UNIT 6

PRICE
In modern economies, prices are generally expressed in units of some form of
currency. (For commodities, they are expressed as currency per unit weight of the
commodity, e.g. euros per kilogram.) Although prices could be quoted as quantities of other
goods or services this sort of barter exchange is rarely seen. Prices are sometimes quoted in
terms of vouchers such as trading stamps and air miles. In some circumstances, cigarettes
have been used as currency, for example in prisons, in times of hyperinflation, and in some
places during World War 2. In a black market economy, barter is also relatively common.
In many financial transactions, it is customary to quote prices in other ways. The most
obvious example is in pricing a loan, when the cost will be expressed as the percentage rate
of interest. The total amount of interest payable depends upon credit risk, the loan amount
and the period of the loan. Other examples can be found in pricing financial derivatives and
other financial assets. For instance the price of inflation-linked government securities in
several countries is quoted as the actual price divided by a factor representing inflation since
the security was issued.
Price sometimes refers to the quantity of payment requested by a seller of goods or
services, rather than the eventual payment amount. This requested amount is often called the
asking price or selling price, while the actual payment may be called the transaction price
or traded price. Likewise, the bid price or buying price is the quantity of payment offered
by a buyer of goods or services, although this meaning is more common in asset or financial
markets than in consumer markets. Economists sometimes define price more generally as the
ratio of the quantities of goods that are exchanged for each other.
Economic theory asserts that in a free market economy the market price reflects
interaction between supply and demand: the price is set so as to equate the quantity being
supplied and that being demanded. In turn these quantities are determined by the marginal
utility of the asset to different buyers and to different sellers. In reality, the price may be
distorted by other factors, such as tax and other government regulations.
When a commodity is for sale at multiple locations, the law of one price is generally
believed to hold. This essentially states that the cost difference between the locations cannot
be greater than that representing shipping, taxes, other distribution costs etc. In the case of the
majority of consumer goods and services, distribution costs are quite a high proportion of the
overall price, so the law may not be very useful. In practice it may well make economic sense
to offer a product or service for sale at a higher price in a wealthy area than in a deprived area
as the marginal utility of the asset for purchasers will be higher in the former.
The paradox of value was observed and debated by classical economists. Adam Smith
described what is now called the diamond water paradox: diamonds command a higher
price than water, yet water is essential for life and diamonds are merely ornamentation. Use
value was supposed to give some measure of usefulness, later refined as marginal benefit
(which is marginal utility counted in common units of value) while exchange value was the
measure of how much one good was in terms of another, namely what is now called relative
price (retrieved from http://en.wikipedia.org/wiki/Price).

UNIT 7
PRODUCT (BUSINESS)
In marketing, a product is anything that can be offered to a market that might satisfy a
want or need. In retailing, products are called merchandise. In manufacturing, products are
bought as raw materials and sold as finished goods. Commodities are usually raw materials
such as metals and agricultural products, but a commodity can also be anything widely
available in the open market. In project management, products are the formal definition of the
project deliverables that make up or contribute to delivering the objectives of the project. In
insurance, the policies are considered products offered for sale by the insurance company that
created the contract.
In economics and commerce, products belong to a broader category of goods. The
economic meaning of product was first used by political economist Adam Smith.
A product can be classified as tangible or intangible. A tangible product is a physical
object that can be perceived by touch such as a building, vehicle, gadget, or clothing. An
intangible product is a product that can only be perceived indirectly such as an insurance
policy.
Intangible Data Products can further be classified into Virtual Digital Goods ("VDG").
They are virtually located on a computer OS and accessible to users as conventional file
types, such as JPG and MP3 files, without requiring further application process or
transformational work by programmers, and as such the use may be subject to licence and/or
rights of digital transfer, and Real Digital Goods ("RDG") that may exist within the
presentational elements of a data program independent of a conventional file type, commonly
viewed as 3-D objects or a presentational item subject to user control or virtual transfer
within the same visual media program platform. Open Source Code, GNU Linux, or even
Android, may manipulate and/or convert base Virtual Digital Goods ("VDG") into processoriented Real Digital Goods ("RDG"), as part of an application process or manufactured
service that may be viewed on Personal Data Assistant ("PDA") or other hand-held tangible
devices or computer OS.
In its online product catalog, retailer Sears, Roebuck and Company divides its products
into "departments", then presents products to potential shoppers according to (1) function or
(2) brand. Each product has a Sears item-number and a manufacturer's model-number. Sears
uses the departments and product groupings with the intention of helping customers browse
products by function or brand within a traditional Raj department-store structure.
A product line is "a group of products that are closely related, either because they
function in a similar manner, are sold to the same customer groups, are marketed through the
same types of outlets, or fall within given price ranges." Many businesses offer a range of
product lines which may be unique to a single organization or may be common across the
business's industry. In 2002 the US Census compiled revenue figures for the finance and
insurance industry by various product lines such as "accident, health and medical insurance
premiums" and "income from secured consumer loans". Within the insurance industry,
product lines are indicated by the type of risk coverage, such as auto insurance, commercial
insurance and life insurance.
Various classification systems for products have been developed for economic
statistical purposes. The NAFTA signatories are working on a system that classifies products
called NAPCS as a companion to North American Industry Classification System (NAICS).
The European Union uses a "Classification of Products by Activity" among other product

classifications. The United Nations also classifies products for international economic
activity reporting.
A manufacturer usually provides an identifier for each particular type of product they make,
known as a model, model variant, or model number. For example, Dyson Ltd, a
manufacturer of appliances (mainly vacuum cleaners), requires customers to identify their
model in the support section of the website. Brand and model can be used together to identify
products in the market. The model number is not necessarily the same as the manufacturer
part number (MPN) (retrieved from http://en.wikipedia.org/wiki/Product_business).

UNIT 8
SALES
A sale is the act of selling a product or service in return for money or other compensation.
Signaling completion of the prospective stage, it is the beginning of an engagement between
customer and vendor or the extension of that engagement.
Sales agents
Agents in the sales process can represent either of two parties; for example:
1. Sales broker, Seller agency, seller agent, seller representative: This is a traditional role
where the salesman represents a person or company on the selling end of a deal.
2. Buyers broker or Buyer brokerage: This is where the salesman represents the
consumer making the purchase. This is most often applied in large transactions.
3. Disclosed dual agent: This is where the salesman represents both parties in the sale
and acts as a mediator for the transaction. The role of the salesman here is to oversee
that both parties receive an honest and fair deal, and is responsible to both.
4. Transaction broker: This is where the salesperson represents neither party but handles
the transaction only. The seller owes no responsibility to either party getting a fair or
honest deal, just that all of the papers are handled properly.
5. Sales outsourcing involves direct branded representation where the sales
representatives are recruited, hired, and managed by an external entity but hold
quotas, represent themselves as the brand of the client, and report all activities
(through their own sales management channels) back to the client. It is akin to a
virtual extension of a sales force (see sales outsourcing).
6. Sales managers aim to implement various sales strategies and management techniques
in order to facilitate improved profits and increased sales volume. They are also
responsible for coordinating the sales and marketing department as well as oversight
concerning the fair and honest execution of the sales process by their agents.
7. Salesperson: The primary function of professional sales is to generate and close leads,
educate prospects, fill needs and satisfy wants of consumers appropriately, and
therefore turn prospective customers into actual ones. Questioning to understand a
customer's goal and requirements relevant to the product and the creation of a
valuable solution by communicating the necessary information that encourages a
buyer to achieve their goal at an economic cost comprise the functions of the
salesperson or of the sales engine (for example, the Internet, a vending machine, etc.).

Inside sales vs. Outside sales

Since the advent of the telephone, a distinction has been made between "inside sales"
and "outside sales" although it is generally agreed that those terms have no hard-and-fast
definition. In the United States, the Fair Labor Standards Act defines outside sales
representatives as "employees [who] sell their employer's products, services, or facilities to
customers away from their employer's place(s) of business, in general, either at the customer's
place of business or by selling door-to-door at the customer's home" while defining those
who work "from the employer's location" as inside sales. Inside sales generally involves
attempting to close business primarily over the phone via telemarketing, while outside sales
(or "field" sales) will usually involve initial phone work to book sales calls at the potential
buyer's location to attempt to close the deal in person. Some companies have an inside sales
department that works with outside representatives and book their appointments for them.
Inside sales sometimes refers to upselling to existing customers. Nowadays inside sales has
become more and more popular in the telemarketing business, and so, there are several tools
developed to serve this niche market. These tools help companies to manage their inside sales
more efficiently. Software vendors for inside sales include Salesforce.com, InsideSales.com
and Lead Desk.
The relationships between sales and marketing
Marketing and sales differ greatly, but have the same goal. Selling is the final stage in
Marketing, which also includes Pricing, Promotion, Positioning and Product (the 4Ps). A
marketing department in an organization has the goals of increasing the desirability and value
to the customer and increasing the number and engagement of interactions between potential
customers and the organization. Achieving this goal may involve the sales team using
promotional techniques such as advertising, sales promotion, publicity, and public relations,
creating new sales channels, or creating new products (new product development), among
other things. It can also include bringing the potential customer to visit the organization's
website(s) for more information, or to contact the organization for more information, or to
interact with the organization via social media such as Twitter, Facebook and blogs (retrieved
from en.wikipedia.org/wiki/Sales).

UNIT 9
MANAGEMENT
Management in all business and organizational activities is the act of coordinating
the efforts of people to accomplish desired goals and objectives using available resources
efficiently and effectively. Management comprises planning, organizing, staffing, leading or
directing, and controlling an organization (a group of one or more people or entities) or effort
for the purpose of accomplishing a goal. Resourcing encompasses the deployment and
manipulation of human resources, financial resources, technological resources, and natural
resources. Since organizations can be viewed as systems, management can also be defined as
human action, including design, to facilitate the production of useful outcomes from a
system. This view opens the opportunity to 'manage' oneself, a prerequisite to attempting to
manage others.

Definitions
Views on the definition and scope of management include:
Management defined as the organization and coordination of the activities of an
enterprise in accordance with certain policies and in achievement of clearly defined
objectives
Management included as one of the factors of production - along with machines,
materials and money
Peter Drucker (19092005) sees the basic task of a management as twofold:
marketing and innovation. Nevertheless, innovation is also linked to marketing
(product innovation is a central strategic marketing issue). Peter Drucker identifies
marketing as a key essence for business success, but management and marketing are
generally understood as two different branches of business administration knowledge.
Directors and managers should have the authority and responsibility to make
decisions to direct an enterprise when given the authority.
As a discipline, management comprises the interlocking functions of formulating
corporate policy and organizing, planning, controlling, and directing a firm's
resources to achieve a policy's objectives
The size of management can range from one person in a small firm to hundreds or
thousands of managers in multinational companies.
In large firms, the board of directors formulates the policy that the chief executive
officer implements.
Basic functions
Management operates through various functions, often classified as planning, organizing,
staffing, leading/directing, controlling/monitoring and motivation.
Planning: Deciding what needs to happen in the future (today, next week, next
month, next year, over the next five years, etc.) and generating plans for action.
Organizing: (Implementation) pattern of relationships among workers, making
optimum use of the resources required to enable the successful carrying out of plans.
Staffing: Job analysis, recruitment and hiring for appropriate jobs.
Leading/directing: Determining what must be done in a situation and getting people
to do it.
Controlling/monitoring: Checking progress against plans.
Motivation: Motivation is also a kind of basic function of management, because
without motivation, employees cannot work effectively. If motivation does not take
place in an organization, then employees may not contribute to the other functions
(which are usually set by top-level management).
Levels of management
Most organizations have three management levels: first-level, middle-level, and top-level
managers. These managers are classified in a hierarchy of authority, and perform different
tasks. In many organizations, the number of managers in every level resembles a pyramid.
Each level is explained below in specifications of their different responsibilities and likely
job (retrieved from titles wikipedia.org/wiki/Management).

UNIT 10

DEBT
Debt is an obligation owed by one party (the debtor) to a second party, the creditor;
usually this refers to assets granted by the creditor to the debtor, but the term can also be used
metaphorically to cover moral obligations and other interactions not based on economic
value.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. Debt is
usually granted with expected repayment; in modern society, in most cases, this includes
repayment of the original sum plus interest.
In finance, debt is a means of using anticipated future purchasing power in the present
before it has actually been earned. Some companies and corporations use debt as a part of
their overall corporate finance strategy.
Payment
Before a debt can be made, both the debtor and the creditor must agree on the manner
in which the debt will be repaid, known as the standard of deferred payment. This payment is
usually denominated as a sum of money in units of currency, but can sometimes be
denominated in terms of goods or services. Payment can be made in increments over a period
of time, or all at once at the end of the loan agreement.
Types of debt
A company uses various kinds of debt to finance its operations. The various types of
debt can generally be categorized into: 1) secured and unsecured debt, 2) private and public
debt, 3) syndicated and bilateral debt, and 4) other types of debt that display one or more of
the characteristics noted above.
A debt obligation is considered secured, if creditors have recourse to the assets of the
company on a proprietary basis or otherwise ahead of general claims against the company.
Unsecured debt comprises financial obligations, where creditors do not have recourse to the
assets of the borrower to satisfy their claims.
Private debt comprises bank-loan type obligations, whether senior or mezzanine.
Public debt is a general definition covering all financial instruments that are freely tradeable
on a public exchange or over the counter, with few if any restrictions.
A basic loan or "term loan" is the simplest form of debt. It consists of an agreement to
lend a fixed amount of money, called the principal sum or principal, for a fixed period of
time, with this amount to be repaid by a certain date. In commercial loans interest, calculated
as a percentage of the principal sum per year, will also have to be paid by that date, or may be
paid periodically in the interval, such as annually or monthly. Such loans are also colloquially
called bullet loans, particularly if there is only a single payment at the end the "bullet"
without a "stream" of interest payments during the life of the loan. There are many
conventions on how interest is calculated see day count convention for some while a
standard convention is the annual percentage rate (APR), widely used and required by
regulation in the United States and United Kingdom, though there are different forms of
APR.
In some loans, the amount actually loaned to the debtor is less than the principal sum
to be repaid; the additional principal has the same economic effect as a higher interest rate,
and is sometimes referred to as a banker's dozen, a play on "baker's dozen" owe twelve (a
dozen), receive a loan of eleven (a banker's dozen). Note that the effective interest rate is not
equal to the discount: if one borrows $10 and must repay $11, then this is ($11$10)/$10 =

10% interest; however, if one borrows $9 and must repay $10, then this is ($10$9)/$9 = 11
1/9% interest.
Rather than the entire principal amount of the loan being due at the end of the loan,
the principal may be slowly repaid or "amortized" over the course of the loan see
amortizing loan. This is particularly common in mortgages and in the minimum payment on
credit cards.
A syndicated loan is a loan that is granted to companies that wish to borrow more
money than any single lender is prepared to risk in a single loan, usually many millions of
dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the
principal sum. Loan syndication is a risk management tool that allows the lead banks
underwriting the debt to reduce their risk and free up lending capacity.
A bond is a debt security issued by certain institutions such as companies and
governments. A bond entitles the holder to repayment of the principal sum, plus interest.
Bonds are issued to investors in a marketplace when an institution wishes to borrow money.
Bonds have a fixed lifetime, usually a number of years; with long-term bonds, lasting over 30
years, being less common. At the end of the bond's life the money should be repaid in full.
Interest may be added to the end payment, or can be paid in regular installments (known as
coupons) during the life of the bond. Bonds may be traded in the bond markets, and are
widely used as relatively safe investments in comparison to equity (retrieved from
en.wikipedia.org/wiki/Debt).

UNIT 11
GOOD
In economics, a good is a material that satisfies human wants and provides utility, for
example, to a consumer making a purchase. A common distinction is made between 'goods'
that are tangible property (also called goods) and services, which are non-physical.
Commodities may be used as a synonym for economic goods but often refer to marketable
raw materials and primary products.
Although in economic theory, all goods are considered tangible, in reality certain
classes of goods, such as information, only are in intangible forms. For example, among other
goods an apple is a tangible object while news belongs to an intangible class of goods and
can be perceived only by means of an instrument such as print, broadcast or computer.
Utility characteristics of goods
Goods may increase or decrease their utility directly or indirectly and may be
described as having marginal utility. Some things are useful, but not scarce enough to have
monetary value, such as the Earth's atmosphere, these are referred to as 'free goods'.
In economics, a bad is the opposite of a good. Ultimately, whether an object is a good
or a bad depends on each individual consumer and therefore, it is important to realize that not
all goods are good all the time and not all goods are goods to all people.
Types of goods

Goods' diversity allows of their classification into different categories based on

distinctive characteristics, such as tangibility and (ordinal) relative elasticity. A tangible good
like an apple differs from an intangible good like information due to the impossibility of a
person to physically hold the latter whereas the former occupies physical space. Intangible
goods differ from services in that final (intangible) goods are transferable and can be traded,
whereas a service cannot.
Price elasticity also differentiates types of goods. An elastic good is one for which
there is a relatively large change in quantity due to a relatively small change in price, and
therefore is likely to be part of a family of substitute goods; for example, as pen prices rise,
consumers might buy more pencils instead. An inelastic good is one for which there are few
or no substitutes, such as tickets to major sporting events, original works by famous artists,
and prescription medicine such as insulin. Complementary goods are generally more inelastic
than goods in a family of substitutes. For example, if a rise in the price of beef results in a
decrease in the quantity of beef demanded, it is likely that the quantity of hamburger buns
demanded will also drop, despite no change in buns' prices. This is because hamburger buns
and beef (in Western culture) are complementary goods. It is important to note that goods
considered complements or substitutes are relative associations and should not be understood
in a vacuum. The degree to which a good is a substitute or a complement depends on its
relationship to other goods, rather than an intrinsic characteristic, and can be measured as
cross elasticity of demand by employing statistical techniques such as covariance and
correlation.

Trading of goods
Goods are capable of being physically delivered to a consumer. Goods that are economic
intangibles can only be stored, delivered, and consumed by means of media. Goods, both
tangibles and intangibles, may involve the transfer of product ownership to the consumer.
Services do not normally involve transfer of ownership of the service itself, but may involve
transfer of ownership of goods developed by a service provider in the course of the service.
For example, distributing electricity among consumers is a service provided by an electric
utility company. This service can only be experienced through the consumption of electrical
energy, which is available in a variety of voltages and, in this case, is the economic goods
produced by the electric utility company. While the service (namely, distribution of electrical
energy) is a process that remains in its entirety in the ownership of the electric service
provider, the goods (namely, electric energy) is the object of ownership transfer. The
consumer becomes electric energy owner by purchase and may use it for any lawful purposes
just like any other goods (retrieved from en.wikipedia.org/wiki/Good_(economics).

UNIT 12
CREDIT

Credit (from Latin credo translation: "I believe" ) is the trust which allows one party
to provide resources to another party where that second party does not reimburse the first
party immediately (thereby generating a debt), but instead arranges either to repay or return
those resources (or other materials of equal value) at a later date. The resources provided may
be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer
credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor,
also known as a lender, to a debtor, also known as a borrower.
Credit does not necessarily require money. The credit concept can be applied in barter
economies as well, based on the direct exchange of goods and services. However, in modern
societies credit is usually denominated by a unit of account. Unlike money, credit itself
cannot act as a unit of account.
Movements of financial capital are normally dependent on either credit or equity
transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which
takes responsibility for the funds. Credit is also traded in financial markets. The purest form
is the credit default swap market, which is essentially a traded market in credit insurance. A
credit default swap represents the price at which two parties exchange this risk the
protection "seller" takes the risk of default of the credit in return for a payment, commonly
denoted in basis points (one basis point is 1/100 of a percent) of the notional amount to be
referenced, while the protection "buyer" pays this premium and in the case of default of the
underlying (a loan, bond or other receivable), delivers this receivable to the protection seller
and receives from the seller the par amount (that is, is made whole).
Trade credit
The word credit is used in commercial trade in the term "trade credit" to refer to the
approval for delayed payments for purchased goods. Credit is sometimes not granted to a
person who has financial instability or difficulty. Companies frequently offer credit to their
customers as part of the terms of a purchase agreement. Organizations that offer credit to
their customers frequently employ a credit manager.
Consumer credit
Consumer debt can be defined as money, goods or services provided to an individual
in lieu of payment. Common forms of consumer credit include credit cards, store cards,
motor (auto) finance, personal loans (installment loans), consumer lines of credit, retail loans
(retail installment loans) and mortgages. This is a broad definition of consumer credit and
corresponds with the Bank of England's definition of "Lending to individuals". Given the size
and nature of the mortgage market, many observers classify mortgage lending as a separate
category of personal borrowing, and consequently residential mortgages are excluded from
some definitions of consumer credit - such as the one adopted by the Federal Reserve in the
US.
The cost of credit is the additional amount, over and above the amount borrowed, that
the borrower has to pay. It includes interest, arrangement fees and any other charges. Some
costs are mandatory, required by the lender as an integral part of the credit agreement. Other
costs, such as those for credit insurance, may be optional. The borrower chooses whether or
not they are included as part of the agreement.
Interest and other charges are presented in a variety of different ways, but under many
legislative regimes lenders are required to quote all mandatory charges in the form of an
annual percentage rate (APR). The goal of the APR calculation is to promote truth in
lending, to give potential borrowers a clear measure of the true cost of borrowing and to
allow a comparison to be made between competing products. The APR is derived from the

pattern of advances and repayments made during the agreement. Optional charges are not
included in the APR calculation. So if there is a tick box on an application form asking if the
consumer would like to take out payment insurance, then insurance costs will not be included
in the APR calculation (retrieved from en.wikipedia.org/wiki/Credit_(finance).