounts. When a person gives something to the organization, it becomes an inflow and therefore the person must be credit in the books of accounts. The converse of this is also true, which is why the receiver needs to be debited.

  • Debit What Comes In, Credit What Goes Out:

This principle is applied in case of real accounts. Real accounts involve machinery, land and building etc. They have a debit balance by default. Thus when you debit what comes in, you are adding to the existing account balance. This is exactly what needs to be done. Similarly when you credit what goes out, you are reducing the account balance when a tangible asset goes out of the organization.

  • Debit All Expenses And Losses, Credit All Incomes And Gains:

This rule is applied when the account in question is a nominal account. The capital of the company is a liability. Therefore it has a default credit balance. When you credit all incomes and gains, you increase the capital and by debiting expenses and losses, you decrease the capital. This is exactly what needs to be done for the system to stay in balance.

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Lesson Posted on 31/07/2017 Tuition/MBA Tuition Tuition/MCom Tuition Functional Training/HR Training +1 Vocational Training less

Human Resource Management: Personal Management

Kousiki C.

Teaching is my hobby and not my profession. I have around 16 years teaching experience. I started my...

1. Meaning of Personnel Management: Personnel refer to the employees working in an organisation. They represent the manpower which is an important asset of a business unit. Employees are the real supporters of a business unit and they contribute substantially for the stability and prosperity of a business... read more

1. Meaning of Personnel Management:

Personnel refer to the employees working in an organisation. They represent the manpower which is an important asset of a business unit. Employees are the real supporters of a business unit and they contribute substantially for the stability and prosperity of a business unit. Employees have various problems relating to wage payment, promotions, transfers, working conditions, welfare facilities, training and so on. All such problems are treated as personnel problems. These problems come within the scope of personnel management which is one important area of total business management. Naturally, a separate department called 'Personnel Department' is created in every organisation. It looks after the personnel problems. The manager in charge of this department is called personnel manager. He has to perform various functions which are responsible in nature and also delicate. He needs tact and imagination while dealing with personnel problems. He also needs active support of the top management for dealing with personnel problems effectively.

A personnel manager must be a specialist in organisation theory. In addition, he should be an expert in the personnel administration with knowledge of relevant Labour laws, procedures and so on. A personnel manager needs sound academic qualifications, communication skill, broad social outlook, sympathy and consideration for employees. Knowledge of subjects like philosophy, logic, sociology and ethics is also useful while discharging his duties and responsibilities. He needs a keen sense of social justice and also rights and interest of men (employees) at work. A personnel manager also needs other qualities which are normally required by a successful manager.

In short, personnel management deals with the people working in an organisation. It studies and solves their problems in order to create an efficient, loyal and co-operative labour force for the benefit of a business enterprise.

Personnel management deals with "personnel" of the organisation. It is concerned primarily with the manpower resource inputs.

2. Definitions of Personnel Management:

  1. According to Edwin Flippo, "Personnel management is the planning, organising, directing and controlling of the procurement, development, compensation, integration and maintenance of the people for the purpose of contributing to organizational, individual and social goals."

  2. According to George R. Terry, "Personnel management is concerned with the obtaining and maintaining of a satisfactory and a satisfied, workforce."

  3. According to British Institute of Personnel Management, in London, "Personnel management is that part of management which is concerned with the people at work and with their relationship within an enterprise."

3. Features of Personnel Management: 

  1. Personnel management relates to managing people at work. It covers all levels of personnel’s and their needs, expectations and so on. In this sense, it is a comprehensive function and is basically concerned with managing people at work.

  2. Personnel management is concerned with employees, both as individuals as well as a group. The aim of personnel management is to get better results (for the Organisation) through their involvement, motivation and co-operation. It is a people-oriented process of bringing people and organisations together so that the goals of each are met property.

  3. Personnel management is concerned with helping the employees to learn and develop their potentialities to the highest level for their benefits as well as for the benefits of their Organisation.

  4. Personnel management is inherent in all organisations as all organisations (including industrial and commercial) need manpower for the conduct of their activities. They are concerned with recruitment, selection, utilisation and development of manpower available. Personnel management is an integral aspect of total business management.

  5. Personnel management is a continuous activity/function in an Organisation as personnel problems continue to exist as long as employees are working in an Organisation. They need constant attention as they may disturb normal working of an Organisation, if neglected.

  6. Personnel management aims as securing willing co-operation of employees for achieving organizational objectives. This is natural as industrial and other activities can be conducted only with the support of human resources.

4. Objectives / Purposes of Personnel Management:

  1. To attain maximum individual development (self development) of the members of an Organisation and also to utilise available human resources fully and effectively.

  2. To mould effectively the human resources.

  3. To establish desirable working relationships between employer and employees and between groups of employees.

  4. To ensure satisfaction to the workers so that they are freely ready to work.

  5. To improve the service rendered by the enterprise to the society through better employee morale which leads to more efficient individual and group performance.

  6. To establish and maintain a productive and self respecting relationship among the members of an Organisation.

  7. To ensure the availability of a competent and willing workforce to the Organisation for its progress and prosperity.

  8. To help Organisation to achieve its goals by providing well trained, efficient and property motivated employees.

  9. To maintain high morale and good human relations within the Organisation for the benefit of employer and employees.

  10. To secure the integration of all the individuals and groups with the Organisation by reconciling individual/group goals with those of an Organisation.

5. Functions of Personnel / HR Management:

The functions of HRM are directly or indirectly related to the human resource available in the organisation. HR manager has to perform the basic functions of management in the area of HRM. These managerial functions include planning, organising, directing and controlling the manpower of his department. The operative functions of the HRM include procurement of manpower, development of manpower, and payment compensation to manpower and so on. In short, HRM involves the following functions and these functions are to be performed by the HRM department of the Organisation:

Functions of Personnel / HR Management are :

  1. Procurement of manpower : Procurement means acquiring or resourcing the human resources or the manpower required by an Organisation from time-to-time. Such procurement will be from the employment market. The basic principle in procurement is "right man for the right job". The procurement function includes manpower planning and forecasting, recruitment, selection, appointment, placement and induction of employees so as to have a team of efficient and capable employees for the benefits of the Organisation. Even promotions and transfers are covered by this broad personnel function. At present, scientific methods are used for recruitment and selection of most suitable manpower for the benefit of the Organisation.

  2. Training and Development of manpower : Development of manpower (human resource development) means planning and execution of the training programmes for all categories of employees in order to develop new skills and qualities required for working at the higher level. Manpower development is possible through training programmes and not simply by offering suitable wages to workers. Such manpower development (possible through systematic training programmes) is required for meeting the growing and changing needs of manpower along with the expansion and diversification of business activities. Executive development programmes are introduced for the benefit of higher level managers. Promotions and transfers are possible when manpower development programmes are introduced regularly. Similarly, future manpower requirement will be met properly through such manpower development programmes. This suggests the importance / significance of human resource development. It aims at educating and training employees for the improvement of overall performance of an Organisation. HRD programmes are for education, training and development of existing manpower in an Organisation. This is for facing new problems and challenges likely to develop in the near future.

  3. Compensation payment and reward to manpower employed : One function of HRM department is to pay compensation (in monetary form) to employees for the services rendered. For this, a fair system of remuneration payment (wages and salaries) needs to be introduced. Remuneration to employees should be suitable so that the labour force will be satisfied and disputes, etc., will be minimized. Fair wage payment acts as a motivating factor. Along with compensation payment, HRM also deals with reward system. It is a type of appreciation of exceptional good work and offer some monetary or non-monetary incentive to suitable employees.

  4. Integration of interests of manpower and the Organisation : Manpower is interested in wage payment while Organisation is interested in higher profits, consumer loyalty market reputation and so on. Personnel management has to reconcile the interests of the individual members of the Organisation with those of the Organisation. This will ensure cordial industrial relations. Reconciliation of individual, social and organizational goals and interest is one challenge before HRM.

  5. Maintenance of manpower : This HRM function relating to maintaining of satisfied manpower in the Organisation through the provision of welfare facilities. For this attention needs to be given to health and safety measures, maintenance of proper working conditions at the work place, provision of welfare facilities and other non-monetary benefits so as to create efficient and satisfied labour force with high morale. Even collective bargaining and workers participation come within this broad personnel function. Maintenance of stable manpower is difficult due to the availability of ample employment opportunities.

  6. Provision of welfare facilities : Employees are offered various welfare facilities. They include medical, educational, recreation, housing, transport and so on. These facilities are given for raising their efficiency and also for making their life happy. Welfare facilities create efficient and satisfied Labour force. To introduce new labour welfare facilities and to maintain the existing facilities is one of the functions of HRM.

  7. Miscellaneous functions : Misc. functions performed under personnel management are :

    1. Maintenance of service records of employees,

    2. Promotions and transfers of employees,

    3. Maintaining cordial industrial relations,

    4. Introduction of rational grievance procedure,

    5. Performance evaluation of employees,

    6. Career planning of employees,

    7. Maintenance of discipline, administering the policies with regard to disciplinary action and compliance of various labour laws,

    8. Restructuring of the Organisation,

    9. Formulating HRM strategy, etc.

 These HRM functions need to be performed regularly for the benefit of employees and also for continuity in the production activities of the Organisation.

W.R. Spriegel has divided the functions of personnel management / HRM department into the following six broad categories:

  1. Employment.

  2. Promotion, Transfer and Termination.

  3. Training.

  4. Wages and other incentives.

  5. Service activities (welfare activities).

  6. Collective bargaining and workers' participation.

As per Indian Institute of Personnel Management (IIMP now called NIPM), the Personnel / HRM functions are classified as noted below :

  1. Improvement of industrial relations,

  2. Promotion of joint consultation,

  3. Helping management to formulate a labour policy and improving communication between management and employees,

  4. Advising management on the fulfillment of statutory obligations relating to safety, health and welfare of the employees,

  5. Improving factory amenities and welfare provisions, and

  6. Advising the management on the training and future education of employees.

In the HRM department, various sections are created in order to give attention to various functions which are basically HRM functions. The functions (as noted above) are varied in character. These are functions of HRM and also the functions of personnel management. They are important and needs constant attention. Efficient, satisfied and co-operative labour force can be created by giving proper attention to various personnel functions.

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Lesson Posted on 31/07/2017 Tuition/BBA Tuition Tuition/BCom Tuition Tuition/MCom Tuition +8 Tuition/MBA Tuition Exam Coaching/MBA Entrance Coaching Exam Coaching/CA Coaching Exam Coaching/Company Secratary (CS) Coaching Exam Coaching/ICWA Coaching Tuition/Class XI-XII Tuition (PUC) Functional Training/HR Training Vocational Training less

Uses For Computers In Business World

Kousiki C.

Teaching is my hobby and not my profession. I have around 16 years teaching experience. I started my...

Almost every business uses computers to complete daily tasks. From making contact with clients to inputting data for reports, computers allow businesses a more efficient way to manage affairs when compared to traditional paper and manila folders. Businesses use a variety of different types of computers... read more

Almost every business uses computers to complete daily tasks. From making contact with clients to inputting data for reports, computers allow businesses a more efficient way to manage affairs when compared to traditional paper and manila folders. Businesses use a variety of different types of computers such as desktops, laptops, servers, smartphones and tablets, depending on their needs. With computers, employees are able to work anytime, anywhere.

1. Communication:

Communication is key when gaining and maintaining clients and other important contacts. Computers give businesses access to email, instant messaging and custom customer contact systems. Computerized phone systems allow for automated support during off hours and a virtual operator can quickly direct callers to the correct department for faster support.

2. Marketing:

Computers allow businesses to create websites, stunning ads and complete marketing campaigns. Marketing videos can be edited and custom ads created in-house with the use of specialized software. Businesses can completely develop and manage websites with their own servers or connect remotely to a third-party business to upload their latest content such as articles, product images and blog posts.

3. Accounting:

Accounting without computers presents a high risk for human error. Accounting software allows businesses to simply input their financial data and instantly see gains and losses. All necessary tax reports are available the moment the data is entered. Using computers for invoicing, managing expenses and calculating payroll is vital for ensuring financial data is as accurate as possible.

4. Storage:

Instead of filing cabinets, businesses are able to store millions of files using computers and servers. Data can be stored centrally for easy access from multiple computers or stored locally for individual use. Computerized storage saves space and provides a far more efficient organization strategy. With encryption, passwords and replace keys, data remains secure.

5. Documents and Reports:

Most businesses have some sort of productivity software which typically includes a word processor and spreadsheet application. These two programs allow businesses to create reports, memos, tutorials and even colorful ads for company events. Spreadsheet applications give businesses the chance to organize, manage and calculate both numeric and alphabetic data. With charts and graphs, reporting becomes visual instead of text-based.

6. Education:

Businesses use computers to help educate employees on software, company policy, standard procedures and safety. Instead of hiring teachers, computers can be used to educate employees at their own pace or through an online webinar with live questions and answers. This form of education fits the busy schedules of businesses without sacrificing the quality of the education.

7. Research:

From learning more about the competition to discovering what customers really want, research isn't as difficult as it once was, thanks to computers. Search engines, forums, social networks and industry specific websites provide businesses with a wealth of information and research data.

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Lesson Posted on 31/07/2017 Tuition/BBA Tuition Tuition/BCom Tuition Tuition/MCom Tuition +6 Tuition/Class XI-XII Tuition (PUC) Tuition/MBA Tuition Exam Coaching/MBA Entrance Coaching Exam Coaching/CA Coaching Exam Coaching/Company Secratary (CS) Coaching Exam Coaching/ICWA Coaching less

Entrepreneurship Development

Kousiki C.

Teaching is my hobby and not my profession. I have around 16 years teaching experience. I started my...

1. Meaning and Definition of Entrepreneur: The word entrepreneur has come from the France word “entreprendra”which means to undertake, to pursue opportunities to fulfill needs and wants through innovation to undertake business.In the year 1725 the word entrepreneur was first brought into... read more

1. Meaning and Definition of Entrepreneur:

The word entrepreneur has come from the France word “entreprendra”which means to undertake, to pursue opportunities to fulfill needs and wants through innovation to undertake business.

In the year 1725 the word entrepreneur was first brought into economics by a social scientist named Richard cantilion.the expert who invented the theory of entrepreneurship was David mc cellion in 1961.

There was various definition of entrepreneur.

According to America heritage dictionary:

“Entrepreneur is a person who organizes operates and assumes the risk for business venture”

The dictionary of social science has defined entrepreneur from functional viewpoint. According to it “entrepreneur is a person 1) who exercise the function or 2) initiating coordinating controlling or institute major change in a business enterprise and or 3) bearing those risk of operation which arise from the dynamic nature of society and imperfect knowledge of the future which can cast through transfer calculation or elimination

According to encyclopedia Britannica:

“Entrepreneur as the individual who bears the risk of operating a business in the face of uncertainty about future condition and who is rewarded accordingly by his profit or losses”.

Richard cotillion says, “Entrepreneur is the agent who purchased the means of production for combination into marketable product”.

So we can say that entrepreneur a person who takes risk for establishing a new venture or business in order to create utility for the welfare of human being as well as for him of herself. She or he is always a person who seeks out opportunities and takes on challenges.

2. Meaning and Definition of entrepreneurship:

 Entrepreneurship is considered as of assuming the risk of an entrepreneur.

According to Natheal H. Leff: 

Entrepreneurship is the capacity for innovation investment and expansion in new markets product and techniques.

Webster highlights entrepreneurship as economic venture organizing and risk taking capabilities.

Joshep a Schumpeter describe entrepreneurship is the force of creative destruction whereby established way of doing things are destroyed by the creating of new and better ways to get things done.

According to S. S. Kanaka: 

Entrepreneurships is a process involving various actions to be taken to establish an enterprise.

From the functional view point entrepreneurship is defined as the combination of activities such as perception of market opportunities gaining command over scarce resources purchasing input producing and marketing of product responding to competition and maintaining relation with political administration and public bureaucracy for concession licenses and taxes etc.

3. Characteristics of an Entrepreneur:

An entrepreneur is a person who initiates a business venture. there are some essential feature of an entrepreneur which are describe below.

  • Risk taking capability: every business has risk of time money etc .so an entrepreneur must have the risk taking capability.
  • Creativity and innovation: an entrepreneur has an initiator possesses creativity and innovative power.
  • Need for achievement: the entrepreneur has strong desire to achieve the goal of business. he is always driven by the needs for achievement.
  • Need for autonomy: an entrepreneur does not like to be under anybody. it is the need for autonomy which drives a person to be an entrepreneur.
  • Internal locus of control: an entrepreneur believes in him his work.
  • External locus of control: he also believes in fate for ultimate result.
  • Self confident: an entrepreneur has confidence in him.
  • Leadership capability: an entrepreneur must have leadership capability to lead works under him
  • Industriousness: a successful entrepreneur must have leadership capability to lead workers working under him.
  • Decision making capability: the entrepreneur has capability to take quick decision
  • Adaptability: he has the capacity to adapt with any kind of situation that arise in the enterprise
  • Foresightness: The entrepreneurs have a good foresight to know about future business environment.
  • Others; the other feature are dynamism, ambition, education and training, long term involvement, future orientation.
4. Qualities of successful entrepreneur:

To become a successful as an entrepreneur in its business life, a businessman should possess a quite a number of essential qualities. Those are noted below:

1. Moderate risk taking: an entrepreneur always takes calculated risk to operate the organization

2. Hard work: an entrepreneur is very much hard worker, he or she always busy with various types work.

3. Accountability: a successful entrepreneur is accountable well as his associates always accountable to him.

4. Educated in real sense: successful entrepreneur is educated In real sense .he tries to implement his organizational objectives through his education.

5. Analytical mind: a successful entrepreneur is analytical minded. he scrutinizes every activity on the organization.

6. Dynamic leadership: a successful entrepreneur is always dynamic to operate the organization

7. Presence of mind: a successful entrepreneur is always at present of mind he is always aware of activities that to happening in the organization and around him

8. Accommodative: a good entrepreneur has the capacity to make his own place at every sector

9. Courageous and tactful: Corsages and techniques is very much essential for a successful entrepreneur

10. Maker of right decision: A successful entrepreneur makes right decision in right time in right place

11. Foresighted: a successful entrepreneur foresights the future and take decision accordingly

12. Right perception of things: A successful entrepreneur things in a right way

13. Enjoy simple life: A successful entrepreneur always deals a simple life a general people of the society

14.  Strong desired to success: A successful entrepreneur have a strong desire to success. he is driven by the desire to success

15. Innovation: innovation is the process of making new something. A successful entrepreneur is innovative

16. Self confidence: A successful entrepreneur is self confidence. does not really on other for decision or fate

17. Goal setting: a successful entrepreneur set the goal

18. Keen observation: A successful entrepreneur always observes the origination

19. Sociable: A successful entrepreneur is sociable person

20. Loves to work; A successful entrepreneur is very much addicted to work

21. Loves new ideas: A successful entrepreneur loves new ides of the organization

22. Team builder: A successful entrepreneur builds a suitable team

23. Clean understanding: A successful entrepreneur clearly understands every things

24. Ability to conceptualize: A successful entrepreneur is able to conceptualize the reality

25. Other: the other qualities are patience, optimistic ,strategist, etc


5. Relationship between entrepreneur and entrepreneurship: 

The relationship between entrepreneur and entrepreneurship are discussed below:

6. Entrepreneur vs Entrepreneurship:

  • Entrepreneur is a person: Entrepreneurship is a process.
  • Entrepreneur is an organizer. Entrepreneurship is an organization. 
  • Entrepreneur is an innovator: Entrepreneurship is an innovation. 
  • Entrepreneur is a risk bearer : Entrepreneur is a risk bearing. 
  • Entrepreneur is a motivator : Entrepreneur is a motivation.
  • Entrepreneur is a creator : Entrepreneur is a creation.
  • Entrepreneur is a visualizer. 
  • Entrepreneur is a vision.
  • Entrepreneur is a leader.
  • Entrepreneurship is a leadership.
  • Entrepreneur is an imitator.
  • Entrepreneurship is an imitation.
7. Distinction between an entrepreneur and a manager:

Sometimes the word entrepreneur and manager are used as synonyms. In fact there are some differences between them. They are described below:

Subject matter    ------------    Entrepreneur     ------------         Manager

1. Motive:

Thinking function. His main motive is to start a new venture by setting up an enterprise. 

Doing function. His main motive is to render service to the organization already established. 

2. Status:

  • Entrepreneur is the owner of the enterprise. 
  • Manager is the service holder or servant of the enterprise.
3. Risk bearing:

  • Being owner of the enterprise assume all risk and uncertainty involved in the enterprise. 
  • As the servant don’t take or bear risk and uncertainty involved in the organization. 
 
4. Reward:
  • Reward is profit which is highly uncertain. 
  • Get salary as a reward which is fixed and certain.
5. Innovation:

  • An entrepreneur is an innovator. 
  • A manager is not an innovator in that sense he implements the plan prepared by the entrepreneur. 

6. Qualification:

  • They are not highly qualified but have extraordinary experience forecasting. 
  • They are highly qualified (institutional education). 
  • After the above discussion we can say that at a time an entrepreneur can be a manager but a manager cannot be an entrepreneur.

8. Different types of entrepreneurs:

On the basis of nature Clarence Danhof classified entrepreneurs into four categories. These are:

  1.  Innovative entrepreneurs: An innovative entrepreneur in one, who introduces new goods, inaugurates new method of production, discovers new market and recognizes the enterprise. It is important to note that such entrepreneurs can work only when a certain level of development is already achieved and people look forward to change and improvement.

  2.  Imitative entrepreneurs: These types of entrepreneurs creatively imitate the innovative technical achievement made by another firm. Imitative entrepreneurs are suitable for underdeveloped countries as it is hard for them to bear the high cost of innovation. 

  3. Fabian entrepreneurs: Fabian entrepreneurs are characterized by very great caution and skepticism to experiment any change in their enterprises. They usually do not take any new challenge. They imitate only when it becomes perfectly clear that failure to do not so would result in a loss of the relative position in the enterprise. 

  4. Drone entrepreneurs: They are characterized by a refusal to adopt any change even at cost of severely reduction of profit. 

Some other types of entrepreneurs: 

(i) Solo operators: These are the entrepreneurs who essentially work alone and if needed at all employ a few employees. In the beginning most of the entrepreneurs start their enterprises like them. 

(ii)  Active partners: Active partners are those entrepreneurs who start or carry on an enterprise as a joint venture. It is important that all of them actively participate in the operations of the business. 

(iii)  Innovators: Such entrepreneurs with their competence and creativity innovate new products. Their basic interest lies in research and innovative activities. 

(iv) Buyers’ entrepreneurs: These are the entrepreneurs who do not like to bear much risk. They do not take the risk of production but take the risk of marketing a product i.e. wholesaler and retailer. 

(v) Life timers: These entrepreneurs believe business as an integral part of their life. These entrepreneurs actually inherit their family business i.e. goldsmith, potter etc. 

(vi) Challengers: These are the entrepreneurs who initiate business because of the challenges it presents. They believe that ‘No risk, No gain’. When one challenge seems to be met, they begin to look for new challenges. 

Beside these, there are Govt. and Non-govt. entrepreneurs. 

9. Factors of Entrepreneurship development:

 A. Personal factors:

  1. Ability to cope with the situation
  2. Age
  3. Education
  4. Personality
  5. Intrapersonal communication ability
  6. Achievement motivation
  7. Self-confidence
  8. Competence
  9. Emotion
  10. Understanding capacity

B. Environmental factors 

         i.  Socio-cultural factors :
  • Religion
  • Values
  • Rural-urban orientation
  • Marginality
  • Education
  • Tradition

       ii. Political and legal factors:
  • Govt. legal bindings
  • Govt. policies
  • Rules and laws related to the industry and business

C. Institutional factors:
  1. Financial institution
  2. Training and development institution
  3. Consulting firms
  4. Incubators organization (old & pioneer)
  5. Research organization

D. Micro factors:
  1. Enterprise itself
  2. Suppliers
  3. Intermediaries
  4. Customers
  5. Competitors
  6. Public

E. Macro factors:
  1. Demographic factors
  2. Economic factors
  3. Physical factors
  4. Technological factors
  5. Cultural/social factors

F. Others:
  1. Venture capital
  2. Experience entrepreneurs
  3. Technically skilled labor force
  4. Supplier’s accessibility
  5. Proximity to universities
  6. Availability of land facilities
  7. Accessibility of transportation
  8. Favorable loan and financial policies
  9. Decepted population
  10. Availability of supportive
  11. Suitable living condition
  12. Capital intensiveness
  13. Research and development activities
  14. Capital incentive ness
  15. Proximity to corporate head quarters
  16. Competitive situation

10. Causes of success and failure of entrepreneur:  

An entrepreneur may sometime become successful and sometime becomes failure. There are some causes of such success and failure. They are noted below:

1. Selection of business: It is an important aspect. That means an entrepreneur has to determine what type business he is going to start. Form various points of view the feasibility of the business should be tested. 

2. Proper planning: Proper planning me s also important. For planning, planning premises like political, economic, social premised should be considered first. The steps of planning should be followed properly. 

3. Initial capital:& read less
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Lesson Posted on 29/07/2017 Tuition/MCom Tuition

Managerial Economics: Market Structure And Pricing Decisions

Kousiki C.

Teaching is my hobby and not my profession. I have around 16 years teaching experience. I started my...

Price determination is one of the most crucial aspects in economics. Business managers are expected to make perfect decisions based on their knowledge and judgment. Since every economic activity in the market is measured as per price, it is important to know the concepts and theories related to pricing.... read more

Price determination is one of the most crucial aspects in economics. Business managers are expected to make perfect decisions based on their knowledge and judgment. Since every economic activity in the market is measured as per price, it is important to know the concepts and theories related to pricing. Pricing discusses the rationale and assumptions behind pricing decisions. It analyzes unique market needs and discusses how business managers reach upon final pricing decisions.

It explains the equilibrium of a firm and is the interaction of the demand faced by the firm and its supply curve. The equilibrium condition differs under perfect competition, monopoly, monopolistic competition, and oligopoly. Time element is of great relevance in the theory of pricing since one of the two determinants of price, namely supply depends on the time allowed to it for adjustment.

Market Structure:

A market is the area where buyers and sellers contact each other and exchange goods and services. Market structure is said to be the characteristics of the market. Market structures are basically the number of firms in the market that produce identical goods and services. Market structure influences the behavior of firms to a great extent. The market structure affects the supply of different commodities in the market.

When the competition is high there is a high supply of commodity as different companies try to dominate the markets and it also creates barriers to entry for the companies that intend to join that market. A monopoly market has the biggest level of barriers to entry while the perfectly competitive market has zero percent level of barriers to entry. Firms are more efficient in a competitive market than in a monopoly structure.

Perfect Competition:

Perfect competition is a situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers

With many firms and a homogeneous product under perfect competition no individual firm is in a position to influence the price of the product that means price elasticity of demand for a single firm will be infinite.

Pricing Decisions:

Determinants of Price Under Perfect Competition:

Market price is determined by the equilibrium between demand and supply in a market period or very short run. The market period is a period in which the maximum that can be supplied is limited by the existing stock. The market period is so short that more cannot be produced in response to increased demand. The firms can sell only what they have already produced. This market period may be an hour, a day or a few days or even a few weeks depending upon the nature of the product.

Market Price of a Perishable Commodity:

In the case of perishable commodity like fish, the supply is limited by the available quantity on that day. It cannot be stored for the next market period and therefore the whole of it must be sold away on the same day whatever the price may be.

Market Price of Non-Perishable and Reproducible Goods:

In case of non-perishable but reproducible goods, some of the goods can be preserved or kept back from the market and carried over to the next market period. There will then be two critical price levels.

The first, if price is very high the seller will be prepared to sell the whole stock. The second level is set by a low price at which the seller would not sell any amount in the present market period, but will hold back the whole stock for some better time. The price below which the seller will refuse to sell is called the Reserve Price.

Monopolistic Competition:

Monopolistic competition is a form of market structure in which a large number of independent firms are supplying products that are slightly differentiated from the point of view of buyers. Thus, the products of the competing firms are close but not perfect substitutes because buyers do not regard them as identical. This situation arises when the same commodity is being sold under different brand names, each brand being slightly different from the others.

For example: Lux, Liril, Dove, etc.

Each firm is therefore the sole producer of a particular brand or “product”. It is monopolist as far as a particular brand is concerned. However, since the various brands are close substitutes, a large number of “monopoly” producers of these brands are involved in a keen competition with one another. This type of market structure, where there is competition among a large number of “monopolists” is called monopolistic competition.

In addition to product differentiation, the other three basic characteristics of monopolistic competition are:

  • There are large number of independent sellers and buyers in the market.

  • The relative market shares of all sellers are insignificant and more or less equal. That is, seller-concentration in the market is almost non-existent.

  • There are neither any legal nor any economic barriers against the entry of new firms into the market. New firms are free to enter the market and existing firms are free to leave the market.

  • In other words, product differentiation is the only characteristic that distinguishes monopolistic competition from perfect competition.

Monopoly:

Monopoly is said to exist when one firm is the sole producer or seller of a product which has no close substitutes. According to this definition, there must be a single producer or seller of a product. If there are many producers producing a product, either perfect competition or monopolistic competition will prevail depending upon whether the product is homogeneous or differentiated.

On the other hand, when there are few producers, oligopoly is said to exist. A second condition which is essential for a firm to be called monopolist is that no close substitutes for the product of that firm should be available.

From above it follows that for the monopoly to exist, following things are essential:

  • One and only one firm produces and sells a particular commodity or a service.

  • There are no rivals or direct competitors of the firm.

  • No other seller can enter the market for whatever reasons legal, technical, or economic.

  • Monopolist is a price maker. He tries to take the best of whatever demand and cost conditions exist without the fear of new firms entering to compete away his profits.

The concept of market power applies to an individual enterprise or to a group of enterprises acting collectively. For the individual firm, it expresses the extent to which the firm has discretion over the price that it charges. The baseline of zero market power is set by the individual firm that produces and sells a homogeneous product alongside many other similar firms that all sell the same product.

Since all of the firms sell the identical product, the individual sellers are not distinctive. Buyers care solely about finding the seller with the lowest price.

In this context of “perfect competition”, all firms sell at an identical price that is equal to their marginal costs and no individual firm possess any market power. If any firm were to raise its price slightly above the market-determined price, it would lose all of its customers and if a firm were to reduce its price slightly below the market price, it would be swamped with customers who switch from the other firms.

Accordingly, the standard definition for market power is to define it as the divergence between price and marginal cost, expressed relative to price. In Mathematical terms we may define it as −

L = 
(P − MC)P

Oligopoly:

In an oligopolistic market there are small number of firms so that sellers are conscious of their interdependence. The competition is not perfect, yet the rivalry among firms is high. Given that there are large number of possible reactions of competitors, the behavior of firms may assume various forms. Thus there are various models of oligopolistic behavior, each based on different reactions patterns of rivals.

Oligopoly is a situation in which only a few firms are competing in the market for a particular commodity. The distinguishing characteristics of oligopoly are such that neither the theory of monopolistic competition nor the theory of monopoly can explain the behavior of an oligopolistic firm.

Two of the main characteristics of Oligopoly are briefly explained below:

  • Under oligopoly the number of competing firms being small, each firm controls an important proportion of the total supply. Consequently, the effect of a change in the price or output of one firm upon the sales of its rival firms is noticeable and not insignificant. When any firm takes an action its rivals will in all probability react to it. The behavior of oligopolistic firms is interdependent and not independent or atomistic as is the case under perfect or monopolistic competition.

  • Under oligopoly new entry is difficult. It is neither free nor barred. Hence the condition of entry becomes an important factor determining the price or output decisions of oligopolistic firms and preventing or limiting entry of an important objective.

For Example: Aircraft manufacturing, in some countries: wireless communication, media, and banking.

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On GST road, There s No Checking India

Ca Prashanth Reddy

I enjoy teaching and interacting with students. Teaching is my passion, profession and hobby. Every student...

The ‘One Nation One Tax’ slogan isn’t just about uniform rate, it is also about removing check posts at borders, which often clog traffic for hours, delaying shipment of goods. While several states have been proactive in removing check posts voluntarily, many more are expected to... read more

 The ‘One Nation One Tax’ slogan isn’t just about uniform rate, it is also about removing check posts at borders, which often clog traffic for hours, delaying shipment of goods.

While several states have been proactive in removing check posts voluntarily, many more are expected to dispense with the posts for commercial taxes on Saturday when the goods and services tax (GST) kicks in.

On Wednesday, the Bihar cabinet decided to stop checking of vehicles by commercial taxes department at six integrated border check posts and Madhya Pradesh too will do away with them.

Similarly, Karnataka CM Siddaramaiah has announced in the assembly that check posts will have no place in the GST regime but he did not specify the date.

What is, however, eye catching is that several states  from the “progressive ones” such as Gujarat, Maharashtra, Haryana, Rajasthan and Chattisgarh to UP, West Bengal and Odisha have done away with check posts.

UP was among the first ones dismantle its check posts in August 2008, while Bengal did so three years ago and Gujarat two years ago under Anandiben Patel.

But will this make life simple for truckers?

“Check- posts will not go away per se. Rather, checking of vehicles by only commercial taxes department officials would be stopped in adherence to rollout of GST,” said a Bihar government officer.

In Karnataka, the role of the physical verification centres will be to stop trucks and verify if the goods are as declared on the GSTN web portal.

Check posts virtually did the same job and officers suggested this system will continue till the replacement in the form of Electronic Way Bills takes off.

Among those who have done away with the border, UP has a similar system in the form of the mobile or flying squads, whose number has only gone up and they play havoc at night.

As anyone driving into Noida from Delhi can tell you, there are lathi-wielding inspectors and employees from the commercial tax department, who often erect barricades and stop almost every commercial vehicle, often throwing the stick (quite literally).

During the day, they are a little more selective. And, this has not changed despite change of administration. So, in case of several states, check posts have been removed, only on paper.

E-Way Bills:

When discussions on transition to GST began, the Centre was keen on reforming the current system to ensure trucks can move across borders freely.

After all, road transport accounts for 65% of freight volume. Although road infrastructure has vastly improved, stoppages at the state borders, some of which are notorious such as the one between Assam and West Bengal have meant that average distance travelled by vehicles have remained constant for three years and are estimated to cost the economy around $6.6 billion (over Rs 40,000 crore), apart from loss of fuel, an IIM Calcutta study estimated.

Currently, all trucks must halt at state borders (with check posts), although only 1% were non-compliant with the documents required. As a result, the Centre backed a risk-based assessment and suggested E-Way Bills.

Officers said that discussions have focused on merging several of the 20 checks that authorities from the states and the Centre conduct. But the complicated rules and a strong lobby from the states has meant that the reform initiative has had to be postponed although GST is ready to be rolled out from Friday.
 
Local Bodies:
 
While state commercial tax department’s check posts will go away, local bodies will still need trucks and commercial vehicles to stop and pay taxes, such as the ones erected by the three municipal corporations of Delhi. Brihanmumbai Municipal Corporation (BMC), the only local body in Maharashtra which collects octroi, has volunteered to do away with check posts from midnight on Friday, but the removal of the structures will still take some time.
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Incorporation of a Company

Ca Prashanth Reddy

I enjoy teaching and interacting with students. Teaching is my passion, profession and hobby. Every student...

What are the four stages of formation of a company? There are four stages in the formation of a company: STAGE I- Promotion of a company STAGE II- Registration and incorporation of a company STAGE III- Raising of capital STAGE IV- Commencement of business What do you mean by ‘promotion of... read more

What are the four stages of formation of a company?

There are four stages in the formation of a company:

STAGE I- Promotion of a company

STAGE II- Registration and incorporation of a company

STAGE III- Raising of capital

STAGE IV- Commencement of business

What do you mean by ‘promotion of a company’ and ‘promoter’?

Promotion of a Company:

Promotion is the first stage in the formation of a company. Certain persons who wish to carry on some business come together to form a company.

These persons are known as promoters.

  • ‘Promotion’ means the   preliminary steps   undertaken by   the promoters to bring a Company into existence.

It refers to all those steps which are taken from the time of having an idea of starting a company to the time of actual starting of a company.

Meaning Of Promoter:

  • Promoter’ means a person who thinks of forming a Company and actually brings it into
  • He takes all the effective steps to incorporate
  • A person, who was not associated with the initial formation of the Company but subsequently helps in floating its capital, will also be regarded as
  • Persons assisting the promoters by acting in a professional capacity are not promoters. However, if he goes further than this, like, introducing his clients to a person who may be interested in purchasing the shares in the proposed Company would be regarded as
  • A person who originates a scheme for the formation of the company, has the Memorandum and Articles prepared, executed and registered, and finds the first Directors, settles the terms of preliminary contracts and prospectus (if any), and makes arrangements for advertising and circulating the prospectus and placing the capital, is a

The relationship between the promoter and the company starts from the day the work of floating the company starts and continues up to the time the Directors take into their hands what remains to be done in the way of forming the company. Thus, the status of a promoter is generally terminated when the BOD has been formed and the Board starts governing the company.

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Consignment Meaning & Features

Ca Prashanth Reddy

I enjoy teaching and interacting with students. Teaching is my passion, profession and hobby. Every student...

Meaning & Features Of Consignment Meaning: Consignment means the transaction of sending goods by one person (called CONSIGNOR) to another (called CONSIGNEE) who is to sell those goods on behalf of the Ist person. Features The relation between consignor and consignee is that of principal and... read more

Meaning & Features Of Consignment

Meaning: Consignment means the transaction of sending goods by one person (called CONSIGNOR) to another (called CONSIGNEE) who is to sell those goods on behalf of the Ist person.

Features

  • The relation between consignor and consignee is that of principal and agent.
  • Only the possession and not ownership is transferred to
  • Risk of goods remains with Consignor and not with the
  • Only movable property is subject matter of the
  • Consignment goods are dispatched on the basis that the goods will be sold on behalf of, at the expense and at the risk of the consignor.
  • Consignor sends Pro-forma Invoice and not Sales
  • Consignee sends Account Sales (which contains information as to Sales, Expenses, Commission, Advance, and Balance due).
  • The Profit or Loss on consignment belongs to Consignor and not Consignee.
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Working Capital

Ca Prashanth Reddy

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Introduction A firm invests a part of its permanent capital in fixed assets and keeps a part of it for working capital e., for meeting the day to day requirements. We will hardly find a firm which does not require any amount of working capital for its normal operations. The requirement of working... read more

Introduction

  • A firm invests a part of its permanent capital in fixed assets and keeps a part of it for working capital e., for meeting the day to day requirements.
  • We will hardly find a firm which does not require any amount of working capital for its normal operations. The requirement of working capital varies from firm to firm depending upon the nature of business, production policy, market conditions, seasonality of operations, conditions of supply
  • Working capital to a company is like the blood to human body. It is the most vital ingredient of a
  • Working capital management if carried out effectively, efficiently and consistently, will assure the health of an

Meaning of Working Capital :

Working capital is defined as the excess of current assets over current liabilities.

Current assets are those assets which will be converted into cash within the current accounting period or within the next year as a result of the ordinary operations of the business. They are cash or near cash resources. These include:

  • Cash and Bank Balances
  • Receivables
  • Inventory
    • Raw materials, stores and spares
    • Work – in - progress
    • Finished goods
  • Prepaid expenses
  • Short-term advances
  • Temporary investments

The value represented by these assets circulates among several items. Cash is used to buy raw – materials, to pay wages and to meet other manufacturing expenses. Finished goods are produced. These are held as inventories. When these are sold, accounts receivables are created. The collection of accounts receivable brings cash into the firm. The cycle starts again. Current liabilities are the debts of the firms that have to be paid during the current accounting period or within a year.

These include:

  • Creditors for goods
  • Outstanding expenses e., expenses due but not paid.
  • Short – term
  • Advances received against
  • Taxes and dividends payable
  • Other liabilities maturing within a

Working capital is also known as circulating capital, fluctuating capital and revolving capital. The magnitude and composition keep on changing continuously in the course of business.

Gross and Net Working Capital

Generally the Working capital has its significance in two perspectives – ‘Gross working capital’ and ‘Net Working capital’.

Gross Working capital: The gross working capital refers to investment in all the current assets. The total of investments in all current assets is known as gross working capital.

Net Working Capital:

  • It is the excess of current assets over current This is, as a matter of fact, the most commonly accepted definition. Some people define it as only the difference between current assets and current liabilities.
  • It is that portion of a firm’s current assets which is financed by long – term

Need for Working Capital

The basic objective of financial management is to maximize shareholders’ wealth. This is possible only when the company earns sufficient profit. The amount of such profit largely depends upon the magnitude of sales. However, sales do not convert into cash instantaneously. There is always a time gap between the sale of goods and receipt of cash. Working capital is required for this period in order to sustain the sales activity. In case adequate working capital is not available for this period, the company will not be in a position to sustain the sales since it may not be in a position to purchase raw materials, pay wages and other expenses required for manufacturing the goods to be sold.

Permanent and Temporary Working Capital:

Working capital can be divided into two categories on the basis of time:

  1. Permanent Working Capital
  2. Temporary or Variable Working

Permanent working capital represents the assets required on continuing basis over the entire year, whereas temporary working capital represents additional assets required at different items during the operation of the year.

Permanent working capital: This refers to that minimum amount of investment in all current assets, which is required at all times to carry out minimum level business activities. In other words, it represents the current assets required on a continuing basis over the entire year. Tandon Committee has referred to this type of working capital as “Hard Core current basis”.

The following are the characteristics of this type of working capital:

  1. Amount of permanent working capital remains in the business in one form or This is particularly important from the point of view of financing. The suppliers of such working capital should not expect its return during the life-term of the firm.
  2. It also grows with the size of the In other words, greater the size of the business, greater is the amount of such working capital and vice versa.

Permanent working capital is permanently needed for the business and therefore, it should preferably be financed out of long – term funds.

Temporary working capital: It refers to that part of total working capital which is required by a business over and above permanent working capital. It is also called variable working capital. Since the volume of temporary working capital keeps on fluctuating from time to time. In other words, it represents additional currents assets required at different times during the operating year. For example, extra inventory has to be maintained to support sales during peak sales period. Similarly, receivable also increase and must be financed during period of high sales. On the other hand investment in inventories, receivables, etc., will decrease in periods of depression. Temporary working capital is generally financed from short – term sources of finance such as bank credit.

Permanent working capital is fixed over a period of time, while temporary working capital is fluctuating. The permanent working capital is increasing over a period of time with increase in the level of business activity. This happens in case of a growing company. Hence, the permanent working capital line is not horizontal with the base line.

 

 

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