MBA/M com/BBA/ Management Notes and PPT

 

What Is an Entrepreneur

What Is the Function of Entrepreneurs?

Entrepreneurs and entrepreneurship are essential to the development of strong industries, economies, and communities. Innovation is essential to the development of new products and services, and can often have an enormous impact locally. Without entrepreneurs in an area, there is a risk of cultural, industrial, and economic stagnation.

What Is an Entrepreneur?

An entrepreneur is someone who starts a business, usually as the result of identifying a market need or a gap in available products and services. While some people use the terms "entrepreneur" and "business owner" interchangeably, this terminology is not correct. Business owners can buy a business instead of starting one. Entrepreneurs are also innovators who develop new products, new services, new delivery methods, and in some cases, new industries.

The Importance of Entrepreneurship

Without entrepreneurs, industrial products and consumer goods would simply not be available. In addition to making useful products and services available to others, entrepreneurs also start businesses that employ workers and develop partnerships with suppliers and retailers. These efforts generate capital for multiple businesses and individuals, contributing to and improving the economy. Even small companies can play a critical role in the economic health of local communities.

Characteristics of Entrepreneurship and Entrepreneurs

Not everybody wants to be an entrepreneur. In fact, many people may lack the personality and skills necessary for successful entrepreneurship. There are some general characteristics and skills that many successful entrepreneurs have:

Problem-solving: Entrepreneurs often start their businesses after identifying a problem and then coming up with a way to address it. Entrepreneurs are also able to figure out how to solve problems that will occur during the development of the business.

Innovation: Entrepreneurs are innovators, and are often engaged continuously in the process of conceiving new products and services, renewing and improving current offerings, and developing new business processes.

Risk-taking: Entrepreneurs are not risk-averse. They are willing to risk their time, money and even their reputation to get the business started and take their products or services to market. Entrepreneurs are also willing to take risks even after they establish a business, developing new products and approaches that can grow their businesses.

Contrariness: Entrepreneurs are often people who are eager to question why and how things are being done – even if these processes are clearly "industry-standard." This doesn't mean an entrepreneur should ignore industry best practices, but the entrepreneur is also willing to challenge these practices if she believes that there is a better way to do them.

Persistence: Entrepreneurs are persistent. They aren't easily discouraged and are willing to work through discouragement and challenges. Entrepreneurs are willing to attend trade shows, meet with bankers, call on clients and do what it takes to get the business started, and then make it successful.

Leadership: Successful entrepreneurs are strong leaders. Leadership is an essential entrepreneurial skill, as the entrepreneur will need to be able to cultivate trust and support from the people who join his business as managers and workers. Many new businesses are cash-poor and experience significant challenges – but a good leader can inspire loyalty in workers who may not yet be receiving high wages, as well as in employees who are facing roadblocks in their efforts to build the company.

Types of Entrepreneurship

Classic entrepreneurs: The so-called "classic" entrepreneur is someone who observes a gap in the market or takes note of a business or consumer need, and develops a company that addresses the deficit or the need. In some cases, the entrepreneur may also be an inventor, although some classic entrepreneurs will team up with someone who has invented a product. In many cases, the classic entrepreneur starts the business and continues to own and manage it for many years.

Serial entrepreneurs: A serial entrepreneur enjoys getting businesses started, and then sells the business to another person or company. This type of entrepreneur is typically somebody who is excited about starting something new and taking risks. Once the business is doing well, however, this entrepreneur wants to move on to another new and different challenge.

Social entrepreneurs: Social entrepreneurs incorporate social conscience with business. While their businesses may still be for-profit, there is typically a strong mission statement connecting the business with a social cause. For example, a social entrepreneur may import fair trade goods for resale while also educating the public about the importance of activism in the area of sustainably and responsibly sourcing products.

Entrepreneur:  Important Functions Performed by an Entrepreneur

Some of the most important functions performed by an entrepreneur are as follows:

An entrepreneur possesses special ability in the modern mechanized and complex production system. He occupies a very important place in production.

Entrepreneur

Image Courtesy: startupshk.com/wp-content/uploads/2013/11/entrepreneurship-networking-advice-

1. To Prepare Plan: The first and foremost function of an entrepreneur is to prepare the plan or scheme of production i. e., the scale of production, types of goods to be produced, and their quantity.

2. Selection of the Site: The entrepreneur makes the selection of the site for the factory to be installed. The place should be near the market, railway station or bus stand. The selection of the place may be near the source of raw materials also. The selection of the place has an important bearing on the cost of production.

3. Provision of Capital: Capital is required to install a factory or an industry. Capital is required at all stages of business. It is not necessary that the entrepreneur should invest his own capital. Therefore, he has to trace out a capitalist, to make provision for capital for the investment. He tries to obtain capital at the lowest possible rate of interest.

4. Provision of Land: After making provision of capital and selection of site, he has to arrange for land. The land is either purchased or hired.

5. Provision of Labour: In modern times, different types of labor are required to produce one type of commodity. The entrepreneur has to make provisions for labor from different places.

 

6. Purchase of Machines and Tools: It is the function of the entrepreneur to purchase machines and tools in order to start and continue production.

7. Provision of Raw Materials: It is the entrepreneur who makes provision for raw materials. He purchases the best quality raw materials at the minimum cost. He also knows the sources of raw materials.

8. Coordination of the Factors of production: One of the main functions of the entrepreneur is to co­ordinate different factors of production in proper combinations so that the cost of production is reduced to the minimum.

9. Division of Labour: The splitting up of production into different parts and entrusting them to different workers is also the function of an entrepreneur. Thus, the entrepreneur decides the level and type of division of labor.

10. Quality of Product: Keeping in view the competition in the market, the entrepreneur has to determine the quality of his product. He is to decide whether the goods produced should be of superior quality only or both of superior and ordinary qualities.

11. Sale of Goods: The responsibility of the entrepreneur is not only to produce goods but also to sell his produce. He employs a good number of salesmen to market the goods. He makes arrangements for publicity to push up the sales. He adopts both informative and persuasive methods to achieve his goal.

12. Advertisement: It is the duty of an entrepreneur to do advertisements explaining the superiority and quality of his goods through newspapers, magazines, radio, TV, etc. Advertisement is done to create and increase the demand or sale of his goods.

13. Search for Markets: The entrepreneur has to explore markets for his products. He produces goods in accordance with the consumers’ tastes which can be known from market trends.

14. Supervision: One of the main jobs of an entrepreneur is to supervise all the factors engaged in the production process. He has to supervise every little detail so as to ensure maximum production and economy.

15. Contact with the Government: The entrepreneur has to make contact with the government because the modern production system is controlled by the government in several ways. A license is taken before the start of production. The entrepreneur has to abide by certain rules and regulations of production and has to pay taxes regularly.

16. Payment to Factors of Production: The rewards of the various factors of production have to be decided by the entrepreneur. He makes payments to the landlord, labor, and capitalist in the form of rent, wages, and interest. Since payments to these factors of production constitute cost, so no entrepreneur wants to pay to a factor more than its productivity.

17. Quantity of Production: The entrepreneur determines the number of products keeping in view the demand for goods and the extent of the market. How much goods are to be produced is the main decision taken by the entrepreneur.

18. Risk-Taking: Risk-taking is the most important function of an entrepreneur. He has to pay to all the other factors of production in advance. There are chances that he may be rewarded with a handsome profit or he may suffer a heavy loss. Therefore, risk-bearing is the final responsibility of an entrepreneur.

 

19. Innovation: Innovation plays an important role in modern business. The entrepreneur makes arrangements for introducing innovations that help in increasing production on the one hand and reducing costs, on the other. Innovations may take the form of the introduction of new methods in the process of production or introducing improvements in the existing methods. It also includes the discovery of new markets, raw materials, and new techniques of production.

 

Entrepreneurial Motivation-Meaning, Definition, Nature, and Factors

Entrepreneurial Motivation

 Meaning…Entrepreneurial motivation is the process that activates and motivates the entrepreneur to exert a higher level of effort for the achievement of his/her entrepreneurial goals. In other words, entrepreneurial motivation refers to the forces or drive within an entrepreneur that affects the direction, intensity, and persistence of his / her voluntary behavior as an entrepreneur. So say, a motivational entrepreneur will be willing to exert a particular level of effort (intensity), for a certain period of time (persistence) toward a particular goal (direction).

Definition…Motivation is regarded as “the inner state that energizes activities and directs or channels behavior towards the goal”.

Motivation is the process that arouses action, sustains the activity in progress, and regulates the pattern of activity.

Nature of Motivation..The nature of motivation emerging out of the above definitions can be expressed as follows:

1. Motivation is internal to man. Motivation cannot be seen because it is internal to man. It is externalized via behavior. It activates the man to move toward his / her goal.

2. A Single motive can cause different behaviors…A person with a single desire or motive to earn prestige in society may move towards joining politics, attain additional education and training, join identical groups, and change his outward appearance.

3. Different motives may result in single behavior….It is also possible that the same or single behavior may be caused by many motives. For example, if a person buys a car, his such behavior may be caused by different motives such as to look attractive, be respectable, gain acceptance from a similar group of persons, differentiate the status, and so on.

4. Motives come and go…Like tides, motives can emerge and then disappear. Motives that emerged at a point in time may not remain with the same intensity at another point in time. For instance, an entrepreneur overly concerned about maximization of profit earning during his initial age as an entrepreneur may turn his concern towards other higher things like contributing towards philanthropic activities in social health and education once he starts earning sufficient profits.

5. Motives interact with the environment…The environment in which we live at a point in time may either trigger or suppress our motives. You probably have experienced an environment or situation when the intensity of your hunger picked up just you smelled the odor of palatable food.

You may desire an excellent performance bagging the first position in your examination but at the same time may also be quite sensitive to being shunned and disliked by your classmates if you really perform too well and get too much praise and appreciation from your teachers. Thus, what all this indicates is that human behavior is the result of several forces differing in both direction and intent.

 

Entrepreneurial Motivating Factors

Most of the researchers have classified all the factors motivating entrepreneurs into internal and external factors as follows:

 

 

Internal Factors

These include the following factors:

1.      Desire to do something new.

2.      Become independent.

3.      Achieve what one wants to have in life.

4.      Be recognized for one’s contribution.

5.      One’s educational background.

6.      One’s occupational background and experience in the relevant field.

External Factors These include:

1.      Government assistance and support.

2.      Availability of labor and raw material.

3.      Encouragement from big business houses.

4.      Promising demand for the product.

 

Entrepreneurship: Characteristics, Importance, Types, and Functions of Entrepreneurship

Entrepreneurial development today has become very significant; in view of its being a key to economic development. The objectives of industrial development, regional growth, and employment generation depend upon entrepreneurial development.

Entrepreneurs are, thus, the seeds of industrial development, and the fruits of industrial development are greater employment opportunities for unemployed youth, an increase in per capita income, higher standard of living and increased individual savings, and revenue to the government in the form of income tax, sales tax, export duties, import duties, and balanced regional development.

Entrepreneurship

Concept of Entrepreneurship: The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to undertake. This refers to those who “undertake” the risk of new enterprises. An enterprise is created by an entrepreneur. The process of creation is called “entrepreneurship”.

Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of something new and exploits such ideas into gainful opportunities by accepting the risk and uncertainty with the enterprise.

Characteristics of Entrepreneurship:

Entrepreneurship is characterized by the following features:

1. Economic and dynamic activity: Entrepreneurship is an economic activity because it involves the creation and operation of an enterprise with a view to creating value or wealth by ensuring optimum utilization of scarce resources. Since this value creation activity is performed continuously in the midst of an uncertain business environment, therefore, entrepreneurship is regarded as a dynamic force.

2. Related to innovation: Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an individual to continuously evaluate the existing modes of business operations so that more efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a continuous effort for synergy (optimization of performance) in organizations.

3. Profit potential:“Profit potential is the likely level of return or compensation to the entrepreneur for taking on the risk of developing an idea into an actual business venture.” Without profit potential, the efforts of entrepreneurs would remain only abstract and theoretical leisure activities.

4. Risk bearing: The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation and implementation of new ideas. New ideas are always tentative and their results may not be instantaneous and positive.

An entrepreneur has to have the patience to see his efforts bear fruit. In the intervening period (time gap between the conception and implementation of an idea and its results), an entrepreneur has to assume risk. If an entrepreneur does not have the willingness to assume risk, entrepreneurship would never succeed.

Entrepreneurial Process:

Entrepreneurship is a process, a journey, not the destination; a means, not an end. All the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway), Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla, Jamshedji Tata, and others all went through this process.

 

Establishing and running an enterprise is divided into three parts – the entrepreneurial job, the promotion, and the operation. An entrepreneurial job is restricted to two steps, i.e., generation of an idea and preparation of a feasibility report. In this article, we shall restrict ourselves to only these two aspects of the entrepreneurial process.

 

 

The Entrepreneurial Process

 

1. Idea Generation: To generate an idea, the entrepreneurial process has to pass through three stages:

a. Germination: This is like the seeding process, not like planting seed. It is more like natural seeding. Most creative ideas can be linked to an individual’s interest or curiosity about a specific problem or area of study.

 

b. Preparation: Once the seed of interest and curiosity has taken the shape of a focused idea, creative people start a search for answers to the problems. Inventors will go on for setting up laboratories; designers will think of engineering new product ideas and marketers will study consumer buying habits.

 

c. Incubation:This is a stage where the entrepreneurial process enters the sub­conscious intellectualization. The subconscious mind joins the unrelated ideas so as to find a resolution.

 

2. Feasibility study:

A feasibility study is done to see if the idea can be commercially viable.

 

It passes through two steps:

a. Illumination:

After the generation of the idea, this is the stage when the idea is thought of as a realistic creation. The stage of idea blossoming is critical because ideas by themselves have no meaning.

 

b. Verification:

 

This is the last thing to verify the idea as realistic and useful for application. Verification is concerned with the practicality to implement an idea and explore its usefulness to society and the entrepreneur.

 

Importance of Entrepreneurship:

Entrepreneurship offers the following benefits:

 

Benefits of Entrepreneurship to an Organisation:

 

1. Development of managerial capabilities:

The biggest significance of entrepreneurship lies in the fact that it helps in identifying and developing the managerial capabilities of entrepreneurs. An entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of cost and benefits implications, and finally chooses the best alternative.

 

This exercise helps in sharpening the decision-making skills of an entrepreneur. Besides, these managerial capabilities are used by entrepreneurs in creating new technologies and products in place of older technologies and products resulting in higher performance.

 

2. Creation of organizations:

Entrepreneurship results in the creation of organizations when entrepreneurs assemble and coordinate physical, human, and financial resources and direct them towards the achievement of objectives through managerial skills.

 

3. Improving standards of living:

By creating productive organizations, entrepreneurship helps in making a wide variety of goods and services available to society which results in higher standards of living for the people.

 

The possession of luxury cars, computers, mobile phones, the rapid growth of shopping malls, etc. are pointers to the rising living standards of people, and all this is due to the efforts of entrepreneurs.

 

4. Means of economic development:

Entrepreneurship involves the creation and use of innovative ideas, maximization of output from given resources, development of managerial skills, etc., and all these factors are so essential for the economic development of a country.

 

Factors affecting Entrepreneurship:

Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of factors.

 

Some of the important factors are listed below:

 

1. Personality Factors:

Personal factors, becoming core competencies of entrepreneurs, include:

 

(a) Initiative (does things before being asked for)

 

(b) Proactive (identification and utilization of opportunities)

 

(c) Perseverance (working against all odds to overcome obstacles and never complacent with success)

 

(d) Problem-solver (conceives new ideas and achieves innovative solutions)

 

(e) Persuasion (to customers and financiers for patronization of his business and developing & maintains relationships)

 

(f) Self-confidence (takes and sticks to his decisions)

 

(g) Self-critical (learning from his mistakes and experiences of others)

 

(h) A Planner (collects information, prepares a plan, and monitors performance)

 

(i) Risk-taker (the basic quality).

 

2. Environmental factors:

These factors relate to the conditions in which an entrepreneur has to work. Environmental factors such as political climate, legal system, economic and social conditions, market situations, etc. contribute significantly to the growth of entrepreneurship. For example, political stability in a country is absolutely essential for smooth economic activity.

 

Frequent political protests, bands, strikes, etc. hinder economic activity and entrepreneurship. Unfair trade practices, irrational monetary and fiscal policies, etc. are a roadblock to the growth of entrepreneurship. Higher-income levels of people, desire for new products and sophisticated technology, need for faster means of transport and communication, etc. are the factors that stimulate entrepreneurship.

 

Thus, it is a combination of both personal and environmental factors that influence entrepreneurship and brings in desired results for the individual, the organization, and the society.

 

Types of Entrepreneurs:

Depending upon the level of willingness to create innovative ideas, there can be the following types of entrepreneurs:

 

1. Innovative entrepreneurs:

These entrepreneurs have the ability to think of newer, better, and more economical ideas for business organization and management. They are the business leaders and contributors to the economic development of a country.

 

Inventions like the introduction of the small car ‘Nano’ by Ratan Tata, organized retailing by Kishore Biyani, and making mobile phones available to the common may by Anil Ambani are the works of innovative entrepreneurs.

 

2. Imitating entrepreneurs:

These entrepreneurs are people who follow the path shown by innovative entrepreneurs. They imitate innovative entrepreneurs because the environment in which they operate is such that it does not permit them to have creative and innovative ideas on their own.

 

Such entrepreneurs are found in countries and situations marked by weak industrial and institutional bases which creates difficulties in initiating innovative ideas.

 

In our country also, a large number of such entrepreneurs are found in every field of business activity and they fulfill their need for achievement by imitating the ideas introduced by innovative entrepreneurs.

 

The development of small shopping complexes is the work of imitating entrepreneurs. All the small car manufacturers now are imitating entrepreneurs.

 

3. Fabian entrepreneurs:

The dictionary meaning of the term ‘fabian’ is a person seeking victory by delay rather than by a decisive battle’. Fabian entrepreneurs are those individuals who do not show initiative in visualizing and implementing new ideas and innovations and wait for some development that would motivate them to initiate unless there is an imminent threat to their very existence.

 

4. Drone entrepreneurs:

The dictionary meaning of the term ‘drone’ is a person who lives on the labor of others. Drone entrepreneurs are those individuals who are satisfied with the existing mode and speed of business activity and show no inclination in gaining market leadership. In other words, drone entrepreneurs are die-hard conservatives and even ready to suffer the loss of business.

 

5. Social Entrepreneur:

Social entrepreneurs drive social innovation and transformation in various fields including education, health, human rights, workers’ rights, environment, and enterprise development.

 

They undertake poverty alleviation objectives with the zeal of an entrepreneur, and business practices and dare to overcome traditional practices and innovate. Dr. Mohammed Yunus of Bangladesh who started Gramin Bank is a case of a social entrepreneur.

 

Functions of an Entrepreneur:

The important functions performed by an entrepreneur are listed below:

 

1. Innovation:

An entrepreneur is basically an innovator who tries to develop new technology, products, markets, etc. Innovation may involve doing new things or doing existing things differently. An entrepreneur uses his creative faculties to do new things and exploit opportunities in the market. He does not believe in the status quo and is always in search of change.

 

2. Assumption of Risk:

An entrepreneur, by definition, is a risk taker and not a risk shirker. He is always prepared for assuming losses that may arise on account of new ideas and projects undertaken by him. This willingness to take risks allows an entrepreneur to take initiative in doing new things and marching ahead in his efforts.

 

3. Research:

An entrepreneur is a practical dreamer and does a lot of groundwork before taking a leap in his ventures. In other words, an entrepreneur finalizes an idea only after considering a variety of options, analyzing their strengths and weaknesses by applying analytical techniques, testing their applicability, supplementing them with empirical findings, and then choosing the best alternative. It is then that he applies his ideas in practice. The selection of an idea, thus, involves the application of research methodology by an entrepreneur.

 

4. Development of Management Skills:

The work of an entrepreneur involves the use of managerial skills which he develops while planning, organizing, staffing, directing, controlling, and coordinating the activities of the business. His managerial skills get further strengthened when he engages himself in establishing equilibrium between his organization and its environment.

 

However, when the size of a business grows considerably, an entrepreneur can employ professional managers for the effective management of business operations.

 

5. Overcoming Resistance to Change:

New innovations are generally opposed by people because it makes them change their existing behavior patterns. An entrepreneur always first tries new ideas at his level.

 

It is only after the successful implementation of these ideas that an entrepreneur makes these ideas available to others for their benefit. In this manner, an entrepreneur paves the way for the acceptance of his ideas by others. This is a reflection of his willpower, enthusiasm, and energy which helps him in overcoming society’s resistance to change.

 

6. Catalyst of Economic Development:

An entrepreneur plays an important role in accelerating the pace of economic development of a country by discovering new uses of available resources and maximizing their utilization.

 

To better appreciate the concept of an entrepreneur, it is desirable to distinguish him from an entrepreneur and promoter. Table 4.1 outlines the distinction between an entrepreneur and entrepreneur, and Table 4.2 portrays basic points of distinction between an entrepreneur and promoter.

 

Basis    Entrepreneur    Intrapreneur

• Capacity• Status• Decisions

• Reward

 

— Owner— Own boss— Takes own decisions

— Uncertain and unlimited

 

— An manager— Salaried employee— Executes decisions with the concurrence of the owner

— Fixed rewards and salary

Basis    Entrepreneur    Promoter

• Stage of business• Owning business• Nature of job

• Example

— From conception to continuation— Owns the enterprise— Includes everything

— Any business

— To bring a business into existence— May or may not own— Highly specialized

— A consultant or a chartered account offering services

 

Some Myths about Entrepreneurship:

Over the years, a few myths about entrepreneurship have developed. These are as under:

 

(i) Entrepreneurs, like leaders, are born, not made:

The fact does not hold true for the simple reason that entrepreneurship is a discipline comprising of models, processes, and case studies.

 

One can learn about entrepreneurship by studying the discipline.

 

(ii) Entrepreneurs are academic and socially misfits:

Dhirubai Ambani had no formal education. Bill Gates has been a School dropout. Therefore, this description does not apply to everyone. Education makes an entrepreneur a true entrepreneur. Mr. Anand Mahindra, and Mr. Kumar Mangalam Birla, for example, is educated entrepreneurs and that is why they are heroes.

 

(iii) To be an entrepreneur, one needs money only:

Finance is the life-blood of an enterprise to survive and grow. But for a good idea whose time has come, money is not a problem.

 

(iv) To be an entrepreneur, a great idea is the only ingredient:

A good or great idea shall remain an idea unless there is the proper combination of all the resources including management.

 

(v) One wants to be an entrepreneur as having no boss is great fun:

It is not only the boss who is demanding; even an entrepreneur faces demanding vendors, investors, bankers, and above all customers.

 

An entrepreneur’s life will be much simpler since he works for himself. The truth is working for others is simpler than working for oneself. One thinks 24 hours a day to make his venture successful and thus, there would be a punishing schedule.

 

 

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The transportation problem in operational research is concerned with finding the minimum cost of transporting a single commodity from a given number of sources (e.g. factories) to a given number of destinations (e.g. warehouses). These types of problems can be solved by general network methods, but here we use a specific transportation algorithm.

The data of the model include

1. The level of supply at each source and the amount of demand at each destination.

2. The unit transportation cost of the commodity from each source to each destination.

Since there is only one commodity, a destination can receive its demand from more than one source. The objective is to determine how much should be shipped from each source to each destination so as to minimize the total transportation cost.

Types of Transportation Problems in Operational Research

1. Balanced Transportation Problem
2. Unbalanced Transportation Problem

The solution to the transportation problem

Stage I: Finding an initial basic feasible solution.

Stage II: Checking for optimality

Existence of Feasible Solution: A necessary and sufficient condition for the existence of a feasible solution to the general transportation problem is that

Total supply = Total demand

Existence of Basic Feasible Solution: The number of basic variables of the general transportation problem at any stage of the feasible solution must be (m + n – 1). Now degenerate basic feasible solution (a feasible solution) involving exactly (m + n – 1) positive variables is known as a non-degenerate basic feasible solution otherwise it is said to be degenerate basic feasible. These allocations should be independent positions in case of non-degenerate basic feasible solutions.

• Optimum Solution: A feasible solution is said to be optimal if it minimizes the total transportation cost.
• Unbalance TP If total supply is not equal to total demand, then it balances with the dummy source or destination.
• 
  

Finding an Initial Basic Feasible Solutions

1. North- west corner method [NWCM]
2. Least cost entry method [LCEM]
3. Vogel’s approximation method (or Penalty method) [VAM]
4. 
   

Steps for North-West Corner Method

1. Allocate the maximum amount allowable by the supply and demand constraints to the variable x11 (i.e. the cell in the top left corner of the transportation tableau).
2. If a column (or row) is satisfied, cross it out. The remaining decision variables in that column (or row) are non-basic and are set equal to zero. If a row and column are satisfied simultaneously, cross only one out (it does not matter which).
3. Adjust supply and demand for the non-crossed out rows and columns.
4. Allocate the maximum feasible amount to the first available non-crossed out element in the next column (or row).
5. When exactly one row or column is left, all the remaining variables are basic and are assigned the only feasible allocation.

Steps for Least Cost Method

1. Assign as much as possible to the cell with the smallest unit cost in the entire tableau. If there is a tie then choose arbitrarily.
2. Cross out the row or column which has satisfied supply or demand. If a row and column are both satisfied then cross out only one of them.
3. Adjust the supply and demand for those rows and columns which are not crossed out.
4. When exactly one row or column is left, all the remaining variables are basic and are assigned the only feasible allocation.

Steps for Vogel’s Approximation Method

1. 1. Determine a penalty cost for each row (column) by subtracting the lowest unit cell cost in the row (column) from the next lowest unit cell cost in the same row (column).
2. 
   
3. 2. Identify the row or column with the greatest penalty cost. Break the ties arbitrarily (if there are any). Allocate as much as possible to the variable with the lowest unit cost in the selected row or column. Adjust the supply and demand and cross out the row or column that is already satisfied. If a row and column are satisfied simultaneously, only cross out one of the two and allocate a supply or demand of zero to the one that remains.
4. 
   

• If there is exactly one row or column left with a supply or demand of zero, stop.
• 
  
• -If there is one row (column) left with a positive supply (demand), determine the basic variables in the row (column) using the Minimum Cell Cost Method. Stop.
• 
  
• -If all of the rows and columns that were not crossed out have zero supply and demand (remaining), determine the basic zero variables using the Minimum Cell Cost Method. Stop.
• 
  

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Meaning and Definition, Characteristics of Publicity and Public Relations( Marketing Management) Notes

Recruitment is a process of finding and attracting the potential resources for filling up vacant positions in an organization. It sources the candidates with the abilities and attitudes, which are required for achieving the objectives of an organization.

The recruitment process is a process of identifying the job vacancy, analyzing the job requirements, reviewing applications, screening, shortlisting, and selecting the right candidate.

To increase the efficiency of hiring, it is recommended that the HR team of an organization follows the five best practices (as shown in the following image). These five practices ensure successful recruitment without any interruptions. In addition, these practices also ensure consistency and compliance in the recruitment process.

Recruitment process

The recruitment process is the first step in creating a powerful resource base. The process undergoes a systematic procedure starting from sourcing the resources to arranging and conducting interviews and finally selecting the right candidates.

Recruitment Planning

Recruitment planning is the first step of the recruitment process, where the vacant positions are analyzed and described. It includes job specifications and their nature, experience, qualifications and skills required for the job, etc.

A structured recruitment plan is mandatory to attract potential candidates from a pool of candidates. The potential candidates should be qualified, and experienced with the capability to take on the responsibilities required to achieve the objectives of the organization.

 

Identifying Vacancy

The first and foremost process of the recruitment plan is identifying the vacancy. This process begins with receiving the requisition for recruitments from different departments of the organization to the HR Department, which contains −

• Number of posts to be filled
• Number of positions
• Duties and responsibilities to be performed
• Qualification and experience required

When a vacancy is identified, it is the responsibility of the sourcing manager to ascertain whether the position is required or not, permanent or temporary, full-time or part-time, etc. These parameters should be evaluated before commencing recruitment. Proper identifying, planning and evaluation leads to the hiring of the right resource for the team and the organization.

Job Analysis

Job analysis is a process of identifying, analyzing, and determining the duties, responsibilities, skills, abilities, and work environment of a specific job. These factors help in identifying what a job demands and what an employee must possess in performing a job productively.

Job analysis helps in understanding what tasks are important and how to perform them. Its purpose is to establish and document the job-relatedness of employment procedures such as selection, training, compensation, and performance appraisal.

The following steps are important in analyzing a job −

• Recording and collecting job information
• Accuracy in checking the job information
• Generating job description based on the information
• Determining the skills, knowledge, and skills, which are required for the job

The immediate products of job analysis are job descriptions and job specifications.

Job Description

A job description is an important document, which is descriptive in nature and contains the final statement of the job analysis. This description is very important for a successful recruitment process.

A job description provides information about the scope of job roles, responsibilities, and the positioning of the job in the organization. And this data gives the employer and the organization a clear idea of what an employee must do to meet the requirement of his job responsibilities.

The job description is generated for fulfilling the following processes −

• Classification and ranking of jobs
• Placing and orientation of new resources
• Promotions and transfers
• Describing the career path
• Future development of work standards

A job description provides information on the following elements −

• Job Title / Job Identification / Organization Position
• Job Location
• Summary of Job
• Job Duties
• Machines, Materials, and Equipment
• Process of Supervision
• Working Conditions
• Health Hazards

Job Specification

Job specification focuses on the specifications of the candidate, whom the HR team is going to hire. The first step in job specification is preparing the list of all jobs in the organization and their locations. The second step is to generate the information for each job.

This information about each job in an organization is as follows −

• Physical specifications
• Mental specifications
• Physical features
• Emotional specifications
• Behavioral specifications

A job specification document provides information on the following elements −

• Qualification
• Experiences
• Training and development
• Skills requirements
• Work responsibilities
• Emotional characteristics
• Planning of career

Job Evaluation

Job evaluation is a comparative process of analyzing, assessing, and determining the relative value/worth of a job in relation to the other jobs in an organization.

The main objective of job evaluation is to analyze and determine which job commands how much pay. There are several methods such as job grading, job classifications, job ranking, etc., which are involved in job evaluation. Job evaluation forms the basis for salary and wage negotiations.

Recruitment Strategy

Recruitment strategy is the second step of the recruitment process, where a strategy is prepared for hiring the resources. After completing the preparation of job descriptions and job specifications, the next step is to decide which strategy to adopt for recruiting potential candidates for the organization.

While preparing a recruitment strategy, the HR team considers the following points −

• Make or buy employees
• Types of recruitment
• Geographical area
• Recruitment sources

The development of a recruitment strategy is a long process, but having the right strategy is mandatory to attract the right candidates. The steps involved in developing a recruitment strategy include −

• Setting up a board team
• Analyzing HR strategy
• Collection of available data
• Analyzing the collected data
• Setting the recruitment strategy

Searching the Right Candidates

Searching is the process of recruitment where the resources are sourced depending upon the requirement of the job. After the recruitment strategy is done, the search for candidates will be initialized. This process consists of two steps −

·      Source activation − Once the line manager verifies and permits the existence of the vacancy, the search for candidates starts.

·      Selling − Here, the organization selects the media through which the communication of vacancies reaches the prospective candidates.

Searching involves attracting job seekers to the vacancies. The sources are broadly divided into two categories: Internal Sources and External Sources.

 

Internal Sources

Internal sources of recruitment refer to hiring employees within the organization through −

• Promotions
• Transfers
• Former Employees
• Internal Advertisements (Job Posting)
• Employee Referrals
• Previous Applicants

External Sources

External sources of recruitment refer to hiring employees outside the organization through −

• Direct Recruitment
• Employment Exchanges
• Employment Agencies
• Advertisements
• Professional Associations
• Campus Recruitment
• Word of Mouth

Screening / Shortlisting

Screening starts after the completion of the process of sourcing the candidates. Screening is the process of filtering the applications of the candidates for the further selection process.

Screening is an integral part of the recruitment process that helps in removing unqualified or irrelevant candidates, which were received through sourcing. The screening process of recruitment consists of three steps −

Reviewing of Resumes and Cover Letters

Reviewing is the first step of screening candidates. In this process, the resumes of the candidates are reviewed and checked for the candidates’ education, work experience, and overall background matching the requirement of the job

While reviewing the resumes, an HR executive must keep the following points in mind, to ensure better screening of the potential candidates −

• Reason for change of job
• Longevity with each organization
• Long gaps in employment
• Job-hopping
• Lack of career progression

Conducting Telephonic or Video interviews

Conducting telephonic or video interviews is the second step of screening candidates. In this process, after the resumes are screened, the candidates are contacted through phone or video by the hiring manager. This screening process has two outcomes −

·      It helps in verifying the candidates, whether they are active and available.

·      It also helps in giving a quick insight into the candidate’s attitude, ability to answer interview questions, and communication skills.

Identifying the top candidates

Identifying the top candidates is the final step of screening the resumes/candidates. In this process, the cream/top layer of resumes is shortlisted, which makes it easy for the hiring manager to take a decision. This process has the following three outcomes −

• Shortlisting 5 to 10 resumes for review by the hiring managers
• Providing insights and recommendations to the hiring manager
• Helps the hiring managers to take a decision in hiring the right candidate

Evaluation and Control

Evaluation and control are the last stages in the process of recruitment. In this process, the effectiveness and the validity of the process and methods are assessed. Recruitment is a costly process, hence it is important that the performance of the recruitment process is thoroughly evaluated.

The costs incurred in the recruitment process are to be evaluated and controlled effectively. These include the following −

·      Salaries to the Recruiters

·      Advertisements cost and other costs incurred in recruitment methods, i.e., agency fees.

·      Administrative expenses and Recruitment overheads

·      Overtime and Outstanding costs, while the vacancies remain unfilled

·      Cost incurred in recruiting suitable candidates for the final selection process

·      Time spent by the Management and the Professionals in preparing job descriptions, job specifications, and conducting interviews.

Finally, the question that is to be asked is, whether the recruitment methods used are valid or not. And whether the recruitment process itself is effective or not. Statistical information on the costs incurred for the process of recruitment should be effective.

 

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What Is Consumer Protection Act, 1986?

Consumer Protection Act, 1986 is an Act of the Parliament of India enacted in 1986 to protect the interests of consumers in India. It makes provision for the establishment of consumer councils and other authorities for the settlement of consumers’ disputes and for matters connected therewith also.

Objectives of the Consumer Protection Act, 1986

 

1. Better protection of interests of the consumer: The Act seeks to provide for better protection of the interests of consumers and for that purpose makes provisions for the establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected therewith.

2. Protection of rights of consumers: The act is intended to protect the following rights of the consumers [under section 6]:

1. The right to be protected against the marketing of goods and services which are hazardous to life and property.
2. The right to be informed about the quality, quantity, potency, purity, standard, and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices;
3. The right to be assured, wherever possible, access to a variety of goods and services at competitive prices ;
4. The right to be heard and to be assured that consumer’s interest will receive due consideration at appropriate forums;
5. The right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers; and
6. The right to consumer education.
7. Right to a healthy environment.

3. Consumer protection councils: The above objectives are sought to be promoted and protected by the consumer protection councils established at the central and state levels.

4. Quasi-judicial Machinery for the speedy redressal of consumer disputes: The act seeks to provide speedy and simple redressal to consumer disputes. For this purpose, there has been set-up quasi-judicial machinery at the district, state, and central levels. These quasi-judicial bodies are supposed to observe the principles of natural justice and are empowered:

1. To give relief of a specific nature, and
2. To award, wherever appropriate, compensation to consumers.

Significance of Consumer Protection Act, 1986

1. Protection from Exploitation: In the absence of consumer protection, consumers were exploited in many ways, e.g., sale of unsafe products, adulteration, hoarding of goods, etc. Through various consumer, protection Acts to keep away from exploitation consumers.

2. Consumer Education: The importance of consumer protection is to create awareness among consumers about their rights and responsibilities by organizing workshops and seminars and giving them the confidence to take legal action against companies who have defaulted.

3. Redressal of Complaints: The importance of this act is to present the consumer complaints in appropriate consumer courts and make sure that justice is done to consumers.

4. Quality Life for Consumers: Aim at redressal of consumer complaints in an effective manner but also on giving good quality life to consumers by business organizations that have defaulted on the other side and make sure that justice is done to final consumers.

5. Ethical Obligations and Getting Public Support.

Amendment Act 2002

The Act was again amended by the consumer protection Act,2002. The act amendments include the following:

1. provision for the creation of benches of the national commission and state commissions as well as holding of circuit benches of these commissions.
2. No adjournment to be ordinarily allowed and where allowed, a speaking order giving reasons would be made.
3. Enabling provision for charging fees in respect of complaints filed before the consumer disputes redressal agencies.
4. Exclusive of services availed for commercial purposes from the purview of the consumer disputes redressal agencies.
5. Prescribing minimum qualifications as well as disqualifications for members of the consumer disputes redressal agencies.

Exam studies 

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Advertising

Topic objective

• Meaning and definitions of Advertising
• Characteristics of an Effective Advertising
• Objectives of Advertising
• Functions of Advertising
• Money spent on Advertising is an Investment
• Advantages of Advertising to the Manufacturers
• Advantages of Advertising to the Middlemen
• Advantages of Advertising to the Consumers 
• Advantages of Advertising to the Society 

Meaning of Advertising ( Exam studies) 

The word 'Advertising' is derived from the Latin word'Adverto', ad means 'towards' and 'verto' means 'I turn'. Thus, advertising means 'to turn attention towards a specific thing. The dictionary meaning of the word 'advertising' is to announce publicly or to give public notice. In this way, advertising is turning the attention of the people towards products, services, ideas by an identified sponsor.

Advertising is a paid form of non-personal communication of ideas, products or services, or people by a sponsorer or organization. It is a vital tool for marketing products, services, and ideas. Advertising is an important tool for promotion. Advertising has acquired great importance in modern India characterized by tough competition in the market, fast changes in technology, fashion, and the taste of the consumers.

Definitions of Advertising

Although advertising has been variously defined by different authors but the basic theme has more or less remained the same. Some of the widely accepted definitions of advertising are as follows:

1. "Advertising is a non-personal form of communication conducted through paid media under clear sponsorship." - Philip Kotler

2. "Advertising consists of all the activities involved in presenting to a group a non-personal, oral or visual, openly sponsored message regarding a product, service or idea." -William J. Stanton

3. "Advertising is any paid form of non-personal presentation and promotion of ideas, goods, and services by an identified sponsor."- American Marketing Association

Characteristics of Advertising

The main characteristics of effective advertising are as follows:

1. It is non-personal communication to a specific audience or consumers.

2. It is a paid form of communication by an identified sponsor.

3. It may be visual, spoken, or written.

4. It is the promotion of ideas, goods, and services.

5. It presents the message about product availability in the market.

6. It persuades people to buy a product by creating the interest of the prospective buyers in the product.

7. It stimulates sales or patronage for the product.

8. It helps indirectly for positioning the product in the market.

9. It is a general term used for any and all types of publicity.

10. It disseminates information or products or services to the consumer.

Objectives of Advertising

The objective of advertising is to sell something, a product, a service or an idea. The real objective of advertising is effective communication between producers and consumers. In short, the following are the main objectives of advertising:

1. Preparation of the ground for the sale of a new product: When a new product is to be introduced in the market, advertising is necessary. The potential consumers can be informed only by means of advertisement. In this way, the advertisement may be used for preparing a ground for the sale of a new product. The mass media like radio and television are used for this purpose.

2. Creation of demand: Another main objective of advertisement is to create demand for a product or service. Advertising creates a favorable atmosphere for maintaining or improving sales. Customers are regularly reminded about the product, brand, etc. The prospective customers may be induced to buy a product by informing them about the comparative quality, price, and other attributes of that product. The object is to change the habit of the consumer, to shift from a rival product.

3. Educate the consumers and the users: Another objective of the advertisement is to educate the consumers and the users about the uses and utility of the product. Unless information reaches the consumers and the users they cannot decide and make good choices.

4. Performing selling job: The object of advertising is also to perform a selling function, e.g., in mail order business the selling function is performed by advertisement.

5. Acquaint buyers with new uses: The objective of advertising is also to acquaint buyers and users with the new uses of a product.

6. Neutralising competitors' advertising: Another objective of advertising is to neutralize competitors' advertising as their promotional strategy. It is essential to follow similar practices to neutralize their effects.

7. Enhancing goodwill of the firm: The objective of advertising is also to enhance the goodwill and reputation of the firm in the minds of middlemen, consumers, and users. In this context, constant and repeated advertisements are of great importance.

8. Informing about changes consumers: Another objective of advertisement is to inform the consumers and users about the changes in the quality, packing, design, size, brand, price, weight packing, etc.

Functions of Advertising

Advertising has become an essential marketing activity in the modern era of large-scale production and severe competition in the market. It performs two types of functions, as explained below:

A. Primary Functions

Among primary functions the following are important:

1. To increase sales of the product by securing greater consumption, attracting new buyers, or introducing new uses for a commodity.

2. Advertising is effectively used to increase the per capita use of the commodity by its constant repetition. 

3. The receptiveness of a new product or a new model increases if the producer has earned a name as a producer of good quality products. This is done by advertisement.

4. Persuasion of dealers to stock the goods is one of the functions of advertisement.

5. It helps the dealers (wholesalers and retailers) to sell the advertised product.

6. Advertisement creates insurance for the manufacturers' business. 

7. Advertisement creates a brand image and brand loyalty.

8. Advertisement helps eliminate or lessen seasonal fluctuations.

9. The buyer's dependability on well-advertised goods is increased because he knows their quality.

10. It raises the standard of living of the public by instigating the desire to purchase better and qualitative things.

B. Secondary Functions

Such functions include the following:

1. Advertisement encourages the salesmen and lends them moral support in facing a difficult customer.

2. Necessary information is furnished to salesmen, dealers, and customers about the product. The printed word is the manufacturer's guarantee.

3. The workers of the company of well-advertised goods feel secure. It means steady work and consequent prosperity. 

4. It creates a feeling among executives and administrative staff that they are working in a company having a public response.

5. It helps the company to secure better employees – executives, salesmen, and workers.

Merits or Advantages or Importance of Advertising

Or

"Money spent on Advertising is an Investment"

Advertising is a means of mass communication and persuasion. It sends messages to prospective consumers in the most economical manner. It increases their knowledge about the product, raises their standard of living, and saves their time in purchasing. It helps the manufacturer more quickly which leads to more production at less cost. 

The success of other promotional tools like personal selling, sales promotion, and publicity rests on the colorful background created by the advertising campaign. Advertising moves the prospective customers nearer and nearer to the point of purchase. It creates a stage for the salesmen to complete their job more easily and quickly.

Advertising plays an important role for educators and entertainers. It helps society by providing a new horizon of knowledge. It teaches the public to adopt new lifestyles, new fashions and new products. Advertising acts as a middleman between the manufacturer and the ultimate consumers.

Nowa days, almost all the manufacturers spend some amount on advertising. Big companies spent huge amount on advertisements i.e. lakhs or crores of rupees; which give benefits to the company for many years, in the form of easy selling, increase in sales, customer's loyalty, brand popularity, etc. These companies consider advertisement expenditure as an investment and show the unexpired advertisement expenditures on the assets side of the Balance Sheet. The importance or advantages to various groups of the society may be summarised as follows:

Advantages of Advertising to the Manufacturers

The manufacturers of product enjoy the following advantages or benefits out of advertising efforts.

1. Increase in sales volume: Advertisement continuously helps in increasing demand and assist in entering new segment thereby increasing the sales volume of the existing product. 

2. Increases the net profit: It increases the net profit by a higher turnover of sales. It leads to higher volume of production. Hence average cost of production is less, and the profit will increase.

3. Stabilised sales volume: Repetition of advertisements helps regularise sales. It reminds the people about the availability and benefits of the product. It also helps to retain demand during off-season. For example, coffee is promoted as an essential drink in winter but its demand during summer season may be retained through promotion of cold coffee as a refreshing and healthy drink.

4. Price stability: price is either printed on the package or announced by the manufacturer, this leads to price stability. Moreover, stability in demand does not necessitate any alterations or overcharging of price.

5. Helps in opening new market: Advertising is helpful in opening or creating new markets. It helps to get leadership in the market. It helps the manufacturers to take decision whether to expand the market share or not. It also helps them to sell new products or improved variety of products.

6. Maintains the existing market: Maintenance of existing market is essential for the success of a concern. Hence manufacturers, who look ahead, always have an eye on the future business. As such, by advertising he is very tactful to hold up the present market and to expand the market.

7. Creates reputation: Advertising increases the reputation of the manufacturers in the public. It builds the image of the product and goodwill of the manufacturers. It protects the manufacturers from aggressive selling method adopted by his competitors. It creates an image in the minds of customers about his brand.

8. Availability of middlemen: Advertising popularise the product and permits easy sales. This helps the middlemen in their work as such, they readily stock the product.

9. Success in competition: Continuous advertising reminds and persuades the consumer about the product. Effective advertising campaign counteract competition.

10. Advantage of large scale production: Advertising helps increase demand which paves way for large scale production. Due to this, manufacturer enjoys many economies.

Advantages of Advertising to the Middlemen

Advertising guarantees quick sales. The middlemen dealing with the advertised products are benefited with the advertising in the following manner:

1. Creates easy sales: Advertisement informs consumers about the quality of the product. Hence, they know about the product. Sale of that product is easy for the wholesalers and retailers.

2. Increase in turnover: Advertisement helps in easy and quick sales. This increases the rate of turnover and reducing the level of stock. It also reduces maintenance cost and obsolescence risk.

3. Attracts more customers: Advertising gives detailed information about the product and the availability of the product in a particular shop. As such, it attracts more customers in that particular shop.

4. Permanent source of income: Advertisement stabilises demand. Customers are thereby available throughout the year which ensures permanent income to the middlemen.

5. Increases the prestige of the store: Customers know about the store through advertising. The goodwill or reputation earned by the manufacturer is also shared by the selling shops. Thus, the prestige of the firm increases.

6. Reduces the burden of middlemen: Advertising is generally undertaken by manufacturer. Therefore, middlemen's work is reduced. His job is supplemented by advertisement, which makes it easy for him to sell.

7. Stimulates sellers: dvertisement saves the time and effort of the middlemen. He can contact many customers in a short period. This creates enthusiasm and confidence in him.

8. Publicity: In advertisement, product publicity and wholesale or retail shop publicity are done simultaneously. Thus, the retailers are also known to the public and thereby increase their sales too.

Advantages of Advertising to the Consumers

Advertising educates the consumers about the new products and their diverse uses. The following are the main advantages of advertising from the point of view of consumers:

1. Educates the customer: The aim of the advertising is to educate the customers about the introduction of a new product mentioning its different uses. It gives information to the customers about the availability of goods and services in the market. The customers come to know about these things and purchase the products according to their standard. Thus, the standard of living of the customers increases. The comparative type of advertisement of different products and substitutes will enable the public to understand more about a product or services.

2. Best quality product: Advertisement, generally stands for a quality product. Manufacturers advertise their products only for selling. If the product is not good, customers will switch on to other product (brand). Manufacturers maintain their quality to retain the market. As such, it is advantageous to customers. Benefits of standardisation are assured to the customers by advertising.

3. Convenient purchase: Advertisement gives information about various brands available in the market and their special features. It makes easy for customer to buy the best one.

4. Knowledge of prices: Prices are generally announced by the manufacturer. Thus, consumer is aware of the price and he cannot be cheated.

5. Saves time: It helps customers by giving information about the availability of the product, i.e., where and when. The customers can select the best product in a particular shop. Thus, it reduces their shopping time.

6. Easy availability: Advertised products are easily available in the market. The consumer does not have to spend much time in purchasing them.

7. Improvement in standard of living: Advertisement stimulates consumption of varied and new products. More the consumption, more will be the standard of living of the consumer.

8. Comparative study: The customer can compare the various products at home without the need of roaming in the market with the help of advertisement.

9. Connecting link: Advertising is the connecting link between the manufacturer and the customers. It eliminates the middlemen. There is no profit for the middlemen. Hence the price is low.

10. Mail order business: Advertising helps the people to get the products directly from the producers through mail order business. There are places, where the products are unavailable-villages, rural areas. Advertising helps them to get the products through post. Thus, it improves the social welfare.

Advantages of Advertising to the Society

Advertising open the avenues of employment generation. It increases the standard of living of the society by providing better quality products at cheaper rates. The following are the advantages of the advertising to the society as a whole:

1. Provides employment: Advertisement creates employment directly and indirectly. The need for artists, copywriters, painters, musicians, photographers, etc. creates direct employment opportunities. Advertisement leads to increase in sales and production. Thus, it indirectly creates employment opportunities for many.

2. Increase the standard of living: Advertising is an effective tool which raises the standard of living of the people of advanced countries. The standard of living is measured by the amount of national income and its distribution and the consumption pattern. Advertising gives stimulus to the consumers to buy new variety of products. It leads to large-scale production of more varieties of products followed by mass consumption. Thus, advertising creates demand for standardised products.

3. Effects values and lifestyles: Advertisement has wide exposure. It effects the purchase made by people. It also has impact on values and lifestyle of society. Advertisement plays a vital role in encouraging healthy values and lifestyles and avoiding the negative values.

4. Reduces the number of middlemen: Advertisement reduces the need of middlemen. It develops direct link between the producer and the consumer. It thus, saves selling expenses and the goods are available to consumers at less prices.

5. Educative value: Advertising educates the members of the community in the various uses of products. As such, people know the varieties of products and their availability in the market and uses and benefits. Thus, it educates the people. People become intelligent buyers. They become economic buyers. They understand the merits and demerits of products they come across.

6. Helps press: Advertising gives more income to the press. We cannot buy newspapers at a cheaper rate without advertisement. Commercial advertisement and broadcasting are undertaken by radios, television, newspapers, etc. This leads to the cheaper availability of newspapers.

Advantages of Advertising to the Salesmen

Advertising is the backbone of personal selling. Advertising benefits the sales force in the following manner:

1. Least effort: Advertised product can be sold very easily. Salesman's time is saved and he can contact more customers in a shorter period. He can meet many customers with the least effort.

2. Creates enthusiasm: Advertising reduces salesman's job. He can do his job in a better way to sell the products, crossing the fixed quota. Hence, it creates enthusiasm and confidence in him.

3. Curtails the burden of the salesman's job: If the advertising is done by the manufacturer, the work of salesman is reduced. Otherwise he has to advertise about the product and then try to sell the product. Salesman's function is supported and supplemented by advertisement. Selling and advertising are 'cup and saucer' or 'key and lock' words. Salesmen's work is made easier and more encouraging by advertisement.

4. Consumer's need can be studied: A salesman's confidence is increased through advertising by educating and stimulating the consumers. Customer's demand and needs are studied by him correctly. The manufacturers are informed of this. They will supply the products according to the demand of the customers and thus equalize the demand and supply of their products.

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 Emerging Trends in Retail

Retailing includes all activities involved in selling goods or services to the final consumers for personal, non-business use.

− Phillip Kotler

n today’s era, the places in the cities have become congested, infrastructure has changed, transport facilities have increased, and the speed of exchanging information has become extremely fast. Retailers are adopting new technology. Society is changing, consumers are changing and so are the retailers. Retailing has managed to keep itself paced with the changing times.

Changing Nature of Retailing

Retailers are changing their business formats, store designs, modes of communication with customers, and ways of handling commercial dealings.

-Modern retailers are adapting new technology for marketing, retail operations, and business transactions.

-Forward-thinking retailers are using social media to communicate with consumers.With the space crunch, modern retailers have learned how to use every inch of the floor constructively.

-Apart from opening an online retail store, the retailers take the help of Augmented Reality such as 3D mock-ups to let the customer try the products on themselves.

-Retailers are working progressively on the delivery of orders that customers placed through online shopping.

-Retailers are bringing something new now and then to charm the customers. Those places where the internet is still not accessible, retailers are exploiting the power of mobile phones to advertise their products.

Modern Retail Formats

Today, the Internet has changed the way products are advertised and the manner of selling-buying transactions.

Here are some modern innovations in retail −

-Modern retail businesses such as malls, specialty stores, and hypermarkets are using micro development and contemporary technology to increase customers’ shopping experience and in turn generate business revenue.

-Around the year 2000, online retail startups started changing the face of retail businesses around the world.

-Social media websites such as Facebook changed consumer behavior as well as made retailers sweat out to take the benefits and develop their brands.

-Modern e-commerce facilities enable faster transactions and allow purchase on a simple 30-day credit facility.

E-Tailing

It is nothing but E-Retailing. It is the process of selling or purchasing the products using the Internet for B-2-B or B2C transactions. The E-tailing process includes the customer’s visit to the website, purchasing products by choosing a mode of payment, product delivery by the retailer, and finally, the customer’s review or feedback. Exam studies

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MARKET SEGMENTATION 

 Introduction

Markets consist of buyers who differ in one or more respects. They may differ in their wants, resources, geographical locations, attitudes, and buying practices. It is, therefore, necessary for a marketer to segment his/her market.

Meaning of Market Segmentation

The process of grouping customers in markets with some heterogeneity into smaller, more similar, or homogeneous segments. The identification of target customer groups and customer groups in which customers are aggregated into groups with similar requirements and buying characteristics. 

Market segment – A group of individuals, groups, or organizations sharing one or more similar characteristics that cause them to have relatively similar product needs and buying characteristics.

Benefits of Market Segmentation

There are a number of reasons organizations undertake segmentation  

❖  Products are designed to be responsive to the needs of the marketplace. – segmenting markets facilitates a better understanding of customers’ needs, wants, and other characteristics. The sharper focus that segmentation offers, allows those personal, situational, and behavioral factors that characterize customers in a particular segment can be considered. By being closely in touch with segments, marketers can respond quickly to even the slight changes in what target customers want. i.e by monitoring the trends toward healthier eating and lifestyles, Mc Donald’s was able to respond by responding by introducing a wider range of salads and healthy eating options – including grilled chicken, fruit, and yogurt onto its menus.

❖  Increase profits – different consumer segments react in contrasting ways to prices, some are far less price-sensitive than others. Segmentation allows an organization to gain from the best price it can in every segment, effectively raising the average price and increasing profitability.

❖  Effective Resource Allocation - organizations are more capable of making products that customers want and can afford.

❖  There is product differentiation – Various products are made to meet the needs of each customer segment.

Requirements for Good Market Segments

In addition to having different needs, for segments to be practical they should be evaluated against the following criteria:

            Identifiable -The marketer should be able to identify which consumers are members of a particular market segment. The consumers in the segment should respond in the same way to a particular marketing mix.

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The segmentation, targeting, and positioning model

 

Today, Segmentation, Targeting, and Positioning (STP) is a familiar strategic approach in Modern Marketing. It is one of the most commonly applied marketing models in practice. In our poll asking about the most popular marketing model, it is the second most popular, only beaten by the venerable SWOT / TOWs matrix.

This is an audience rather than a product-focused approach to communications which helps deliver more relevant messages to commercially appealing audiences. The diagram below shows how plans can have the flow from

Audience options > Audience selection > Production positioning

In addition, STP focuses on commercial effectiveness, selecting the most valuable segments for a business and then developing a marketing mix and product positioning strategy for each segment.

Access the Essential Marketing Models

Applying Segmentation, Targeting, and Positioning to digital communications

STP is relevant to digital marketing too at a more tactical communications level. For example, applying marketing personas can help develop more relevant digital communications as shown by these alternative tactical email customer segmentation approaches. This visual from Dave Chaffey of Smart Insights' book shows how Segmentation, Targeting, and Positioning apply to digital marketing strategy.

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Retail Management - Pricing

We as customers, often get to read advertisements from various retailers saying, “Quality product for the right price!” This leads to the following questions what is the right price and who sets it? What are the factors and strategies that determine the price of what we buy?

The core capability of the retailers lies in pricing the products or services in the right manner to keep the customers happy, recover investment for production, and generate revenue.

What is Retail Pricing?

The price at which the product is sold to the end customer is called the retail price of the product. Retail price is the summation of the manufacturing cost and all the costs that retailers incur at the time of charging the customer.

Factors Influencing Retail Prices

Retail prices are affected by internal and external factors.

Internal Factors

Internal factors that influence retail prices include the following −

• Manufacturing Cost − The retail company considers both, fixed and variable costs of manufacturing the product. The fixed costs do not vary depending upon the production volume. For example, property tax. The variable costs include varying costs of raw materials and costs depending upon the volume of production. For example, labor.

• The Predetermined Objectives − The objective of the retail company varies with time and market situations. If the objective is to increase return on investment, then the company may charge a higher price. If the objective is to increase market share, then it may charge a lower price.

• Image of the Firm − The retail company may consider its own image in the market. For example, companies with large goodwill such as Procter & Gamble can demand a higher price for their products.

• Product Status − The stage at which the product is in its product life cycle determines its price. At the time of introducing the product in the market, the company may charge a lower price for it to attract new customers. When the product is accepted and established in the market, the company increases the price.

• Promotional Activity − If the company is spending a high cost on advertising and sales promotion, then it keeps product prices high in order to recover the cost of investments.

External Factors

External prices that influence retail prices include the following −

• Competition − In case of high competition, the prices may be set low to face the competition effectively, and if there is less competition, the prices may be kept high.

• Buying Power of Consumers − The sensitivity of the customer towards price variation and purchasing power of the customer contributes to the set price.

• Government Policies − Government rules and regulations about manufacturing and announcement of administered prices can increase the price of products.

• Market Conditions − If the market is under recession, the consumer's buying pattern changes. To modify their buying behavior, the product prices are set less.

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Organization Practices and Organization Behaviour MBA/BBA

Introduction Organizational

• The organization may be studied from two perspectives micro and macro perspective of organization study focuses on the human being in the organization. 

• The micro aspect of organization study is generally the subject matter of organization behavior.

• The macro perspective considers the organization as a unit for analysis. It emphasizes the study of human behavior as a collectivity of people and deals with how the organization is structured and how technology affects people in the organization.

• Classify management function

• Planning:

  •  Planning consists of the activities involved in choosing courses of action to achieve 

  • organizational objectives.

  •  It is deciding in advance what to do, when to do it, how to do and who will do it, in order to achieve these objectives.

  •  Both long-term and short-term plans are necessary to achieve goals.

  Organizing:

  • The organization is the process of dividing work into convenient tasks or duties, a grouping of such duties in the form of a position. 

  • Organizations are structured based on product, function, geography, customer, and project.

  "Staffing is the process by which a manager builds an organization by recruitment, selection and development of individuals as employees." - M.C. Farland. 

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Introduction of Retailing

• Retail occupies an important place in the world economy. The retail industry is of the fastest-changing and vibrant industries in the world Retail has contributed to the economic growth of many countries. Retail does not include only goods but also services, which may be provided to the end consumer.   

• What is Retail Management? (https://examstudie.blogspot.com/)

     Management refers to the process of bringing people together on a platform and making them work as single units to achieve the goal and objective of an organization. Retail Management is an art that requires a number of management tools for complete end-user satisfaction. 

Factors Affecting Retail Management 

Characteristics of Retailing

• Direct sales to the consumer 

• Sales in small quantities 

• Locational advantages 

• Consumers preferences 

• Business service 

• A large number of retail shops

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H.P. TECHNICAL UNIVERSITY HAMIRPUR (HP) HPTU-Hamirpur -H.P. 

Syllabus Master of Business Administration

FIRST-YEAR

SEMESTER-I

SEMESTER-II

SECOND-YEAR

SEMESTER- III

SEMESTER-IV