UNIT 12 Business Management

Management is the process of planning, organizing, leading

& controlling the resources of the organization efficiently
and effectively to achieve the goals & objectives in a
dynamic business environment

Efficiency Effectiveness
Achieve goals & objectives Achieve goals & objectives
with low wastage or usage within the given time frame Managerial skills were introduced by Robert L. Katz
according to stakeholder
expectations
Doing things right Doing the right thing
Relates to inputs Relates to output

Most important skill for low level managers is technical skills

Productivity and Most important skill for top level managers is conceptual
Efficiency has a skills
positive relationship Usefulness of management to achieve personal goals

- To achieve personal expectations or ambition

Manager is the person responsible for planning and - To manage personal income and expenses
directing the work of a group of individuals, monitoring their - To improve personal efficiency
work, and taking corrective action when necessary
Usefulness of management to achieve business goals
Role of Manager – Henry Mintzberg
- To maximize profits - Manage business plans
Interpersonal Figurehead - Head of the organization, - To distribute limited resource - Increase market share
Role represent
Leader – Motivate & give direction to Characteristics of Manager – Impartial, Strategic, Self-
subordinates confidence, humanistic
Liaison – Maintain relationship with
internal & external parties The need & importance of management
Informational Monitor – Collect information internally  To set goals & objectives & to ensure their achievement
Role and externally  To solve problems and provide solutions
Disseminator – Distribute information
 To face competition & be competitive
internally
 For continuous growth
Spokesperson – Provide information to
external parties on behalf of the Business Resources
organization, to provide official details
to media (1st) 5Ms – Men, Money, Machine, Method, Material
Decisional Entrepreneur – Making changes to
Role organization (3rd) Management Classification – Physical resources,
Disturbance Handler – Avoid/solve human resources, finance resources, information resources
unexpected situation (4th Categorization) – Land, Labour, Capital,
Resource Allocator – Allocate
Entrepreneurship, Knowledge, Information, Time
resources among organization members
Negotiator – As an intermediary when Decision Making/Problem Solving Process
problems are solved among internal and
external conflicts 1. Identify the problem
Management Classification 2. Analyze the problems
3. Generate alternative solutions
4. Valuate alternative solutions
5. Select best alternative solution
6. Prepare plan to implement best solution
7. Implement the decision
8. Evaluate & feedback of decision
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 Planning  Due to high competition from external parties
 Due to lack of communication and coordination
Planning is the process of setting goals & objectives &
strategies to achieve them. Reasons businesses do not involve in planning

Major 3 activities of planning process  Lack of knowledge on how to do planning

 Lack of understanding on importance of planning
 Deciding the goals & objectives
 Deciding the ways & means (Strategies) Plan – A plan is typically any procedure used to achieve an
 Getting those decisions to plans (Documentation) objective. It is a set of intended actions, through which one
expects to achieve a goals
Planning Process

Organizing

Organizing is the process of allocating the work, resources &

authorities among the organizational members, in order to
achieve goals & objectives that are stepped in planning.

Main functions in Organizing (Process)

Concepts addressed in planning/ goal formulation

1. Vision – Long term expectations of an organization

2. Mission – Explains nature & direction of organization
Factors included in mission statement
Nature of business, target customers, market
Mission Statement answers following questions
Departmentalization is the process of grouping activities
What is its mission? Why does it exist?
which are similar and logically connected.
What does it do? What does it expect to reach?
3. Goals – Long term achievements Bases of Departmentalization
4. Objectives (Features – SMART)
A B C D E
5. Policy
6. Strategies
7. Procedures
8. Rules
9. Programs
10. Projects

Principles of Planning

- Priority - Practicability
- Flexibility - Simplicity F. Mix Base Departmentalization
- Time period - Efficiency
- Participation & dedication Delegation of Authority is the formal process of transferring
- Based on goals & objectives the authority & responsibility from top level to middle &
lower level managers
Advantages of planning
Advantages of delegation of authority
 Business can use resources much more efficiently
 Future uncertainties can be addressed with confidence  Increase overall growth & quality of decisions
 Provides motivation & confidence to stakeholders  Improve skills of subordinates
 Continuous planning supports growth & existence
Disadvantages of delegation of authority
Reasons for failure in plans
 Inversely affect overall uniformity of decisions
 Due to unexpected changes in macro-environment  Instant & urgent decisions cannot be made
 Lack of support from connected stakeholders
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Coordination is the process of integrating or linking the Accountability – Obligation to report the level of work
organizational work, members & departments to achieve completed [Reporting responsibility]
goals & objectives simultaneously as 1 organization
Responsibility – Obligation to complete given tasks
Chain of Command means decisions & authorities flow from
top to lower level managers as an unbroken line
Hierarchy explains the position of an organizational
member in the organizational structure
Unity of Command means 1 employee reports to 1 manager
Organizational Structure – Implies how business has
Span of Control – Number of subordinates directly reporting
allocated their work, authorities & responsibilities among
to a given manager
departments & members & how they coordinate.
Wide Span of Control – Higher number of subordinates
Organizational Charts – Visual presentation of
reporting to 1 manager
organizational chart

Vertical Chart

Narrow Span of Control – Low number of employees

Horizontal Chart Circular Chart
reporting to one manager

Limitations of Organizational Chart

 Orgn chart gets outdated with business growth

 Skills & qualifications of managers can’t be identified
 Informal groups can’t be recognized
 Informal communication methods can’t be identified
Power – Ability to influence others behavior

Authority – Legal right a person could earn from the Leading

organizational position to make decisions The process of influencing the behavior of the organizational
members & provide them the direction & guidance to
Sources of Power achieve goals & objectives of the business
 Authority [Legitimate Power] – Legal power generated
from position
 Expert Power – Through experience & qualifications
 Reward Power – Ability to give rewards [promotion]
Leadership is the process of motivating the followers in
 Personality Power [behavioral patterns] – Through
order to achieve the expectations of the business
behavior or communication style he maintains
 Informational Power – Access to vital information Leader is the party who has the power to influence the
 Coercive Power – Ability to impose punishments others behavior in order to achieve goals & objectives
 Referent Power – Earned due to being followed or
referred by others
 Charismatic Power – Earned due to others having a
greater devotion towards them

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Motivation is the process of encouraging organizational
members to complete the work voluntarily through financial
and not-financial sources

Communication

Exchanging information between two or more parties with

clear understanding is known as communication.

Importance of communication

 To organize well the activities of the firm

 To manage human resource
 To get required information to make decisions
 To implement the overall control activities of the firm

Types of Communication

1. Formal Communication
 Horizontal Communication – Communication
between individuals at the same level
 Vertical Communication – Communication with
individuals at different levels
 Downward – Top level to low level
 Upward – Low level to top level
2. Informal Communication – The communication that
takes place beyond the official hierarchy of the
organization, officially unaccepted and without
transparency is known as informal communication.

Controlling
Comparing the actual performance with planned
performance of an organization, identifying the variances if
any and taking necessary actions to correct them can be said
as controlling

Steps of Controlling

1. Setting Standards
2. Measure actual performance
3. Compare and identify deviations
4. Take corrective actions

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 UNIT 13 Operations Management
The group of managerial activities relevant to the planning, Advantages Disadvantages
organizing, leading and controlling of an operation activity to -Unit cost low compared -Unit cost high compared
attain the aims and objectives of an organization is known as to job production to flow production
operations management -Finish of product can be -Individual customer
modified from one batch satisfaction less than job
Importance of Operations Management to another production
-Can still address specific -Economies of scale cannot
 To produce high quality goods and services customer needs if required be achieved
 To produce goods and services with novelty -Receiving discounts since -There can be losses and
 To face competition successfully in global environment a relatively large amount wastages when production
 To improve efficiency and effectiveness of production of materials are purchased process is modified
Flow production refers to the production of large amount of
Functions of Operations Management one kind of product on a continued basis, with an unbroken
flow based on the future demand
1. Production Engineering is making decisions on the
production process, required plant and machinery, Example: Production of soft drink and motor vehicle
production schedule, required materials, deciding of
required quantity of materials and their quality Advantages Disadvantages
2. Production Planning is the planning and allocation of -Economies of scale due to -Initial capital requirement
raw materials, workers, and workstations to fulfill drop in unit cost is very high
-New technology can be -Have to face high market
manufacturing orders on time
used easily risk
3. Purchasing Materials is obtaining the right materials in
-Production can be offered -High competition in the
the required quantity, at required time and at minimum to a larger market market
cost -Division of labour and -Employee motivation
4. Production Controlling is inspecting if the goals specialization can be levels can drop due to
established in accordance with production engineering implemented repetition of work
and production planning, are being reached and if not,
determining necessary remedial actions for them.
Machinery control, stock control, quality control, cost
control are some of the production controls
5. Research & Development is collecting information
regarding existing product, production process, new
production planning and developing them.

Production Methods
Factors to consider when Location factors foe a
Job production refers to the production for a specific order selecting production business start-up
of a customer in which one item is produced from the method
beginning to the end based on the current demand.
-Cost incurred -Cost
Example: Birthday cakes, Tailor made clothes -Market size -Availability of suppliers
-Technology used and -Transport access and links
Advantages Disadvantages equipment required -Nature of the business
-Risk is low -High production cost -Purchasing pattern -Nature of product
-High customer satisfaction -No economies of scale -Nature of product -Location of competitor
-Customer loyalty -Skilled labor required
-Higher profits margin -Special equipment and
machines needed Layout Planning is planning of physical facilities such as
workstation centers, materials, machinery and equipment,
suppliers and services and many more for an efficient
Batch Production is where production occurs in batches of
production procedure
similar items, but each batch may differ in materials, labor,
quantity, types, and working hours, even though the overall The necessity of an operational layout planning
process is continuous and the items are generally alike.
 Maximum use of available space
Example: Bakery items, Uniforms for preschool students  Reduction in industrial accidents
 Growth in efficiency
 Reduction in cost

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1. Process Layout – Preparing the layout to conduct all Margin of safety = Sales Units – BEP Units
activities to complete one stage of production at one
Target Profit Volume = Total Fixed Cost + Target Profit
place
Contribution
Advantages Disadvantages
-One machine failure won’t -Greater space is required BEP can be graphically represented as follows;
affect production process -Cost would increase due
-High flexibility in machines to high machine usage
-Extremely suitable for -High volume of work-in-
service business progress items
2. Product Layout – Preparing the layout to flow the total
production process from one station to another in a
linear way

Advantages Disadvantages
-High level of productivity -Employee motivation can
-Production can be done in be low due to repetition
minimal space -Machines are not flexible Advantages & Disadvantages of BEP analysis
-Time consumption is low -One machine breakdown
can affect entire process Advantages Disadvantages
3. Cellular Layout – Preparing the layout by fixing similar -Business can identify the -It is not successful for long
and scalene machinery in separate cells to flow the production volume where term decision making
functions of production in a production process they make no profit nor -Limitations made through
4. Fixed Position Layout – Preparing the layout to conduct losses the assumptions at the
the production by bringing inputs such as materials, -Can calculate margin of BEP analysis
labor, power and tools etc .to the place itself where the safety and target profit
production takes place volume
-Can be used to decide
Breakeven Point [BEP] production capacity
Purchasing materials
Fixed cost - The cost, which up to a certain production level,
doesn’t change with the number of units produced Materials Purchased can be;

Variable cost - The cost that changes with the number of 1. Materials required for production activities
units produced 2. Materials required for the consumption of a business
3. Purchased Services
Total Cost = Total Fixed Cost + Total Variable Cost
The steps of purchasing process
Total Revenue - The revenue that businesses receive from
selling its products in a specific period of time  Notifying the materials requirements to the purchasing
department
Total revenue = Number of Selling units x Selling price per
 Finding of a supplier
unit
 Placement of order
Contribution - calculated by subtracting variable cost from  Receipt of goods
total revenue.  Payment of cash

Contribution = selling price per unit – variable cost per Few of the matters that have to be considered in
unit purchasing materials

Profit - Calculated by subtracting total cost from total  Product specification

revenue.  Quality of materials
 Price
Profit = Total revenue - Total cost
 Speed in supply and the continues availability
BEP is the production or the selling level at which a
Stock Controlling
business receives neither profit nor loss
Maintaining stocks at an optimum level with the low cost in
order to maintain the continuity of the manufacturing
process is known as the stock control

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The necessity of stock control Consumption is determined by variations in a firm's level of
production or sales, as shown below:
 To continue the production and marketing activities
 To reduce the cost of holding the excess or the  Maximum quantity of consumption
insufficient stocks  Minimum quantity of consumption
 To get the maximum use of resources such as  Average quantity of consumption [Max + Min/2]
machinery, labor etc.
The time from placing an order to stock arrival is called the
 To face unexpected situations of demand.
re-order period (lead time)
Stock Controlling Methods
Economic Order Quantity (EOQ) is the optimal number of
1. Stock Level Determining - Making an attempt to hold units per order that minimizes both holding and ordering
stocks by determining various stock levels such as costs
maximum stock level, minimum stock level re order
Re-order level is the stock level at which a firm places a new
level and economic ordering quantity
order as existing stock gradually decreases due to
production or sales.

Re-Order level = Maximum Usage x Maximum Order Period

Minimum stock level is the lowest limit of stock that must

be maintained to ensure uninterrupted production or sales

Min stock level = Re-order level – (Avg usage x Avg order period)

2. ABC Analysis - Firm that hold a great number material Maximum stock level is the highest limit of stock beyond
items use ABC analysis for controlling stocks. This which inventory should not increase
method is done on the value of the items and required Max stock = Re-order level – (Min usage x Min Lead Time) +EOQ
space.
3. Two bin System – When items in the first bin have been TOTAL INVENTORY COST = ORDERING COST + HOLDING COST
depleted, an order is placed to refill or replace them.
Ordering Cost: Expenses related to placing an order,
The second bin is then supposed to have enough items
including purchase price, inspection, and transportation.
to last until the order for the first bin arrives.
4. Continuous Stock Recording System – Recording the Stock Holding Cost: Costs incurred from receiving stock into
changes in stocks then and there and keeping records so storage until it is issued for production or sales.
as to know the balance in the store at any time
At EOQ; Ordering Cost = Holding Cost, Inventory cost is at lowest
5. Computer Program – Using advanced computer
software developed for controlling stock
6. JIT [Just-in-time] Method – Method of obtaining
materials for production at the required time in correct
quantity and delivery of the output to the market
immediately.

Advantages of JIT Disadvantages of JIT

-Holding cost is low -Low supplier reliability can
-Cash will not be stuck in lead to JIT failure Quality is the ability of a good or a service to satisfy the
stocks -High transport cost consumer needs and wants
- Management attention -Loss of bulk discounts,
towards stock controlling Hence no economies of Elements of quality of a product;
reduce scale
Necessary Stock Levels to maintain an optimum stock  Proper functioning • Durability
 In accordance to standards • Suitability
Several facts to be considered in computing stock levels are  Reliability • Safety
given below;
Importance of Quality for a firm;
1. Consumption of materials in relation to a period.
2. Re-order period  To obtain good reputation
3. Re-order quantity  To penetrate and capture the market easily
 Maximize customer loyalty and create customer loyalty
Required quantity of materials for the production or selling  To face competition successfully
activities in a particular period such as a day or a week or a  Reduce wastages by decreasing quality defect products
month is known as the consumption of materials in relation  Business survival and increase profits
to a period.

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Quality Control is a process through which a business seeks Modern Technology Used to Improve Productivity
to ensure that product quality is maintained or improved
1. Computer Aided Design [CAD] is the planning of the
Quality Controlling Techniques product using computer graphics
2. Computer Aided Manufacturing [CAM] is the usage of
1. Quality Circles are small groups of employees
computer program for managing the production
performing similar tasks who identify and discuss job-
process
related problems to find solutions
3. Computer Integrated Manufacturing [CIM] is the
2. Zero Defects technique ensures every product is made
method used for the designing of products and for
without defects by aiming to get it right the first time,
managing the production process [CAM+CAD+Robotics]
avoiding errors altogether
4. Computerized Numerical Control [CNC] is the control of
3. Quality Assurance involves formal procedures at each
machinery through computer program that are used for
production stage to ensure product quality, focusing on
implementing the operations of a firm
preventing problems rather than detecting them
5. Robots  Robotic Process Automation
4. Quality Standards involve employees inspecting their
own work, issuing guarantee certificates, and complying Benefits of Using Modern Technology
with national and international requirements beyond
quality control inspections  Minimizes wastages
5. Total Quality Management [TQM] approach to quality  Increases efficiency and productivity
requires involvement of all levels employees in an  Minimal employee requirement
organization  Can launch new products to the market
6. Statistical Process Control collects manufacturing Problems of Using Modern Technology
performance data and communicates it to relevant
parties using diagrams, tables, and graphs  Rapid change in technology
 Significant investment requirement
Productivity is the ratio of inputs to outputs and is a key
 Environmental pollution
measure of production effectiveness and efficiency
 Technical issues can halt entire production process

Importance of Productivity

 Decide on resource allocation

 Make decisions about business expansion
 Compare productivity with similar businesses
 Monitor business progress

Different Forms of Productivity

 Total productivity
 Labour productivity
 Machine productivity
 Material productivity

Methods to Improve Productivity

 Increasing output while having a fixed input

 Decreasing input while having a fixed output
 Increasing the output while decreasing the input
 Increase output at a higher rate than increase in input
 Decrease input at a higher rate than decrease in output

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 UNIT 14 Marketing Management
Market is a collection of all true and potential customer for Marketing Concepts
a product
1. Production Concept  Focus is on massive production
Two primary types of market are the Consumer market and with efficiency. Hence cost decrease and product price
Industrial goods market will be low
2. Product Concept  Launch quality and innovative
Types of Markets in a Market Economy products
3. Selling Concept  Focus on aggressive promotion &
 Resource Market – Raw material, Labour etc.
selling
 Government Market – Government buying products
4. Marketing Concept  Offer products after research,
 Consumer Market – Buying for personal use
identifying & understanding customer requirements
 Manufacturers Market – B2B transactions
5. Customer Concept  Focus on individual preference of
 Intermediaries Market – Involving middlemen
consumers
Marketing is the management process that is aimed at 6. Social Marketing Concept  Focus on Profit, Customer
identifying, anticipating and satisfying customer satisfaction & Society [Three factor marketing]
requirements profitably. 7. Holistic Marketing Concept, Comprise of;
 Relationship Marketing
Core Concepts of Marketing  Integrated Marketing
 Internal Marketing
 Needs, Wants & Demand
 Performance Marketing
 Target Market  Focusing on specific customer group
 Positioning  Creating positive image for product Market segmentation is the sub dividing of the market into
 Market Segmentation  Dividing market to segments similar groups to whom a separate marketing mix can be
 Offering  Bundle of values offered to the market focused
 Brands  Group of words, a logo
Bases of segmentation;
 Marketing Channels Various accesses that the
marketers use to reach target market  Geographical  Dividing market based on location
 Paid, Owned & Earned Media  Demographic  Segmenting based on measurable
- Paid Media  Advertising by paying money characteristics [Age, Gender, Income, Education, etc.]
- Owned Media  Advertising in own digital assets  Psychological  Based on mindset of people
- Earned Media  Advertising by customers  Behavioral  Based on how people behave
 Impression & Engagement  Number of times media
used to reach customer is impression and extent of Requirements to be fulfilled for effective Segmentation Are
customers attention and involvement is engagement Measurability, Substantiality, Accessibility, Differentiability,
 Value  Total evaluation by customer regarding ability Actionable
of product to satisfy consumer need Benefits of Market segmentation
 Satisfaction  Gratification gained by consuming
product  Ability to launch marketing programs successfully
 Supply chain  Allow firm to utilize limited resources efficiently
 Competition. Types of competition are Brand  Able to minimize market risk
Competition, Industry Competition, Form Competition  Allows firm to recognize appropriate & periodic market
& Generic Competition
Target Market is the group of customers, business aims to
 Exchange & Transaction
target and serve the product attractively and profitably
 Relationships
 Marketing Environment  Concentrated Marketing [Niche or target Market]
Focus on one specific segment & dominate it
Importance of Marketing
 Differentiated Marketing Segmented Marketing]
Businessmen Consumer Economy Different products for different segments
-To attract & -To be informed -Developing  Undifferentiated Marketing [Mass Marketing]
retain customers about the market entire economy Same product and marketing for everyone
-To face -To purchase -Expansion of
competition products easily products Market Positioning is creating a favorable attitude in
-To earn profits -Get maximum -Increase in consumers’ mind regarding a good or a service
continuously satisfaction for employment
amount spent

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Marketing Mix is the step of controllable variables that Product life cycle is the amount of time a product goes from
affirm blends to produce desired results from its chosen being introduced into the market until its’ taken off the
target market shelves

Marketing Mix  Product, Price, Place & Promotion [4P’s] 1. Product Development Stage
2. Introduction Stage  product introduced to target
market
3. Growth Stage  Sales, revenue & profit increase
4. Maturity Stage  Sales & profits reach its peak, No
major changes in profits and revenue
5. Decline Stage  Sales & profits gradually decrease
Marketing Mix in a service business [7P’s]  People,
Processes & physical environment instead of 4P’s

Marketing Mix in consumers’ view [4C’s]

 Customer Needs & Wants – Product

 Cost – Price
 Communication – Promotion
 Convenience – Place Assumptions of product life cycle concept
Importance of Marketing Mix  Product has a specific life time
 Ability to launch product to market in a way that  Product passes various stages brining different
satisfying customer needs & increase turnover challenges to the marketer
 Consumers could be attracted via appropriate price that  Sales & profit change at each stage
 Market follows marketing goals and strategies in
allows business to face competition
accordance with nature of each stage
 Can use various promotional strategies to influence the
customer to purchase the product Brand is a name, sign, symbol, design or a combination of
 Distributing products and making it available in places them, intended to differentiate the goods or services of one
where consumers can purchase easily with convenience marketer or group of marketers from those of competitors
Product is anything offered to the market to fulfill human Pronounceable part of brand is Brand Name. Logo of the
needs and wants brand is Brank Mark & when it is registered it is Trade Mark
Companies will have to ensure products contain quality, Characteristics of a good brand
features and design
 Being short and simple
Product Levels  Easy to pronounce, recognize and remember
1. Core benefit  First level of a product which is also  Give hint on basic qualities & usefulness of product
considered as basic benefit / core benefit  Representing a particular culture
2. Generic product  Second level of a product. Here the Various Forms of Brand
core benefit becomes basic product
3. Expected Product  Presentation of the product with  Private Brand  Sold under retailers brand name,
the features that the buyer expects. This is the third manufactured by some other manufacturer
level of the product  Family Brand  Series of products under same brand
4. Augmented Product  The product is presented to the  National Brand  Name of business and brand is same
market in a level which exceeds the customers’  Individual Brand  All products has different brands
expectation. This is the fourth level of a product  Co brands  Combination of 2 brands
5. Potential Product  Entering to the potential market
Usefulness of Brand
through augmentation features at the planning of the
product after considering the fact that the customer Businessmen Consumer
would demand these features in the future -Will be different compared -Can chose quality products
to competitors’ brand -Can chose products with
Product Mix -Can build recognition minimal effort
Can easily get orders -Can obtain legal protection
 Width - Number of product lines of the firm. Levels of Brand Loyalty
 Length - Number of items included in all product lines.
 Depth - Number of items presented under one product 1. Brand Recognition  Low loyalty
line. 2. Brand Preference  Moderate loyalty
 Consistency - The relationship among the types of 3. Brand Insistence  High loyalty
goods.
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Packaging is the function of designing and producing a Distribution is the process of getting the products reached
wrapper outer covering or container for a particular product from producer to consumer

Packaging performs the following useful functions Distribution channel consists of individuals or organizations
that assist in getting products to the right place at right time
 Protection for the product
 Convenience to the seller and the customer Importance of transportation [Used for distribution]
 Advertising, Attraction and Attention
 Assist the expansion of market
 Offering meaningful information to the customer
 Consumer gets opportunity to consume various product
The three levels of packaging  Transportation can be done on factors such as nature of
production, nature of market & nature of demand
1. Primary Package [For protection]
2. Secondary Package [For attention/Information] Product distribution channels & factors to consider
3. Tertiary Package [To Distribute/Transport]
- Nature of product - Nature of demand
Factors to be taken into account in planning a package - Nature of market - Strength of producer
- Distribution channel of competitors
 Nature of the product
 Benefits of the product from the package Distribution channels
 Cost
Consumer goods; Industrial goods;
 Features of the package
 Convenience to the trader
 Providing information about the product

Label  Gives sufficient information to the consumers

Elements in a label;
Service goods;
- Brand - Information about product
- Price - Ingredients
- Manufacturing date - Expiry date

Price is the amount of money charged from a customer for a

particular good or a service
Promotion is communicating customers who are interested
Factors to consider and objectives of pricing
about the products with the purpose of motivating to
Factors Objectives of pricing purchase
-Cost -Survival in the market
Importance of promotion is a follows;
-Competitor -Profit maximization
-Nature of demand -Maximize market share  To increase brand awareness
-Objective -Maximize market skimming  To introduce new products to consumers
-Product quality leadership
 To increase sale of existing products
Pricing Techniques
 To enhance reputation of the business

Promotion Mix

1. Advertising – Paid form of non-personal presentation

4. Group Pricing/Price Discrimination  Different prices of information by a certain sponsor
for different customers Media to advertise  Television, Radio, Newspaper,
Magazines & Internet
Pricing Strategies Objectives of advertising is to Inform, Persuade,
 Penetration pricing  Low price to enter market Remind Reinforce
 Price skimming  High initial price for new innovation, 2. Sales Promotion
gradually decreasing 3. Personal Selling
 Psychological pricing  Price set to appear cheaper [Ex: 4. Public Relations
Rs.999 instead of Rs.1000] 5. Direct Marketing
 Loss leader pricing  Sell a product at a price lower 6. Events & Experiences
than its cost to attract customers, hoping they’ll buy
other profitable products
 Prestige pricing  Sets a higher price on purpose to
create an image

Prepared by: Abdul Maajid

 UNIT 15 Financial Management
Financial Management is obtaining fund requirements of a Financial Requirements
business organization from appropriate sources of funds via
Short Term Long Term
low cost and investing them effectively in business activities
- Pay Supplier - Purchase Land
Main aim of financial management is to maximize - Pay Employees - Purchase NCA
shareholder wealth - Settle Bank OD - Expansion

Shareholder wealth = Market share price x Number of shares Sources of Funds

Objectives of Financial Management; 1. According to the ownership

 Profit maximization
 Maximizing Earnings Per Share [EPS]
 Establishment of long term financial stability
 Maintaining the liquidity in an optimum level

Functions of Financial Management 2. According to the source

 Generating funds from most suitable options Internal Sources – Funds generated to business by business itself
 Investing funds in most profitable options using internal capabilities & decisions
 Maintain sufficient working capital Advantages Disadvantages
 Maintain financial statements according to standards -Cost of obtained funds is low -Can’t generate huge amount of
-Can obtain funds conveniently funds
Financial Management Decisions -No need of paying back -There can be working capital
problems
External Sources – Funds generated from external parties
according to agreements or conditions that are decided

Advantages Disadvantages
-Can obtain large amount of fund -Associated with a cost
-Can expand ownership of -Collaterals are necessary
business -Liabilities of business increase
3. According to the method
1. Financing Decisions – How to raise money to invest or
Direct Method – Funds generated to business directly from wealthy
grow the business parties or investors
2. Investing Decisions – Deciding where to put your money
so it gives the best return Advantages Disadvantages
-Ability to obtain on time -Interest & dividend applicable
1. Budgeting is the process of creating a plan to spend your -No need to obey conditions -If business is not reputed, funds
money. Two main forms of budget are; -No need to incur extra cost cannot be generated
a. Cash Budget – The document prepared including Indirect Method – Funds generated to business through the banks
& other financial intermediaries
expected receipt of money and expected payment of
money in a certain future period Example: Leasing, Commercial papers, Bank overdraft
Benefits of preparing cash budget
Advantages Disadvantages
 Facilitates overall planning and controlling -No impact on management -Have to obey rules & conditions
 Owners confidence on the business will increase -No impact of business ownership -Have to incur time & cost to
 Cash surplus can be identified & can plan how to invest -Ability to pay off on time prepare documents
 Cash shortage can be identified & can plan how to solve 4. According to time

Short Term Sources – Bank OD, Creditors, Payables & Accrued

expenses

Advantages Disadvantages
-No long-term bonds or liabilities -Paying back time being reduced
b. Capital Budget - process of planning how to invest an -Ability to obtain quickly -Problems in working capital arise
organization's current funds in long-term assets or -Impact on management reduced
projects to earn future benefits. Long Term Sources – Bank loans, debentures, share issue
2. Cashflow statement – Outlines cash inflows and
Advantages Disadvantages
outflows of business in a specific historical period -Can pay via installments -Dividend applicable
-No need to pay immediately -Interest charges
Total Assets – Total Liability = Equity [Net Assets] -Collaterals will be required

Current Assets - Current Liability = Working Capital

Prepared by: Abdul Maajid

Factors to take into account when selecting source of fund Financial statements

 Nature of the business 1. Income Statement/Statement of Profit or Loss

 Amount of capital required 2. Balance Sheet/ Statement of Financial Position
 Period for which funds are required 3. Statement of Changes in Equity
 Cost involved 4. Cash flows statement
 Risk of the source 5. Notes to financial statements

Sources of Investment Financial Ratios

Current 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔

Short term investment Long term investment

y Ratios
=

Liquidit
decisions decisions Ratio 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Quick Ratio 𝑳𝒊𝒒𝒖𝒊𝒅 𝑨𝒔𝒔𝒆𝒕𝒔
Investment options withInvested into long term =
greater liquidity and low
options with low level of 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Liquid Assets = Current Asset – [Closing stock + Prepaid exp]
risk liquidity and greater 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑺𝒂𝒍𝒆𝒔
Inventory =
earning capability

Activity Ratios
Turnover 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
Investments are focused Decisions are focused upon 𝑪𝒓𝒆𝒅𝒊𝒕 𝑺𝒂𝒍𝒆𝒔
Debtors =
upon current assets non-current assets 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑫𝒆𝒃𝒕𝒐𝒓𝒔
Turnover
Examples: Examples: 𝑺𝒂𝒍𝒆𝒔
Asset =
Trade debtors, short term Renovation, long term 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
Turnover
investment, cash, stocks investment, diversification, 𝑫𝒆𝒃𝒕 𝑪𝒂𝒕𝒊𝒂𝒍
Debt to = 𝒙 𝟏𝟎𝟎
establishment 𝑬𝒒𝒖𝒊𝒕𝒚 𝑪𝒂𝒑𝒊𝒕𝒂𝒍
Equity

Leverage
Factors to take into account prior to any investment

Ratio
Debt ratio 𝑫𝒆𝒃𝒕 𝑪𝒂𝒕𝒊𝒂𝒍
decisions; = 𝒙 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑪𝒂𝒑𝒊𝒕𝒂𝒍
Interest 𝑷𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒕𝒂𝒙 + 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕
 Return on investment =
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕
cover
 Risk of investment Gross Profit 𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
 Environmental factors = 𝒙 𝟏𝟎𝟎
Ratio 𝑺𝒂𝒍𝒆𝒔
Profitability Ratios

 Influence on operations Net Profit 𝑵𝒆𝒕 𝒑𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒕𝒂𝒙

= 𝒙 𝟏𝟎𝟎
Ratio 𝑺𝒂𝒍𝒆𝒔
Working Capital – Total amount of capital that will be 𝑷𝑩𝑻 + 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕
Return on = 𝒙 𝟏𝟎𝟎
required by the business to settle its short-term expenses. 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
investment
Return on 𝑷𝑨𝑻 − 𝑷𝒓𝒆𝒇𝒆𝒓𝒆𝒏𝒄𝒆 𝒔𝒉𝒂𝒓𝒆
equity = 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅𝒔 𝒙 𝟏𝟎𝟎
𝑬𝒒𝒖𝒊𝒕𝒚 𝑪𝒂𝒑𝒊𝒕𝒂𝒍
Financial System – System which implement financial
decisions of an economy

1. Financial Markets
 Money Market – Market in which short term financial
working capital amount that will be required depends on; securities are traded
 Scale of the business and operation  Inter-bank call money market – Banks having liquidity
 Number of employees shortage obtain short term loans to fulfill their
requirements from the banks having excess liquidity
 Nature of sales
 Internal foreign exchange market
 Production cycle
 Commercial paper market
Capital Gearing – Proportion of a company’s debt compared  Treasury bills market
to equity  Primary Market &Secondary Market
 Capital Market – Market in which long term financial
 High Gearing  Debt Capital > Equity Capital
securities are traded
 Low Gearing  Debt Capital < Equity Capital  Treasury bond market
Advantages & Disadvantages of highly geared structure  Corporate bond market/debenture market
 Long term loan market
Advantages Disadvantages  Share market – Market in which company shares are
-Growth rate of business -High interest charges issued by companies and exchanged among investors
will be high -Difficult to repay is loss is
-Suitable when business generated Organizations that participate in capital market
generating high profits -If loans are defaulted, can
-High gearing represents lead to negative  Colombo stock exchange • Licensed commercial banks
high trust by eternal party consequence’s  Licensed specialized bank • Insurance companies
-Can earn tax benefits  Registered finance companies • Unit trust

Prepared by: Abdul Maajid

 Primary Market Secondary Market Listing procedure in CSE
Buying directly from issuer Buying from other investor
To raise new capital to firm To facilitate liquidity  Appointment of sponsor
Company issue new shares Company not involved  Amend Articles of Association [AOA]
2. Financial Institutions [Unit 7]  Prepare prospectus
3. Financial Infrastructure – SLIPS, RTGS, SWIFT, SSDS  Submit application
4. Financial Instruments  Listed in either main board or dirisevi board

Colombo Stock Exchange 1. Main Board 2. Dirisevi Board

-Well-established firm -Growing, small companies
Functions of CSE Importance of CSE -Minimum public holding -Minimum public holding
-Registering PLCs’ -Encourages investment 25% 10%
-Supporting investors to -Investors can enjoy -Positive net assets for last -Positive net assets in 1
transact shares benefits 2 years recent year
-Educate general public -Attract foreign investment -Earned profit last 3 years -Active operation period
-Maintain boards -Companies can generate a for last 2 years
-Maintain institutions significant capital 3. Watch List Board
The institutes & securities connected to CSE
Securities exchanged in stock market
 Stock exchange companies • Listed companies
 Stock brokering companies • Unit trust  Ordinary shares  Voting & non-voting
 Central depository system • Investors  Preference shares  Redeemable & Non-Redeemable
 Securities & exchange commission •Finance Ministry  Share warrant
 Corporate debentures
Primary Market  Direct purchase of shares by investors  Government debt securities
from a company that involves in issuing shares
Direct benefits Indirect benefits
Secondary Market  Purchasing of shares from Colombo -Dividends [shares] -Voting rights
stock market -Capital gains [shares] -Can use as collateral
-Interest [debentures] -Capital gain free from tax
Stock Brokering Firms
-Right issue -Bonus issue
 29 stock brokering firms [They are the members of CSE]
 01 debt trading partner
Trading Systems in CSE
 Investors can maintain CDS account through remaining
28 broker companies 1. Automated Trading System [ATS] – An electronic
system in which the transactions related to ordinary
Services provided by stock brokers shares take place
 Opening accounts for investors 2. Debt securities Trading System [DEX] – An electronic
 Intermediary services system created in order to sell debt securities of the
 Provide market information government and the incorporated companies
 Provide research facilities Information included in trading systems
 Provide margin trading facilities
 Price index • Details on waiting orders
Stock Market Performance  Companies statement • Details about the customers
BULL MARKET BEAR MARKET Benefits of Trading system
-Share prices are rising -Share prices are falling
continuously continuously  Quick settlement of transactions
-Investors’ confidence high -Investors’ confidence low  Providing of information
Reasons Reasons  Management of current liquidity
-Strong economy -Weak economy
-Political stability -Political instability Functions of Central Depositary System [CDS]
-High corporate profits -low foreign investment
-Foreign investment inflow -Adverse conditions  Open CDS account for investors
Registering in the share market  Transfer shares among accounts
 Clearing and settlement activities of shares
Options to register in share market [Limited Company]  Safe custody of securities
 Through Initial Public Offer [IPO]
 Through an offer for sale
 Through an introduction

Prepared by: Abdul Maajid

Securities & Exchange Commission [SEC]

Objectives Functions
-Inspect & supervise all - Issue license for stock
market activities of CSE brokers
-To protect investors - Providing compensation
-Conduct transactions in in an event of loss
fair manner meeting all the - Give consultancy to
standards government to improve
-Operate compensation CSE
fund to protect investors - Cancel the license that are
financial loss issued

Stock Market Indicators

1. Market Capitalization – The Market Value of all the shares that are registered in the stock market
2. Market Turnover – Total value of shares that has been traded on a specific trading time [day or week]
3. Market Volume – Total number of shares that has been traded on a specific trading time [day or week]
4. Market Liquidity – Total number of shares that are getting traded in a given day our of the total number of listed shares

Market Indices

Indices Purpose Formula Base Year

All Share Price Fluctuations of prices of ordinary 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 1985
= 𝑥 100
Index [ASPI] shares of all the listed companies 𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝𝑖𝑡𝑙𝑎𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟
S&P SL 20 Index Fluctuation of the price level of 20 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 2012
companies out of all the listed 20 𝑆𝑒𝑙𝑒𝑐𝑡𝑒𝑑 𝐶𝑜𝑚𝑝𝑎𝑛𝑖𝑒𝑠
= 𝑥 100
companies 𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝𝑖𝑡𝑙𝑎𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟
All Share Total Changes in share prices and income
Return Index from dividends of all companies
[ASTRI] Total Return Index
S&P SL 20 Total Changes in share prices and income [TRI]
Return Index from dividends of 20 companies
[S&PTRI]

Importance of Share Market Indices

 Can gain knowledge about performance of the company

 Can gain knowledge about functioning of companies
 Can gain knowledge about the performance of the economy
 Can compare share market condition with other countries

Prepared by: Abdul Maajid

 UNIT 16 Human Resource Management
Utilizing the human resources efficiently and effectively to The three elements of a Job
achieve the goals and objectives is human resource
 Tasks – Specific piece of work or an activity
management
 Duties – Involves multiple tasks
Uniqueness of Human Resources  Responsibility – Obligation to perform task or duty

 Appreciates with time 2. Job Analysis

 Ability to control other resources
Job analysis is a systematic review of the features and
 Behaviours can’t be predicted
related behaviours of a job and the qualities that should be
 Ability to be trained possessed by the employee
Goals of Human Resource Management
Job Description Job Specification
 Maintain a satisfied and appropriate labour force that About the Work About the Person
could dedicate their maximum contribution  Main -Tasks, duties & -Academic & professional
responsibilities qualifications
 Employee development and motivation
-Working hours -Skills & talent
 Controlling the cost of employment
-Working conditions -Prior year experiences
 Improving the industrial relations -Salary & other benefits -Attitudes & habits
 Employee welfare -Nature of the job General knowledge
Describes the job Describes person suitable
Importance of Human Resource Management
Explains job characteristics Explains human character
 To minimize and control labour turnover Part of job description Not part of job description
 To improve quality of work life
 To achieve orgn success via employee motivation 3. Human Resource Planning
 To get the use of employee’s competencies
 Essential to create employee development Determining future work force requirement and fulfilling
those requirements through decisions to achieve goals &
Functions of Human Resource Management objectives is known as human resource planning
1. Job design 9. Training & development Advantages/Importance of Human Resource Planning
2. Job analysis 10. Employee movement
3. HR planning 11. Pay Management  Deciding the future employee requirements
4. Recruitment 12. Employee welfare  Utilizing the HR more efficiently and effectively
5. Selection 13. Discipline Management  Reducing the cost of employees
6. Hiring 14. Health & Safety Management  Development of competent employees
7. Induction 15. Grievance handling  Strategic planning & implementation
8. Performance appraisal 16. Industrial relation
Process of Human Resource Planning
1. Job Designing
1. Planning the future Human Resource requirement
Arrangement of tasks, duties & responsibilities assigned for Influencing factors of HR demand
a work unit of the firm in order to achieve a particular goal is  Demand for the particular goods or services
known as the job designing  Number of employees resigning
 Future retirement • Objectives of the firm
Job designing techniques
 Future projects • Termination of service
1. Job enlargement – Adding more tasks and duties to job 2. Assessing the human resource supply 
2. Job enrichment – Allocating more authorities and Internal Supply & External Supply
responsibilities to a job 3. Comparing the demand & supply of HR
3. Job rotation – Transferring from one job to another job 4. Developing the strategies to be implemented
to increase experience Shortage
4. Scientific technique – Total work is divided into sections  Working overtime • Training programs
5. Professional technique – Recruiting professionals to the  Outsourcing • Part time/contract employees
businesses Surplus
6. Group technique – Group of employees get together  Hire freezing policy • Expand production
and perform similar tasks  Voluntary retirement • Transfer to other departments
5. Evaluating the efforts taken for HR planning

Prepared by: Abdul Maajid

 4. Recruitment Interview

Recruitment is the process of attracting the job seekers to Advantages Disadvantages

apply for the vacancy -Allow in depth -High cost & time
assessment of candidate’s consuming
Recruitment Process skills & qualifications -Applicant may not show
-can evaluate the real behaviour
1. Recognizing vacancies for jobs
interpersonal & -Creating unnecessary fear
2. Studying the job specifications
communication skills -Being biased
3. Recognizing the factors affecting recruitment
Bio Data/CV
4. Preparing the application form
5. Selecting ways of recruiting Advantages Disadvantages
6. Implementation - Assist in preparing -Inability to assess the
7. Evaluation personal files of selected personality factors
candidates -It takes a long time to
Internal Recruitment Methods  Within Organization -Having higher validity study the applicant
Factors to be considered in selecting a person
 Job posting • Intranet
 Skills inventory • Succession plan  Attitude • Knowledge
 Referrals from internal employees  Skills • Physical & mental fitness

Advantages Disadvantages 6. Hiring

-Speedy process -High training cost
-Low cost -Limited choices The process of appointing the most eligible individuals to
-Not time consuming -Unnecessary competition the job is known as hiring
-Workers are motivated -Modern knowledge
Basis in which employees can be appointed
doesn’t flow to the firm
External Recruitment Methods  Outside of Organization  Permanent, Temporary, Casual

Appointment letter  A letter of appointment is a legal

 Advertisements & agencies • Past employees
document stating the terms, conditions, and duties of a job
 Website • Job fairs
after appointment.
Advantages Disadvantages
Important facts that consist in the letter of appointment
-Good number of choices -High cost
-Can attract competent -Time consuming process  Title/Position of job • Name of employee & employer
and capable applicants -Demotivates existing
 Job conditions • Salary scale
-Reduce training cost employees
-Innovation and new -Good employer employee Importance of letter of appointment
knowledge flow into firm relationship will not exist
 Binds the employee and employer legally
 Acts as an evidence for employment
Job Advertisement  Shows relationship of employer and employee
Information Examples
 Employee can get comprehensive details of the job
-Title of the job -Newspaper
-Experience -Internet Probation period  service time a new employee must
-Salary & other benefits -Television complete before becoming permanent.
-Working time -Radio
-Age limit Actions During Poor Performance in Probation
5. Selection
 Termination of service
Recognizing the best applicants to fill the vacancies from  Warning verbally and in written form
those who were recruited is known as selection  Extending the probationary period
 Transferring to another department
Selection Methods
7. Induction  The act of introducing a new employee to
1. Evaluation of application
the firm and its working environment
2. Interview
3. Tests Methods Objectives/benefits
a. Personality test  Judge based on behaviour/qualities -Buddy method -Motivates the employees
b. Practical test  Apply their skills in situations -Factory tour -Build confidence on
c. Mental test  Health status for a task -Lectures and videos employees
d. IQ test  Mental capabilities -Booklet -Clearly outlook on job
e. Background test  Family, education, social aspects -Generate required
f. Aptitude test  Determine individual ability and skills performance

Prepared by: Abdul Maajid

Probationary/casual employees 10. Employee Movement

Advantages Disadvantages  Promotion  Moving an employee to a higher position

-Minimize labour cost -Lack of commitment  Demotion  Moving an employee to a lower position
-Can terminate employees -Lack of employee loyalty  Termination  Employee retiring or end of contract
8. Performance Evaluation  Dismissal  Fired due to disciplinary/work issues
Process if supervising and reporting to what extent the  Transfer  Moving to another department
relevant duties are performed successfully by the employee  Layoff  Removing employees due to company reason
is known as performance evaluation/appraisal 11. Pay Management
Benefits to Employer Benefits to Employer Types  Salaries, Wages & Incentives
-To recognize the training - Enhancing the employee
needs productivity Factors considered when determining pay
-To make decisions on - Increasing the employee
promotion and motivation  Demand and supply of labour • Living cost
transfers - Recognizing the training  Financial level of business • Labour rules
-To take disciplinary needs  Risk of the job
actions.
9. Training and Development 12. Employee Welfare

Training Development Examples  Food, Housing allowance, Transportation

-Short term program -Long term program Disadvantages of Employee Welfare to Business
-Improve Technical skilled -Improve Conceptual skills
-Low cost program -High cost program  Unnecessary cost • Increased expectation
-For Non-managerial -For Managerial  May not achieve goal • Probable misuse
employees employees
-Address current -Address Future Common Benefits/Objectives of employee movement and
requirement requirement pay management
On the job training methods
 To retain existing employees
 Apprenticeship training • Internship  To motivate employees
 Supervisory training • Mentoring  To attract new employees
 Instructions on work • Job rotation  To control labour cost
 Shadow work • Role playing  Reputation of the firm
Advantages Disadvantages 13. Discipline Management
-Can earn job experience -Disrupts productivity
-Low cost -Limited scope The standard or employers expected behavior from the
Off the job training methods employee to carry on a business organization formally and
legally can be called as discipline management
 Workshops and seminars • Simulation
 Vocational courses • Coaching Anti-Disciplinary Actions or Misconducts
 Lectures and videos • Case study
 Willful damages to organizational resources
Advantages Disadvantages  Not reporting to work without prior permission
-High scope -High cost  Late attendance to the work
-Doesn’t disrupt -Cant earn job related  Leaving work place without prior permission
productivity experience
Disciplinary actions that can be taken during misconduct

Training & Development – A&D To Employer  Verbal warning • Written warning

Advantages Disadvantages  Demotion from post • Dismissal from job
-Raise quality of product -Have to bear high cost  Charging for loss • Suspending from job
-Minimize employee errors -Employee moving to
other organizations Importance of Disciplinary Management
Training & Development – A&D To Employee  Minimizing disputes among colleagues
Advantages Disadvantages
 Decrease conflict between employer and employee
-Enhance job satisfaction -Extra time and effort
 Promotes seriousness in the business environment
-More chance to get -Resistance to change
promoted  Create expected employee performance continuously
-Improves professional
value of employee

Prepared by: Abdul Maajid

 14. Health & Safety Management 16. Industrial Relations

The perfect mental and physical fitness of the employee to Any type of professional relations between employee and
perform the tasks, duties and responsibilities of his job is employer is known as industrial relations
called as health
Good Relations Benefits Bad Relation Consequence
Protecting the employees from all the hazards causing the -Employee motivation -Industrial disputes
health of the employee is called safety -Increase productivity -Demotivated employees
-Employee turnover reduce -Low productivity
Factors and hazards affecting employee health and safety

 Job related accidents – Deafness, Poor eyesight Employee Rights Employee Responsibility
 Job related diseases – Cancer, Breathing problems -Earn and receive salary -Perform as expected
 Organizational stress -Job security -Behave well at work place
-Use allocated leaves -Follow rules & regulations
Same Advantages & Disadvantages of Employee Welfare Employer Rights Employer Responsibilities
15. Employee Grievances -Implement strong -Pay salaries on time
disciplinary procedure -Ensure job security
Employee grievances are the mental discontent or -Introducing work ethics -Provide leaves
dissatisfaction of an employee or a group of employees -Ability to function -Making payment for
regarding job or working environment according to regulations overtime
Employee rights and responsibilities are granted through
Reasons for the employee grievances labour act and collective agreement

 Assigning tasks that’s not in the job description Job Industrial Disputes
 Employing to a job with mismatched skills Related
Job related disputes arisen between employers and
 Changing the work place, working hours Work Condition
employees
 Unhealthy or unsafe work environment Related
 Salaries, wages & incentives being unfair HRM Policy Reasons for disputes Methods to resolve
 Policies & procedures related to promotions Related -Insufficient salaries -Collective bargaining
 Taking unreasonable/tough disciplinary actions Rules -Poor job security -Collective agreement
 Breach conditions in collective agreement Related -Unfair termination -Conciliation officer
-Pressurizing work -Industrial tribunal
Methods to identify  Suggestion box, survey, exit environment -Labour court
interview Employer Actions

Steps to handle employee grievance  Close the workplace

 Removing the employee
1. Listening about the grievance carefully
 Work done through other employees
2. Collecting the accurate information of the grievance
3. Discussing the relevant matters with the employee.  Mutual aid pact  Help from other employers
4. Listening to the employee carefully Consequences of Industrial disputes
5. Accepting matters said by employee if they are true. Employees Employers Customer/Economy
6. Build trust in the employee. -Demotion -Output & -Product shortage
-Job dismissal quality drops -Prices increase
Methods to handle employee grievances
-Discipline -Affects -Drops living
 Formal grievance handling procedure actions reputation standard
-Promotion -Reduce -Essential services
 Through the immediate supervisor
barriers market share gets disrupted
 Having an Open-Door policy
Trade Unions
 Joint Committee Method
 Counselling Organization that is established by employees and
employers to protect their rights and for other privileges
Effective Grievance Ineffective Grievance
Handling  Advantage Handling  Disadvantage Objectives of trade unions
-Employee turnover -Employee turnover
reduce increase  Gain reasonable salary & pleasant working environment
-Employee absenteeism -Employee absenteeism  To get working hours reduced
controlled increase  To get protection from job related accidents
-Increase productivity & -Decrease productivity &  To participate in firms’ management decisions
Motivation motivation
-Enhance reputation -Damage to reputation

Prepared by: Abdul Maajid

Trade Union Actions/Industrial Actions

Action Definition
1. Collective bargaining Negotiation between management and trade unions
2. Work to rule Following every single rule and regulation and doing small quantity of work
3. Go slow When workers deliberately work slowly
4. Working with black strip Working with a black strip in the hand or head
5. Sit ins Employees refuse to leave the organization
6. Token strikes Being away from duties during a particular period after informing the management
7. Continuous strikes Completely stop working due to failure of gaining their demand
8. Picketing Public protest by trade unions
9. Boycott Stoppage of work of both employees and machines
10. Fasting Abstain from eating by employees until demands are fulfilled
11. Abstain from working OT Workers refusing to work more than their normal working hours
12. Sabotage Damaging the organization’s properties
13. Taking leaves collectively Every employees take leaves collectively

Criteria used in measuring the success of HRM

1. Labour Turnover – The rate at which employees leave the firm

𝑵𝒐. 𝒐𝒇 𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒆𝒔 𝒍𝒆𝒇𝒕 𝒅𝒖𝒓𝒊𝒏𝒈 𝒕𝒉𝒆 𝒚𝒆𝒂𝒓
𝑳𝒂𝒃𝒐𝒖𝒓 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 = 𝒙 𝟏𝟎𝟎
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑵𝒐. 𝒐𝒇 𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒆𝒔 𝒊𝒏 𝒕𝒉𝒂𝒕 𝒑𝒆𝒓𝒊𝒐𝒅

2. Employee Absenteeism – Employees getting absent from work

𝑾𝒐𝒓𝒌 𝒅𝒂𝒚𝒔 𝒍𝒐𝒔𝒕
𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒆 𝑨𝒃𝒔𝒆𝒏𝒕𝒆𝒆𝒊𝒔𝒎 = 𝒙 𝟏𝟎𝟎
𝑵𝒐. 𝒐𝒇 𝒘𝒐𝒓𝒌 𝒅𝒂𝒚𝒔

3. Labour Productivity – Relationship between the employee inputs and the outputs
𝑶𝒖𝒕𝒑𝒖𝒕
𝑳𝒂𝒃𝒐𝒖𝒓 𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒗𝒊𝒕𝒚 =
𝑵𝒐. 𝒐𝒇 𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒆𝒔

4. Human resource accounting

5. Human resource scorecard method
6. Industrial relations

Additional

Gratuity Payment  Lump amount employees are entitled to get from an organization when resigning, termination or retirement
if worked for more than 5 years [Not applicable if dismissed]

𝑮𝒓𝒂𝒕𝒖𝒊𝒕𝒚 𝑷𝒂𝒚𝒎𝒆𝒏𝒕 = 𝑳𝒂𝒔𝒕 𝒎𝒐𝒏𝒕𝒉𝒔 𝒃𝒂𝒔𝒊𝒄 𝒔𝒂𝒍𝒂𝒓𝒚 𝒙 𝑵𝒐 𝒐𝒇 𝒚𝒆𝒂𝒓 𝒘𝒐𝒓𝒌𝒆𝒅 𝒙 𝟎. 𝟓

EPF ETF
 Both employer and employee contributes  Employer contributes
 Foreign and self-employees are not entitled  Foreign and self-employees are entitled
 Managed and administered by CBSL  Managed by ETF board under finance ministry
 Employer 12% & Employee 8%  Employer 3%

Prepared by: Abdul Maajid

 UNIT 17 Information System
Evolution of communication technology Information System

1. Nomadic Era 3. Industrial Era Integration of human activities and resources in collecting,
2. Agricultural Era 4. Information Era converting and distributing information

Data & Information Importance of Information System to Business

Data Information  Make decisions relevant to management

Raw facts and figures All processed data  To achieve organizational goals and objectives
Inputs of the process Output of the process  To face competition successfully
Has no value or meaning Has meaning or value  To improve the productivity or organization
Cannot use for decisions Can use to make decisions
Methods of presenting data Functions of I/S Components of I/S
-Input -Hardware
 Visual Data • Pictorial data -Process -Software
 Numerical data • Audio data -Output -Live ware [User]
-Storing -Firmware
Data processing procedure -Feedback -Data
-Procedures
Criteria to classify information system

1. According to the level of usage [Employees used]

Data processing functions  Strategic IS – Make long term decisions that affect the
entire organization [Chairman, Director board]
 Classifying – Data are separated based on their features Summarized information
 Sorting – Arranging data in a specific order  Management Level IS – Direct & control operational
 Calculating – Data subjected to mathematical or activities [Marketing, Finance, HR manager]
rational processes Administrative & operational information
 Summarizing – Data are presented briefly to get an idea  Knowledge Level IS
Knowledge workers - Create & manage information
Data processing technology
[Lawyers, Accountants, Engineers]
 Manual system – Data arranged entirely by hand Data workers – Copy, distribute & process information
 Semi-manual system – system combining manual [Clerks, computer operators]
effort with mechanical assistance.  Operational Level IS – Supporting day to day
 Electro mechanical system - system that automates operational activities [Work foremen, storekeepers]
Transactional, routine & real time information
processes but still relies on human control or
2. According to the usage
monitoring.
 Transaction Processing system [TPS] – Processing data
 Electronic data processing – Automated data
generated from daily frequent and routine operations
processing
[Ordering material, receive orders, preparing budgets]
Characteristics of good information Used by: Operational level
 Knowledge work system – Generate and manage new
 Completeness • Completeness • Accuracy knowledge and information [CAD, CAM]
 Availability • Timeliness • Relevance Used by: Knowledge level – Knowledge workers
 Office Automation System – Assists in processing,
Classification of Information
distributing & communicating data [email, scheduling,
 Source  Internal, External document preparing]
 Time  Past, Present, Future Used by Knowledge level – Data workers
 Nature  Quantitative, Qualitative  Management Information System [MIS] – Planning &
 Probability  Definite, Probable controlling activities. Information through reports
 Production Function  Financial, Marketing, [Daily sales records, monthly debtor report]
Operations, Administration Used by: Management level
 Management Level  Top level, Middle level, First line  Decision Support System [DSS] – Structured and semi-
 Collectiveness  Aggregate, Disaggregated structured decisional are supported [Structured – EOQ,
Semi Structured – Investment Evaluation]
Used by: Management level

Prepared by: Abdul Maajid

 Executive Support System [ESS] – Supports  Ring Network – Each computer connected to two other
unstructured decisions [Strategic planning, external computers, forming a circular data path
market analysis, long term business forecasting]  Star Network – All computers are connected to a central
Used by: Strategic level computer
 Business Intelligence System [BIS] – Initiated to  Tree Network – Computers connected in a hierarchical
strengthen ESS by collecting info from DSS and provide structure resembling a tree with branches
to ESS for non-structured decisions
Used by: Strategic level Services of Internet
3. According to the function  World Wide Web [WWW] – A system of interlinked
 Marketing  Market research, Advertising, Promotion documents & resources that can be accessed over the
 Financial & Accounting  Cash management, Auditing internet using a web browser
 Operations  Planning & controlling of Purchase, CIM  E-mail – Transferring electronic messages from one
 Human Resource  HR planning, Salary, Training computer to another
 Research & Development  File Transfer Protocol [FTP] – Technique used to
4. Formality  Formal, Informal exchange files mutually among computers connected
5. Openness to environment  Open IS, Close IS with internet
6. Computerization  Manual, Computer support,  Chatting facilities – Text, Voice, Video chatting
computer based  News group – Facility provided for receiving
Information Technology information and exchanging views among groups with
same desires
Acquiring, processing, storing & distributing visual, pictorial,  Tele Computing – Facilitating the use of another
numeric and audio data by using technical resources is IT computer through the internet using a computer
located at a particular place is known as tele computing
Components of Information Technology
Other concepts
 Information Communication Technology [ICT] –
Transmitting information from one party to another  Web conferencing – Real time online meeting over
 Information Management Technology [IMT] – internet using browser or software
Managing the information  Video conferencing – Live meeting with audio & video
 Computer Technology [CT] – Perform calculation and for team or group discussion
processes  Multi media – Combination of texts, image, audio, video
& animation used together
Benefits of Information Technology to a firm
 Social Network – Online platform where people are
 Ability to make more accurate decisions easily connected to share and communicate information
 Minimizing the errors in performance  Virus – Malicious software that can damage computer
 Ability to perform the tasks efficiently and effectively files
 Raising the quality of the products  Artificial Intelligence [AI] – Simulation of human
intelligence processes by machines, especially computer
Computer Networks systems
When several computers are connected to each other with  Big Data – Volume, Variety, Value, Veracity, Velocity
a common purpose is known as a computer network  Chatbots – AI programs designed to simulate
conversation with human users
1. Based on geographical distribution
 Local Area Network [LAN] – Network of computers Threats to computer systems
located in same department or building  Malware • Phishing
 Wide Area Network [WAN] – Network connecting  Ransomware • Data breaches
computers located in several cities of countries
2. Based on the users or objectives Solutions to computer system threats
 Intranet – Network under control of particular
 Antivirus software • Firewalls
individual or institute only for internal parties
 Data backups • Regular software updates
 Extranet – Network in which few authorized external
parties too can involve [Key customer & supplier] Factors needed to connect internet
 Internet – Integrated network of computers, computer
network programs, information and users of them  Device
3. Based on the way they are connected [Topologies]  Telephone connection
 Bus Network – All computers connected to single  Modem
common line for data transmission [If one computer  Internet service provider
fails, others remain unaffected]  Internet software [Browser]

Prepared by: Abdul Maajid

 UNIT 18 Business Plan
Business Idea – entrepreneur’s idea for a product to satisfy Business Description - A section explaining the business, its
product/service, customer benefits, and exclusiveness


a need or want.

Macro Analysis – evaluating business ideas using macro Components of business description
environmental factors to find the most suitable one.
 Goals & objectives • Director board

Micro Analysis – Evaluating shortlisted ideas using internal  Type of organization • Pioneers & promoters
and task factors to select the most rewarding business idea.  Orgn structure • Detail of good & service


Business Plan – Document which describe goals & objectives Importance of Marketing Plan
of business & strategies followed to achieve them
 To communicate market segmentation implemented
Instances where business plan is prepared  To communicate growth of the target market
 Indicates sufficient and growing market for the product
 When opening new branch
 Indicates possibility to face market competition
 Amalgamation
 When modifying a business Components of Marketing Plan
 When purchasing a business
 Marketing expense – Distribution, promotion expense
 When obtaining a bank loan
 Expected good or service to be sold – Product, Product
Importance of preparing business plan mix, Usage of products, Design
 Analysis of industry & market
 To guide the business operation
 Analysis of competitor
 To get financial facilities required by the business
 Strategies of competitors – 4Ps of competitor
 To evaluate business performances
 Strategies of entrepreneur – 4Ps
 To understand the future resources requirement
 Expected sales – Size of target market
Factors to consider in preparing a business plan  Target market
 Sales forecast
 Focus • Financial resources
 Customers • Goals Importance of operating plan

Parties attracted through preparing business plan  Early awareness of future operations
 Reduced waste and delays
 Potential investors • Banks & other financial institute  Improved product quality
 Resource providers • Suppliers, Resource providers  Continuous manufacturing flow
Organizations that assist in preparing business plan Components of operational plan
 Merchant banks • Export Development Board  Raw material requirement • Production plan
 Investment board • Industrial Development Board  Employee Requirement • Layout plan
Key components generally included in a business plan  Manufacturing overheads
 Environmental influence and Disposal of wastage
 Cover page & content • HR plan  Total manufacturing and unit cost
 Executive summary • Finance plan  Equipment & Machines requirements
 Business description • Operation plan
 Marketing plan • Appendix Importance of Human resource plan

Executive summary – Section in which basic facts in a  Forecasting future employee needs and costs
business plan are briefly stated aimed at external parties  Efficient use of human resources
[Creates a fore view about entire business plan, Gives  Lower unplanned recruitment costs
guideline & build confidence about business plan]  Opportunity to hire highly skilled employees

Components of executive summary Details included in a human resource plan

 Vision, Mission, Goal & Objectives  Organization chart

 Name & Address of business & history  Organization structure
 Good or service that is to be manufactured  Details about entrepreneurs/partners
 Main management of business  Managerial skills
 Total investment  Annual expenditure for the human resources

Prepared by: Abdul Maajid

Importance of finance plan

 Determining required business funds

 Making investment decisions
 Anticipating financial shortages and solutions
 Managing excess funds through effective investments

Elements in a financial plan

1. Estimated project cost [Capital requirement]

a. Fixed Costs
b. Pre-operational expenses
c. Total working capital
2. Loan repayment chart
3. Estimated Income Statement
4. Estimated Statement of Financial Position
5. Estimated Cash flows
6. Summary of project
7. Ratio analysis
8. Break-even point

Project Report

Project reports are almost same as the business plan with

minor differences of project report having an end date
whereas business plan doesn’t

Prepared by: Abdul Maajid