Directing means giving instructions, guiding, counselling, motivating and leading the staff in an organisation in doing work to achieve

Organisational goals. Directing is a key managerial function to be performed by the manager along with planning,organising, staffing and controlling. From top executive to supervisor performs the function of directing and it takes place accordingly wherever superior subordinate relations exist. Directing is a continuous process initiated at top level and flows to the bottom through organisational hierarchy. Direction is a complex function as it deals with people whose behaviour is unpredictable. Effective direction is an art which a manager can learn and perfect through practice. However, managers can follow the following principles while directing their subordinates: 1 Harmony o objectives: Individuals join the organisation to satisfy their physiological and psychological needs. They are expected to work for the achievement of organisational objectives. They will perform their tasks better if they feel that it will satisfy their personal goals. Therefore, management should reconcile the personal goals of employees with the organisational goals. 2. Maximum individual contribution. Organisational objectives are achieved at the optimum level when every individual in the organisation makes maximum contribution towards them. Managers should, therefore, try to elicit maximum possible contribution from each subordinate. [Link] of command. A subordinate should get orders and instructions from one superior only. If he is made accountable to two bosses simultaneously, there will be confusion, conflict, disorder and indiscipline in the organisation. Therefore, every subordinate should be asked to report to only one manager. [Link] techniques. The managers should use correct direction techniques to ensure efficiency of direction. The techniques used should be suitable to the superior, the subordinates and

the situation. 5 Direct Supervision. Direction becomes more effective when there is a direct personal contact between a superior and his subordinates. Such direct contact improves the morale and commitment of employees. Therefore, wherever possible direct supervision should be used. _ 6. Strategic use of informal organisation. Management should try to understand and make use of informal groups to strengthen formal or official relationships. This will improve the effectiveness of direction. 7 Managerial communication. A good system of communication between the superior and his subordinates helps to improve mutual understanding. Upward communication enables a manager to understand the subordinates and gives an opportunity to the subordinates to express their feelings. 8 Comprehension. Communication of orders and instructions is not sufficient. Managers should ensure that subordinates correctly understand what they are to do and how and when they are to do. This will avoid unnecessary queries and explanations. 9 Effective leadership. Managers should act as leaders so that they can influence the activities of their subordinates without dissatisfying them. As leaders, they should guide and counsel subordinates in their personal problems too. In this way, they can win the confidence and trust of their subordinates. 10. Principle of follow through. Directing is a continuous process. Therefore, after issuing orders and instructions, a manager should find out whether the subordinates are working properly and what problems they are facing. He should modify, if necessary, his orders in the light of these findings.

Benefits of Management by Objectives 1. Balanced Stress on Objectives Management by Objectives forces managers to set objectives with balanced stress on key result areas. Thus, crisis conditions are avoided to take place in the organisation. 2. Better Managing Management by Objectives forces managers to think about planning for results, rather than merely planning activities or work. Managers are required to ensure that the targets are realistic and needed resources are made available to subordinates to achieve the targets. Clearly set objectives for the subordinates serve as evaluation standards as well as motivators for them. Thus, Management by Objectives results in improvement in managing. 3. Better Organizing The positions in the enterprise can be built around the key result areas. Managers are required clarifying organizational roles and structures. Hence better organizing. 4. Greater Employee Involvement and Commitment If Management by Objectives programme is installed in an organization, people are not just doing work, following instructions and waiting for guidance and decisions from "above" and the superiors do not dictate things. They are now individuals with clearly defined goals, which have been formalized through their own participation in the process. Moreover, they fully well understand the areas of their discretion - their authority. They are also confident of getting needed help from their superiors. There is clarity of roles. These elements together make for a feeling of greater personal commitment on the part of the subordinates. They become more enthusiastic in attaining the targets. There is high motivation; there is high morale too. 5. Orderly Growth of Organization Management by Objectives provides for the maintenance and orderly growth organization by means of predetermined set of objectives for everyone involved. It is also provides in measurement of what is actually achieved. The progress and even the tenure of all responsible managers are dependent upon their producing the results. Management by Objectives emphasizes the ability, skill and achievement of managers rather than their personality. Thus, the orderly growth and development of the organisation is ensured.

6. Development of Effective Controls Management by Objectives not only sharpens the planning, but also develops effective controls. It specifically provides for periodic reviews and annual performance appraisals serving as the needed feedback for further streamlining the objectives or targets. It makes possible for a manager to control his own performance, high degree of selfcontrol resulting in stronger motivation. Control from "above" is substituted by control from "self" Management by Objectives facilitates coordinated effort and teamwork. 7. Generating of an Ideal Atmosphere Douglas McGregor says. "The motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behaviour toward organisation goals are all present in people. Management does not put them there. The essential task of management is to arrange organizational conditions and methods of operations so that people can achieve their own goals best by directing their own efforts towards organizational objectives." This is an ideal atmosphere suitable for better industrial relations and ensured success of the enterprise. 8. Objective Appraisal Management by Objectives provides a scientific basis for evaluating a subordinate's performance, because goals (standards) are jointly set by the superior and the subordinates. Benefits of Managements by Objectives 1. Improvements of managing: All the advantages of managements by objectives can be summarized by saying that is results is greatly improved management. Objectives cannot be established without planning is the only kind that makes sense. Management by objectives forces managers to think about planning for results, rather than merely planning activities or work. 2. Clarification of organization: Another major benefit of managing by objectives is that is forces managers to clarify organizational roles and structures. To the extent possible, positions should be built around the key results expected of the people occupying them. 3. Encouragement of personal commitment: One of the great advantages of management by objectives is that it encourages people to

commit themselves to their goals. No longer are people just doing work, following instruction, and waiting for guidance and decisions; they are now individuals with clearly defined purposes. They have had a part in actually setting their objectives; they have had an opportunity to put their ideas into planning programs. 4. Development of effective controls: In they same way that management by objectives sparks more effective planning, it also aids in developing effectives controls. Control involves measuring results and taking action to correct deviations from plans in order to ensure that goals are reached. Weaknesses: 1) Failure to teach the philosophy of MBO: As management by objectives may seem, managers who would put into practicemust understand and appreciate a good deal about it. They, in turn, must explain to subordinates what it is, how it work, why it is being done, what part it will play inappraising performance, and above all, how participants can benefit. 2) Failure to give guidelines to goal setters: Management by objectives, like any other kind of planning, cannot work if those who are expected to set goals are not given needed guidelines. Managers must know what the corporate goals are and how their own activities fit in with them. 3) Difficulty of setting goals: Truly verifiable goals are difficult to set; particularly they are to have the right degree of stretch and pull, quarter in and quarter out, year in and year out. Goal setting may not be much more difficult than any other kind of effective planning, although it will probably take more study and work to establish verifiable objectives. 4) Emphasis on short run goals: In most MBO programs, managers set goals for the short term, seldom for more

than a year and often for a quarter or less. There is clearly a danger of emphasizing the short run, perhaps at the expense of the longer range. In spite of its many advantages, the Management by Objectives has some weaknesses as follows: 1. Unfavourable Attitude of Managers Some managers have an attitude that the regular attention required of them by Management by Objectives system, draws heavily on their busy time-schedule and is not consistent with their roles. They feel that it is not so effective a way as some other approaches. Some managers view their roles as principally involving policy-making, budget formulation etc. 2. Excessive Paper Work Management by Objectives programme involves a huge amount of newsletters, instruction booklets, training manuals, questionnaires, performance date, review and appraisal reports to be prepared by the superiors and subordinates. Thus, Management by Objectives is said to have created one more "paper mill" in the organisation added to the already existing large amount of paper work. 3. Problems about Goal Setting Management by Objectives requires issuance of proper, exhaustive guidelines to goal-setters. However, managers responsible for practicing Management by Objectives do not themselves understand and appreciate a good deal about it, expecially about the concept of self-control and self-direction which is basic to Management by Objectives. Similarly, there are several other difficulties in goal setting: * Positive and active participation from subordinates is not easily forthcoming. * Truly verifiable goals are not easy to formalize. * Empahasis is put on short-range goals, where as long-range goals are avoided, though long-range goals are vital for growth and development of the organisation. * Goals remain inflexible and rigid. For example, changes desirable in annual budgets are not easily accepted in the middle of the year. * Over-use of quantitative goals jeopardizes the qualitative aspect which may

even more important the quantification is some case. * Goals tend to take precedence or priority over the people who uses them. Any action is acceptable if it serves in the attainment of goals, without caring of its impact on people. Thus, all these difficulties come in the way of making management by objectives operational in an organisation. Further, managing involves more than goal setting. 4. Time-Consuming Nature of Management by Objectives Management by Objectives system is time-consuming especially in the early phases of its introduction when employees are unfamiliar with its process. Since managers also have to learn the necessary skills it is commonly estimated that it takes 2 years to take an management by objectives programme working smoothly. A few management by objectives programme working smoothly. A few management by objectives programmes have failed because managers could not spare adequate time needed for its various phases. 5. Difficulties in Making Organizational Changes Management by Objectives system requires to be integrated with other systems in the organisation, such as budgeting, forecasting, communication, control etc. Sometimes current practices may have to be changed. Thus, greater decentralization may become a necessity. Moreover, some systems may required to be changed, for example, control system, data processing system etc. Managers feel such changes as time-consuming, distributing there "status quo" (or as it is) facilities and difficult in different other ways. 6. Failure to Teach Management by Objectives Philosophy Management by Objectives as a concept is simple but it is deceptively so. It is much easier to explain this principle than to introduce it to an organsation, especially in a very dynamic and changing environment. Moreover, management by objectives is still building toward achieving a fully institutionalized system of management to be used by the entire key manager. Sometimes managers fail to use objectives as a constructive force, even with the full participation and assistance of their superiors. In order to understand the philosophy of management by objectives, managers have to make themselves professionals.

Pricing Strategies

Strategy is concerned with setting prices for the first time, either for a new product or for an existing product in a new market; tactics are about changing prices. Changes can be either self-initiated (to improve profitability or as a means of promotion) or in response to outside change (i.e. in costs or the prices of a competitor). Pricing strategy should be an integral part of the market- positioning decision, which in turn depends, to a great extent, on your overall business development strategy and marketing plans. Companies usually do not set a single price, but rather a pricing structure that reflects variations in geographical demand and costs, market-segment requirements, purchase timing, order levels, delivery frequency, guarantees, service contracts, and other factors As a result of discounts, allowances, and promotional support, a company rarely real-

izes the same profit from each unit of a product that it sells. Here we will examine several price-adaptation strategies: geographical pricing, price discounts and allowances, promotional pricing, discriminatory pricing, and product-mix pricing. Geographical pricing (Cash. Counter trade. Barter) Geographical pricing involves the company in deciding how to price its products to different. Customers in different locations and countries. For example, should the company charge higher prices to distant customers to cover the higher shipping costs or a lower price to win additional business? Another issue is how to get paid. This issue is critical when buyers lack sufficient hard currency to pay for their purchases. Many buyers want to offer other items in payment, a practice known as counter trade. American companies are often forced to engage in counter trade if they want the business. Counter trade may account for 15 to 25 percent of world trade and takes several forms: barter, compensation deals, buyback agreements, and offset. Barter - The direct exchange of goods, with no money and no third party involved Compensation deal - The seller receives some percentage of the payment in cash and the rest in products. A British aircraft manufacturer sold planes to Brazil for 70 percent cash and the rest in coffee. Buyback arrangement - The seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment. A US. Chemical company built a plant for an Indian company and accepted partial payment in cash and the remainder in chemicals manufactured at the plant. Offset - The seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated time period. For example, PepsiCo sells its cola syrup to Russia for rubles and agrees to buy Russian vodka at a certain rate for sale in the United States. Price discounts and allowances The role of discount Offering discounts can be a useful tactic in response to aggressive competition by a competitor. However, discounting can be dangerous unless carefully controlled and conceived as part of your overall marketing strategy. Discounting is common in many industries in some it is so endemic as to render normal price lists practically meaningless. This is not to say that there is anything particularly wrong with

price discounting provided that you are getting something specific that you want in return. The trouble is that, all too often, companies get themselves embroiled in a complex structure of cash, quantity and other discounts, whilst getting absolutely nothing in return except a lower profit margin. Let us look briefly at the main types of discounts common today Cash and settlement discounts These are intended to bring payments in faster. However, since such discounts need to be at least 2,5% per month to have any real effect, this means paying your customer an annual rate of interest of 30% just to get in money which is due to you anyway. What is more, customers frequently take all the discounts on offer and still do not pay promptly, so that you lose both ways. Much better, we believe, is either to eliminate these discounts altogether and introduce an efficient credit control system, or change your terms of business so that you can impose a surcharge on overdue accounts instead. Whilst you may lose some business by doing this, these will probably be the worst payers anyway. If some customers will not pay you for months you are probably better off trying to win others who will. Quantity discounts The trouble with these is that, when formalized on a published price list, they become an established part of your pricing structure and as a result their impact can be lost. If you are not very careful, although they may have helped you win the business to start with, in the long run the only effect they have is to spoil your profit margin. As a general rule, only publish the very minimum of quantity discounts your very largest customers will probably try to negotiate something extra anyway. Also keep quantity discounts small, so that you hold something in reserve for when your customers do something extra for you, such as offering you sole supply, or as part of a special promotion. Promotional discounts These are the best kind of discounts because they enable you to retain the power to be flexible. There may be times when you want to give an extra boost to sales to shift an old product before launching an updated one for example. At times like these special offers or promotional discounts can be useful. But try to think of unusual offers a larger pack size for the same price or a five for the p [rice of four can often stimulate more interest than a straight percentage discount. They also make sure that the end user gets at least some of the benefit, which doesnt always happen with other types of discounts. Two other points to remember are

Make sure you retain control over your special promotions, with a specific objective, a beginning and an end point. Be sure to terminate them once they have outlived their usefulness. Ensure that your offers are linked to sales and not simply to orders. Otherwise you may find that orders to you are up for a while, only to be followed by a barren period whilst your customer supplies the end user from his accumulated stocks. Clearly the role of discounts will vary from one type of business to another and not all of the comments above will apply to you. In part your ability to minimize discounts, or eliminate them altogether, will depend on the non-price benefits of your product. But, whatever business you are in, you should always ask yourself what your discounts are supposed to achieve, whether they are effective, and how long they are expected to last. In general, keep standard discounts low to retain maximum flexibility and ensure that they are consistent with your overall marketing and pricing strategy. Promotional Pricing Companies can use several pricing techniques to stimulate early purchase: Loss-leader pricing - Supermarkets and department stores often drop the price on well Known brands to stimulate additional store traffic. This pays if the revenue on the additional sales compensates for the lower margins on the) boss-leader items. Manufacturers of loss-leader brands typically object because this practice can dilute the brand image and bring complaints from retailers who charge the list price. Manufacturers have tried to restrain intermediaries from loss leader pricing through lobbying for retail-price -maintenance laws, but these laws have been revoked. Special-event pricing - Sellers will establish special prices in certain seasons to draw in more customers Cash rebates - Auto companies and other consumer-goods companies offer cash rebates to Encourage purchase of the manufacturers products within a specified time period. Rebates can help clear inventories without cutting the stated list price. Low-interest financing - Instead of cutting its price, the company can offer customers low- interest financing. Automakers have even announced no-interest financing to attract Customers. Longer payment terms - Sellers, especially mortgage banks and auto companies, stretch loans over longer periods and thus lower the monthly payments. Consumers often worry

less about the cost (i.e., the interest rate) of a loan and more about whether they can afford the monthly payment. Warranties and service contracts - Companies can promote sales by adding a free or low- cost warranty or service contract. Psychological discounting - This strategy involves setting an artificially high price and then offering the product at substantial savings Promotional-pricing strategies are often a zero-sum game. If they work, competitors Copy them and they lose their effectiveness. If they do not work, they waste money that could have been put into other marketing tools, such as building up product quality and service or strengthening product image through advertising. Discriminatory pricing Companies often adjust their basic price to accommodate differences in customers, products, locations, and so on. Price discrimination occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs. In first-degree price discrimination, the seller charges a separate price to each customer depending on the intensity of his or her demand. In second-degree price discrim-ination, the seller charges less to buyers who buy a larger volume. In thirddegree price discrimination, the seller charges different amounts to different classes of buyers, as in the following cases: Customer-segment pricing - Different customer groups are charged different prices for the same product or service. For example, museums often charge a lower admission fee to students and senior citizens. Product-form pricing - Different versions of the product are priced differently but not pro-portionately to their respective costs Image pricing - Some companies price the same product two different levels based on image differences at. A perfume manufacturer can put the perfume in one bottle, give it a name and image, and price it at Rest. 50. It can put the same perfume in another bottle with a different name and image and price it at Rs.200. Channel pricing - Coca-Cola carries a different price depending on whether it is purchased ill a fine restaurant, a fast-food restaurant, or a vending machine.

Location pricing - The same product is priced differently at different locations even though the cost of offering at each location is the same. A theater varies its seat prices according to audience preferences for different locations. Time pricing - Prices are varied by season, day, or hour. Public utilities vary energy rates to commercial users by time of day and weekend versus weekday. Restaurants charge less to early bird customers. Hotels charge less on weekends. Hotels and airlines use yield pricing, by which they offer lower rates on unsold inventory just before it expires. Coca-Cola considered raising its vending machine soda prices on hot days using wireless technology, and lowering the price on cold days. However, customers so dis-liked the idea that Coke abandoned it. For price discrimination to work, certain conditions must exist. First, the market must be segment able and the segments must show different intensities of demand. Second, members in the lower-price segment. Must not be able to resell the product to the higher-price segment. Third, competitors must not be able to undersell the firm in the higher-price segment. Fourth, the cost of segmenting and policing the market must not exceed the extra revenue derived from price discrimination. Fifth, the practice must not breed customer resentment and ill will. Sixth, the particular form of price discrimination must not be illegal. As a result of deregulation in several industries, competitors have increased their use of discriminatory pricing. Airlines charge different fares to passengers on the same flight, depending on the seating class; the time of day (morning or night coach); the day of the week (workday or weekend); the season; the persons company, past business, Of status (youth, military, senior citizen); and so on. Airlines are using yield pricing to cap-ture as much revenue as possible. Computer technology is making it easier for sellers to practice discriminatory pric-ing. For instance, they can use software that monitors customers movements over the Web and allows them to customize offers and prices. New software applications, how-ever, are also allowing buyers to discrimi-nate between sellers by comparing prices instantaneously. Product-mix pricing Price-setting logic must be modified when, the product is part of a product mix. In this case, the firm searches for a set of prices that maximizes profits on the total mix. Pricing

is difficult because the various products have demand and cost interrelationships and are subject to different degrees of competition. We can distinguish six situations involving product-mix pricing: product-line pricing, optional-feature pricing, captiveproduct pricing, two-part pricing, by-product pricing, and product-bundling pricing. Product line Pricing - Companies normally develop product lines rather than sin-gle products and introduce price steps. In many lines of trade, sellers use well-established price points for the products in their line. A mens clothing store might carry mens suits at three price levels: Rs800, Rs.1500, and Rs.4500. Customers will associate low-, average-, and high-quality suits with the three price points. The sellers task is to establish perceived-quality differences that justify the price differences. Optional-feature pricing Many companies offer optional products, features, and services along with their main product. The automobile buyer can order electric window controls, defoggers, light dimmers, and an extended warranty. Pricing is a sticky problem; automobiles companies must decide which items to include in the price and which to offer as options. Restaurants face a similar pricing problem. Customers can often order liquor in addition to the meal. Many restaurants price their liquor high and their food low. The food revenue covers costs, and the liquor produces the profit. This explains why servers often press hard to get customers to order drinks. Other restaurants price their liquor low and food high to draw in a drinking crowd. Captive-product pricing Some products requires the use of ancillary, or captive, products. Manufacturers of razors and cameras often price them low and set high markups on razor blades and film, respectively. A cellular service operator may give a cellular phone free if the person commits to buying two years of phone service. Two-part pricing Service firms often engage in two-part pricing, consisting of a fixed fee plus a variable usage fee. Telephone users pay a minimum monthly fee plus charges for calls beyond the minimum number. Amusement parks charge an admission fee plus fees for rides over a certain minimum. The service firm faces a problem sin1ilar to captive -product pricing-namely, how much to charge for the basic service and how much for the variable usage. The fixed fee should be low enough to induce purchase of the ser-vice; the profit can then be made on the usage fees. By-product pricing The production of certain goods- meats, petroleum prod-ucts, and other chemicals-often results in by-products. If the by-products have value to a

customer group, they should be priced on their value. Any income earned on the byproducts will make it easier for the company to charge a lower price on its main product if competition forces it to do so. Product-Bundling pricing Sellers often bundle products and features. Pure bundling occurs when a firm only offers its products as a bundle. In mixed bundling, the seller offers goods both individually and in bundles. When offering a mixed bundle, the seller normally charges less for the bundle than if the items were purchased separately. An auto manufacturer might offer an option package at less than the cost of buying all the options separately. A theater company will price a season subscription at less than the cost of buying all the performances separately. Because customers may not have planned to buy all the components, the savings on the price bundle must be substantial enough to induce them to buy the bundle.

Materials Management has several core objectives and many secondary objectives. The core objectives of material management are: Proper, cost effective material procurement. Proper storage of materials so as to minimize wastages and material holdups. Making available the material TIMELY.A good material management system will keep up to data records of all the information generated in it, preferably using a computer-based system. In addition to these primary objectives a materials management system indirectly fulfills many secondary objectives also. These secondary objectives are normally related to the functions of a material management system. Some of these secondary objectives are: Identifying new or better sources of supply Development and sustenance of relationships with the vendors Creating a standardized quality of the products Performing the value analysis of inventory. This can be related to the cost of materials. Creating a smooth flow of materials and information among the various sections of materials management system. The material management system works under the broad basic objectives of an organization that is maximum profit with sustained growth

and research, satisfied customers and staff of the organization. The material management supports this objective by providing support through: Continuity of supply by maintaining a uniform flow of materials, Reducing the costs of materials purchased and handling by using scientific techniques and electronic tools. The use of scientific tools and techniques for materials and information management, Minimizing holdups of working capital and performing effective inventory control, Releasing working capital by ensuring effective control over inventories, Providing high quality at the lowest price, and Development of better relationships with customers and suppliers.