Course pack

June 2015

S.No

Content

1. Case Learning .... ...........................

Page Nos
3 -22

2. Business Communication .

23-30

3. Basics of Excel ...................

31-37

4. Bridge Course Accounting .

38-64

5. Bridge Course Statistics,.

65-81

6. Organisation Structure..................................................................

82-99

Learning from Case Studies

1. Objectives of the module

To understand the importance of case method in management curricula

To understand the need of self-learning and self-discovery
To know how to be an active participant in the case class
To sharpen skills of problem identification, decision making and analytical skills.

2. Session Plan
Sl.no Content of the session
1
Introduction to Case Method:
Meaning of a Case Study; Brief
Historical background of the
pedagogic tool; Benefits; How to
participate in discussions and
learn; How to prepare for a case
class; Expectations of the case
facilitator; How is assessment
done.
2
Participating in Case
Discussion: Demonstration of
problem identification, solution
analysis and decision making
through a hands-on approach
using caselets.
3
Case Discussions:Discussion of
full-length case studies. This can
be for duration of one or two
hours depending on the case
study.

Pedagogy
Lecture and
Discussion

Reference
Handout 1: How
to Analyze a Case
Handout 2: How
to Analyze a Case
Handout 3:
Writing a case
study analysis

Discussion

Caselet 1: Omega
School of
Management
Caselet 2:
Distribution of
Herbal Soap
Case Study:
Naming a
Pharmaceutical
Brand: A Product
Managers
Dilemma

Discussion

Assignment

3. Caselets & Case Study

Readings for Sessions:
The caselets, Omega School of Management and Distribution of Herbal Soap are to be
compulsorily read for Session 2.
The case study, Naming a Pharmaceutical Brand is to be read for Session 3.

4. Handouts
How to analyse case studies

5. Learning outcome of the module

The participants are expected to learn
The meaning and significance of the case method in MBA curriculum
The preparation required for participating in a case discussion
Understand how assessment is done in case discussions and analysis
Participate in discussions and learn to identify problems, analyse of solutions and
draw conclusions

Omega School of Management

OSM was an upcoming school in Mysore. Dr. Dev Patel was its Director. The
management comprised of prominent businessmen from the city.
Dr. Dev was a man of principles. He was a doctorate from Univ. of Michigan. He had
a rich experience of industry and academia. He was very committed to serve the
student community.
The MBA course offered was approved by AICTE. On a recent inspection by AICTE,
the intake was increased from 30 to 50. However, strong objections were made about
the inadequate library, lack of computer lab and poor salaries for the staff.
On May 30th Dr. Dev asked his secretary to call his professor-friend at the Business
Academy in Bangalore. He explained his friend the problem and asked for
suggestions.
So what was Dr. Devs problem?
The sanctioned 50 seats are filled up by MAT and recommendation from the
management. About 70% were filled up based on MAT score. Only one seat was to
be filled from the remaining seats in the management quota. Even for the management
quota, Dr. Dev was particular about selecting the right candidate with the right
attitude and high scores in the degree course.
There were three candidates vying for the seat. Rishi was from a prominent college in
Bangalore. He had 95% score. During the interview with Dr. Dev, Rishi made it clear
that his father owns a huge conglomerate and he does not need an MBA degree. He
gave an impression that the two years would be more a mandate from his father rather
than his own preference. Given a choice he would try modelling for two years and not
experience the rigour of the MBA programme.
Smitha scored 75% in her degree exam. But she was the daughter of the local MLA
whose cousin was the member of the management. Smithas uncle seemed to
dominate the management as his word ended up in concrete decisions. Otherwise too
he managed to convince other members and gained support in the meetings
The third candidate, Sanil was from a poor family. However he had excellent track
record of academic and other activities. He had a score of 90%. He appeared to be
very confident. He identified his strengths and showed keen enthusiasm to work on
his weaknesses. He had made up his mind about the field that he would enter after the
MBA programme.
The professor patiently listened and replied he would have an answer in a days time.

Distribution of a Herbal Soap

Mr. Rajan, General Manager of Modern Cosmetic Ltd., in Satara is concerned about
the problem of designing a distribution system for the companys new product
Herbal soap. He has four alternative distribution plans and wants to arrive at the
decision after careful weighing of pros and cons or economics & effectiveness of each.
The major objective is to make the product easily available to the customer.
Competition in the product category has increased immensely.

The alternative plans are:

1. direct distribution to the retailers

2. direct distribution to the customers
3. distribution through sole selling agent
4. direct distribution to the wholeseller

Mr. Rajan is wondering which one of them he should choose.

How To Analyze A Case

In a case study there is no right or wrong answer. The following suggestions will
help you to analyze case studies more effectively:
Read the case: The first step to a successful case solution is to read the case,
carefully and with an eye for detail more than once. Dont rush through it.
Look for the smallest of details. That is the only correct way to read intelligent
conclusions. Look for case attachments and accompanying tables and numbers
if available. Do not reach conclusions until all facts are considered. Your best
defense against surprise is to read the case thoroughly.
Take notes: Unlike textbooks which are written in chapter, essay or reprint form,
case studies might be arranged in chronological order. While textbooks may
proceed in logical fashion, this is not necessarily so in case studies. At times,
they may seem chaotic with many events happening at once order and
discipline may be missing and key issues are not always evident. Case studies
may also contain substantial amounts of information in tubular form. To know
what such data means you will have to read the tables and apply what you have
learned. Your notes should focus on the details you will need to identify the
business problems involved in the case, the issues critical to solving those
problems, as well as resources available to the managers in the case. Those
notes will be helpful in producing a case solution.
Look for (business) problem(s): Do not just rephrase the obvious problems
stated in the case, but try to identify the real problems faced by the organization.
In each case, at least one fundamental problem is present.
Specify an objective for the managers involved: Once you have identified
one or more business problems present in the case, think about the outcome(s)
you would most hope to see for the company and people you have read about. If
you were asked to consult on this companys problems and that is the role
most public relations students are playing as they read a case study what
results would you hope for? Dont limit your thinking to what the company should
do, but what the most successful outcome would look like. Be specific about how
the company will know if it succeeded. Quantify the desired results whenever
you can.
Identify alternatives: After identifying the problem, start thinking about the
various alternatives available to the organization. There are usually more than
two alternatives. Once you identify the alternatives, list the pros and cons of each
alternative. This will help you revise the alternatives later in the decision-making
process.

How To Analyze A Case Page 2

Define the crucial or critical Issues: The crucial issues are those conditions,
which affect the feasibility of the various alternatives. They serve as organizing
points around which facts can be grouped and deductions drawn.
Identify and rank the critical issues: These issues are at the heart of the case.
If you miss a critical issue, you may not be able to solve the case to the
satisfaction of your professor (or the client).
Consider relevant information and underlying assumptions: Accept the fact
that much of the information contained in the case will not be useful to your
analysis. You should also accept the fact that you will never know all that you
would like in order to produce a solution. Life is like that. So are case studies.
List possible solutions: Every problem lends itself to more than one solution.
Keep looking for good ideas even when you have already thought of one that
will solve the problem. Listing possible solutions is a form of brainstorming that
will later permit you to assign values or weights to those ideas: is one solution
less expensive than another? Will one be more effective than another? Will one
idea work more quickly than another? Will one of these ideas have a more
lasting effect?
Select a (your recommended) solution: (Decide how to implement the best
solution; explain how to communicate the solution) Indicate which of the
alternative paths of actions the organization should follow. Your conclusion
should weigh the importance of each alternative. You need to make sure the
recommendations flow from the analysis and involve managerial decisionmaking. Further, your best alternative should include a strategic implementation.
Also make sure that you state any assumptions you make.
Write it up: Provide your professor (client) with your best thinking and be as
detailed as you think you can within the page limits you have been given.

How to Analyze a Case

An Introduction to the Case Method
For many of you, this will be the first course using cases that you have ever taken. The fact that
this form of learning is new to you will naturally cause you some concern, and early on, some
difficulty. Your textbook has twelve chapters that present aspects of the strategic marketing
planning process, and a large number of stories about companies called cases. These cases give
you the chance to look at the present situation facing an organization, and after a systematic
analysis, make recommendations that will produce a change in the results or outcomes. While
you cannot be certain what that outcome will be, through the discussion and critique of your
suggestions by fellow students and your professor, projections can be made about the foundation
for the probable success of your recommendations.
In this course you will have the opportunity, through cases, to see how well you can assess and
address a business issue or problem. The role of the case course is to provide you with the
opportunity to utilize the knowledge you have gained to this point to evaluate and make
recommendations to enhance the performance of real organizations. This is not a substitute for
real world experience in a job with an organization, but it is the type of learning that helps
prepare you to begin using the business knowledge you have acquired.

Analysis Frameworks
Because the process of learning through case analysis may be new to you, we will devote much
of this discussion to providing you with a framework to use in analyzing the cases found in your
textbook. Such a framework is useful not only in analyzing cases in textbooks, but also in
considering business situations described in publications such as The Wall Street Journal,
Business Week, Fortune, and Forbes. In reality, most articles about companies in magazines and
newspapers are mini-cases. The cases in your text tell stories, including facts, opinions,
projections, results, expectations, plans, policies, and programs. As readers, we need some way
to structure the information presented in a way that makes it more useable. Analysis frameworks
provide a means to accomplish this end.
There are several benefits in having a framework to use for analyzing situations. The first is that
a framework provides comprehensive coverage of the topics and issues involved. Without a
framework, the analyst may overlook some issues. For example, a person might not consider the
various effects of the economic environment facing the organization at a given point in time.
Recommendations made without this consideration may not be appropriate, and they may even
lead to the failure of the organization. Another benefit of a framework is ease of communication.
When everyone uses a similar framework to analyze cases, the terms each person uses person
have similar meanings. This is a huge advantage in discussing cases in and outside of class. A
final benefit is consistency of analysis. A framework provides a blueprint to approach situations
consistently every time. This is a great aid in getting started and conducting the analysis
effectively and efficiently. Using the framework repeatedly will make you very proficient with it.

In fact, experience shows that students continue to use this framework in their jobs long after
graduation. They continue to get these benefits, and in times of crisis, the framework gives them
something to rely on in dealing with difficult situations.
The framework presented in the remainder of this discussion is certainly not the only one that is
useful in analyzing cases. We also cannot claim that it is the best framework. Your professor may
provide his or her own framework, and if so, you should follow it. In all probability, it will be
some modification of the one outlined here. As long as the framework provides you with the
benefits outlined above, you feel it suits your needs, and you use it consistently, the case analysis
process will be made more manageable and valuable.

The Seven-Step Case Analysis Framework

The seven-step framework presented here is a synthesis of the frameworks used by your books
authors in their many years of combined experience in teaching marketing. It has been improved
over the years through discussions with other marketing professors who use case analysis in their
courses. It is straightforward to use, and provides the benefits of comprehensiveness,
communication, and consistency. It will not, however, serve as a substitute for carefully reading
(usually three or more times) and considering the cases. It will provide a solid structure to
organize the diverse information presented in a case.
As you work your way through this framework, or a similar approach to case analysis, we offer
the following hints to increase your probability of success:
1. No one can analyze a case after reading it only one time, or even worse, doing the analysis
during the first reading of the case. You should read through the case once just to get an
understanding of the nature of the case. During the second reading, you can begin to structure
and classify the issues as they appear. A truly comprehensive case analysis will probably
require at least three readings.
2. Dont get trapped into thinking the answer to the case is hidden somewhere in the case text.
There is never a single answer to a case just as there is never a single marketing strategy that
is appropriate for all situations. Each case is unique. Looking for tricks or shortcuts is not
appropriate.
3. Make an effort to put yourself in the shoes of the decision maker in the case. The use of roleplaying as part of the analysis can be very useful. It helps you gain some feeling for the
perspective of the key parties at the time the case took place. After you have done several
analyses, you will likely come up with your own additional procedures or guidelines that
assist you with this process.
Step 1: Situation Analysis
The material presented in a case is much like the communications we have in our daily lives.
Usually our conversations involve the selection of a topic and then the discussion of that topic,

and so it is with cases. The problem is that we end up with bits and pieces of information that by
themselves are not very useful, but once organized, can be quite valuable in our assessment of the
situation. The first step in the framework helps you organize the pieces of information into more
useful topic blocks.
The process of assessing a situation is widely accomplished through the use of SWOT Analysis
(strengths, weaknesses, opportunities and threats). The issues and procedures involved in SWOT
Analysis are fully explored in Chapter 4 of your text. Our role here is simply to reinforce the
issues covered in SWOT and to emphasize its role in the case analysis framework.
Looking at an organizations strengths and weaknesses is the first half of Step 1. This involves
looking at the organizations internal environment. Strengths are those aspects of the internal
environment that can help the firm address a present problem, issue, or opportunity, while
weaknesses are negative factors or deficiencies that do not allow the firm to reach its full
potential. One topic that should be addressed is the content and appropriateness of the current
marketing plan. Is the marketing plan current? Do the key parties understand and utilize it? Was
it developed with input from all levels of the organization? The organizations financial
condition may also present strengths and weaknesses. Is it in a solid position, and does it have, or
can it acquire, needed funds at a reasonable cost of capital? Other possible strengths and
weaknesses might include managerial expertise, human resources, product reputation and
customer loyalty, patents and trademarks, age and capacity of production facilities, channel
relationships, and promotional programs (sales force, advertising program, publicity, and sales
promotion efforts). These are all issues that we want to consider in terms of both the present state
of the firm and identifiable trends.
Students assessing a case situation see the importance of considering the organizations internal
environment fairly naturally. The aspect of SWOT analysis that gives students the most difficulty
is the external environment where all opportunities and threats reside. These are issues that exist
outside the boundaries of the firm. All opportunities and threats will exist at their present levels
even if the organization in question does not exist. Technology, competition, the macroeconomic
environment, regulation, and social and cultural trends are all issues that affect the success of an
organizations strategies, but the organization has only limited influence on them.
Because the power to affect the external environment significantly is usually absent, management
must view the factors and forces present in the external environment as issues to be considered,
but not usually controlled. Managers should take steps to minimize the exposure to threats and to
take full advantage of the opportunities. You might think of opportunities and threats as currents
in a river. It is much easier to find a river whose currents will help take you where you are going
than to try to make headway going against the force of the river.
You may get hung up on several points when conducting a SWOT analysis. First, while a factor
will usually fall into only one of the four categories, this is not always the case. A factor can be
both a strength and a weakness, or an opportunity and a threat. For example, excess capacity in a
factory would be a weakness from a production efficiency standpoint. But, it could be a strength
if the firm is looking to introduce a new product because it will not have to build a new factory.

The second and more serious issue is the difficulty in identifying opportunities. There is a
tendency to confuse opportunities with possibilities. Something the company might do, such as
franchise its operations in an effort to expand, is not an opportunity. The mention of the
organizations name in the opportunity is a clear indication that it is not an issue from the
external environment. Both threats and opportunities would be present even if the organization
did not exist.
Third, if your professor asks you to update the case material, you must be sure to get an
explanation of what it means to update a case. To some professors, updating a case means
locating additional information about the case situation at the time the situation actually took
place. Thus, if a case situation took place in late 2003, updating that case would involve
gathering information that was published in 2003 or earlier. Using more recent information
sources can bias your strategy recommendations and conclusions. However, many professors will
prefer that you use recent sources of information to bring a case into the present day. We
personally do not recommend this approach because it usually changes the focus of the case.
What the organization did is not a key issue because there is no one right recommendation for
any case. Even if the company was successful with its subsequent strategy, it does not make that
strategy the only good option.
Finally, you are accustomed to the material in a textbook containing accurate information that
should be believed and remembered. However, in some cases, you will find statements of
opinion that are often biased by a persons motives and position in a firm. The organizations
CEO who has just recently given approval to the firms strategic plan might say, This is an
excellent mission statement that will effectively direct our firms efforts for the next decade. Is
this really true? It might be, but it will be up to you to determine what is fact as opposed to
someones opinion. Opinions will need to be assessed in your case analysis to determine their
accuracy.
Step 2: Assumptions and Missing Information
As with life, it is neither possible nor realistic for cases to contain all the information a decision
maker might wish to have available. Usually a decision maker has only bits and pieces of
information. He or she must either fill in the gaps, or make the decision that the information is
not critical, fairly predictable, or simply too costly and time-consuming to justify collecting for
the decision at hand. A marketing manager might want to know the history of competitive
reactions to price cuts by his firm. This information may be present in company files. It also
might be available from trade sources or other noncompetitive channel members.
Following the seven-step framework, in step two you will list important information not
contained in the case, why that information might be useful, and how you might go about
acquiring it. This is more than just a wish list. The items included here should considered
thoroughly. The list should contain pieces of information that would help shore up or fill gaps in
your SWOT analysis. Some of the materials may be available from secondary sources, such as
U.S. Department of Commerce reports, the Bureau of the Census, or trade publications such as
Sales & Marketing Management Magazine. Internal records will contain much of the needed
strength/weakness information, such as employee turnover or historical sales levels.

Some of the information that is not available can be addressed through assumptions. One might
assume that if information about the firms advertising budget is not available, it would be equal
to industry averages. The same assumptions might be made for other costs and revenues. It is
critical that these assumptions be realistic and clearly identified before and during the case
analysis. This list should contain only those items that will be truly useful in enhancing the
quality of the decisions made. It should not be a list of things that would be interesting to know.
The quality of your analysis will depend on your coverage of the framework, the depth of your
analysis, and the degree to which you can defend your recommendations.
Step 3: Statement of The Problem(s)
The identification and clear presentation of the problem(s) or issue(s) facing the company is the
most critical part of the analysis framework. Only a problem properly defined can be addressed.
Define the problem too narrowly, or miss the key problem all together, and all subsequent
framework steps will be off the mark. Getting a clear picture of the problem is one major benefit
derived from SWOT analysis.
The process of identifying problems is similar to the one people go through with their doctors. A
nurse or assistant comes in to conduct a strength and weakness assessment on you. Your vital
signs are taken and you are asked about any symptoms you may be experiencing. Symptoms are
observable manifestations or indications that a problem may be present. Symptoms are not the
problem themselves. If you have a temperature of 103 degrees, that is a symptom. If the medical
staff were to pack you in ice for several minutes, that reading would probably approach 98.6
degrees. Would that make you well? It might make your condition worse! The doctor uses the
information collected from you, with knowledge of the viruses and diseases that are present in
the external environment, to identify what has led to your high fever. The doctor will attempt to
diagnose the real problem, then prescribe treatment from a set of feasible alternatives (make
recommendations about what steps will help solve the problem) and provide you with a
prognosis (an indication of the things you can expect to occur as you are recovering).
The case analysis process is similar to the doctors analysis and treatment of a patient in several
basic ways. First, symptoms are the most observable indication that a problem exists. Many
students are very quick to start treating the symptoms found in a case, as opposed to digging
deeper to find the underlying problem(s). A symptom may be that sales are down from previous
periods. If this is how you define the problem, your answer might be to cut the price. This might
be an appropriate step, but not based on the analysis to this point. Sales might pick up, but will
this reaction make the company healthier? This is a clear case of prescription without adequate
diagnosis.
The most important question in the identification of any problem is Why? The Why question
should always be asked after a potential problem has been proposed. To illustrate, pinpointing
the problem associated with the sales decline in our previous example might progress like this:
The problem is that sales have declined.
Why have sales declined?

Sales have declined because there are too many sales territories that are not
assigned to a salesperson.
Why are so many sales territories unassigned?
Sales territories are unassigned because sales force turnover has
doubled in the past year.
Why has sales force turnover doubled?
Turnover began to increase over a year ago when
the sales force compensation plan was altered in
order to reduced variable expenses.
When you can no longer devise a meaningful response to the Why? question, you have probably
found the problem. In this instance, the problem statement might read:
The current sales force compensation plan at XYZ Company is inadequate to retain an
acceptable percentage of the firms salespeople, resulting in lost customers and decreased
sales.
The problem statement should be briefalmost always one or two sentences. It should be to the
point, and it should provide a clear indication as to what must be addressed to improve the
performance of the organization.
Given this problem statement, our first reaction, to work on the symptom of reduced sales by
cutting prices, would clearly not solve the problem. When we work on symptoms, the symptom
may go away, but the problem will always manifest itself again with the same symptom, or a
related one. Cutting prices would enhance sales, but would it be profitable? And, with an
understaffed sales force, could the firm serve customers at a level that would keep them
satisfied?
It is often said, and very true: a problem well defined is a problem half solved. This is certainly
the situation when performing case analyses.
Step 4: Development of Alternatives
Once we have the problem clearly and succinctly defined, we are in a position to develop a set of
strategic alternatives that have a reasonable potential to solve the problem. A key problem
students face in this step is that they generate a laundry list of a dozen fairly detail-oriented items.
These items have a lot more to do with the tactics of implementing a strategy than with
presenting alternative strategies from which we will make our selections. Going back to the sales
force example above, the list may include ideas such as:

Take candidates through a more rigorous interview process

Lengthen the training program
Give every salesperson a company car
Offer both individual and regional bonuses
Increase company contribution to the retirement program for each year of employment
Conduct an employee-evaluation training program for the firms sales managers

While these may all be good ideas, they are not strategic alternatives. The term alternative
suggests an either/or situation. From the list above, you might include several items in your
recommendation section. Strategic alternatives should identify basic directions the firm might go
with the sales force support of its product.
One alternative is always the status quo. You must understand that this is not a means of
avoiding a decision. If recommended as the next step, it is a conscious decision, based on a
careful evaluation, that the present strategy in use, perhaps with some tactical modifications, is
the best course of action in the current situation.
Besides the status quo, you should use creative thinking to come up with several truly strategic
alternatives. For our present example, one option might be to eliminate the external sales force
and start using a manufacturers representative network to sell to the firms customers. Another
alternative would be to use direct marketing, with an inside sales force to market the product.
Another possible option is to reemphasize the sales force with a more effective sales
management program, including better selection, compensation, evaluation, and recognition of
the sales force.
Frequently, the underlying problem facing the organization is the failure to have a current, widely
used, well-developed marketing plan. If the analysis indicates this to be the case, conducting a
comprehensive strategic market planning process should be one of the alternatives listed. This is
one of the few options that might be selected in combination with some other alternative.
Step 5: Evaluation of Alternatives & Recommendations
Once you have developed a set of realistic alternatives, it is time to do a thorough evaluation of
each of the options. Three major criteria should be used in this evaluation process. First, how
well does the alternative address the problem or issue as stated in Step 3? Closely related to the
first criterion is the consistency of the alternative with the organizations mission statement, as
well as its ability to assist in achieving the plans stated goals and objectives. These issues are
addressed in Chapter 2 of your textbook. Clearly, for an organization whose mission includes
providing the most innovative health care products to doctors, nurses, and patients, a low
cost/price competitive organization model would be inappropriate.
This does not mean alternatives that are not consistent with the present plan should never be
selected. It does indicate that part of the evaluation for such alternatives must address the
complete modification of the organizations strategic plan. Likewise, an objective of increasing
profit margins from 15% to 25% is not consistent with the alternative of becoming a low-price
provider. The deletion, or at the very least modification, of this aspect of the plan must be
considered in evaluating this alternative.
For each alternative, you should make an effort to estimate and evaluate the cost and revenue
implications of the option. Probable income statements, under corresponding stated assumptions,
should be included for each alternative. Exhibit 1 provides an example of just such an
assessment. Costs are certainly easier to calculate than revenue projections, but an effort must be

made to do both. To conclude simply that developing a new innovative product line for the
organization, without any discussion of the costs and benefits involved, or in what year each is
likely to occur, is an incomplete and unrealistic approach to case analysis. You should use what
you have learned from your accounting and finance courses when you conduct case analyses.
Look at any financial information you are given in the case, or that you can acquire, as a key
resource in conducting your analysis.
<Insert Exhibit 1 Here (see end of file)>
The final criterion is an important one that relates to the feasibility and probable success of each
alternative: How well do the alternatives coincide with the key findings from the SWOT Analysis
you conducted in Step 1? In other words, how well does each alternative match up with the
internal and external environments of the organization? Does the organization have, or can it
realistically acquire, the human and financial resources required by each alternative? Building
additional capacity to increase volume as the low-price provider is probably not a reasonable
alternative for an organization in great financial difficulty. Conversely, for a firm with limited
history and investment in research and development, becoming the innovative leader in the
industry will not be possible in the near term.
The external environment, in terms of the economy, competition, regulation, and cultural trends,
will have a major impact on the pro forma revenue projections you make in this step. Any
alternative that adds pollution to the environment will not be well received today. Often,
alternative analyses assume the competition is an inanimate object. Thinking that competitors
will stand still while you steal their customers with a new marketing strategy is not at all realistic.
Part of the evaluation of alternatives, and making projections about their potential success, is to
use the assessment of the external environment to make assumptions about what key competitors
will do. You must remember that as one company is setting a course for the future, most of its
effective competitors are doing likewise.
The recommendation portion of this step is often included as a separate phase in the case analysis
framework. We include evaluation with recommendation because, if the former is done well, the
latter should be a natural continuation of the process. The alternative chosen is the one that
stands up best in terms of all three criteria: consistency with mission, goals and objectives as
stated or as modified, strongest probable financial performance, and harmony with the internal
and external environments of the organization. With a thorough evaluation, the recommended
alternative should be a natural move. This does not mean that two alternatives will never be close
in terms of their attractiveness, but usually one will be a better match for the organization as a
whole.
One more note: Become accustomed to making recommendations in the face of unknown
economic or competitive conditions. While you will be able to know some things for certain
(such as gross domestic product or consumer spending), no one can possibly predict all future
events. As long as your evaluation is thorough, and your assumptions are clearly stated and
reasonable, your recommendations will be justified.

Step 6: Implementation
This step has historically been omitted from the strategic planning process. However, in modern
strategic planning, implementation has become so critical that we devoted all of Chapter 11 in
your textbook to its discussion. Implementation includes actions to be taken, the sequencing of
marketing activities, and a time frame for their completion. A timeline, like the one shown in
Exhibit 2, can be a very useful tool in directing the implementation discussion. Students are often
very optimistic in terms of the time needed to carry out certain tasks. However, small things, like
the development of a questionnaire and the collection and analysis of data, can take several
weeks, if not months. Be careful to provide reasonable amounts of time for each step.
<Insert Exhibit 2 Here (see end of file)>
It is frequently noted that Americans are great innovators, while the Japanese are great
implementers. In U.S. organizations, the selection of the alternative to be pursued is often made
on a majority-rules basis. If ten people are on the decision-making team, and six speak in favor of
introducing a new product line and four speak against it, a decision to introduce the new line is
the likely result. Under this system, six people leave the room with their reputation on the line to
make the decision work, but what about the other four? Will they be committed to the project?
This can cause serious problems in implementing the selected alternative. Contrast this process
with the traditional decision-making process in Japanese organizations, where an alternative is
not chosen until everyone agrees that it is the appropriate course of action. The selection process
is much more time consuming, and often requires compromises that can make the selected
alternative less distinctive. On the plus side, everyone leaves the process agreeing that the
selected course of action is best. With everyone working together, implementation becomes a
much easier process.
This aspect of the decision-making process makes internal marketing a critical issue that you
must address in your discussion of the implementation phase. Who will be the critical players in
carrying out the plan? Are they likely to be naturally in favor of the selected alternative? What
can be done to get them on board? Giving more people, particularly frontline personnel, more
input during the decision-making process will be a plus here. Top-down planning often creates
resistance in the implementation phase. Part of the problem with some strategic plans is that the
frontline employees, those people who are most likely to come in contact with suppliers and
customers, feel that the plan handed down is not realistic given what they know about the dayto-day working environment. They may feel that management is out of touch. Getting their input
early and late in the planning process can go a long way toward easing the implementation of the
selected alternative.
In all instances, it is very difficult for employees to market the firm and its products as planned
until the plan has been marketed to them. Internal marketing plays a major role in determining
the success of the plan. If employees can be shown they will get things they value by helping the
firm carry out this plan, the process has an excellent chance for success. Many managers feel that
they would rather have a mediocre plan vigorously implemented, than an excellent plan
implemented in a mediocre fashion.

Step 7: Evaluation and Control

As the firm is implementing the selected alternative, it must constantly monitor the results
achieved. What do you expect this chosen alternative to accomplish, and by when? This is a
major concern, as the firm must determine if the selected strategy is working as anticipated. Clear
objectives must be set. A 20% increase in awareness and a 10% increase in sales within six
months are possible examples of the benchmarks that might be used to determine if the selected
alternative is on course.
If objectives are not being met by the targeted dates, a tough decision must be made. Is it a poorly
devised strategy, poor implementation, or an unfavorable environment that is leading to these
results? The answer to this question will dictate how the organization will respond. As we said
earlier, planning cannot assume an inanimate set of competitors. If your recommendation is to cut
price and expand distribution, can you reasonably assume that competitors will do nothing and
let you take their business away without a fight? This is seldom the case. The competitive
situation will almost always change, sometimes significantly. Other external environmental
factors, such as the economy or technology, may also not remain constant or turn out as planned.
Such changes that result in outcomes that do not meet expectations point to the need for the
development of contingency plans. Contingency plans are not centered on the most preferred
alternative under the present conditions, but are a fall-back position in case things do not work
out as planned for the selected alternative. For example, more expensive, upscale products might
have been recommended for the firm. If the competition slashes prices at the same time the
economy weakens, the firm might need to respond by implementing a contingency plan. To
blindly carry out a strategy that no longer matches the environment is an almost certain route to
failure. In this instance, a contingency plan of heavy sales promotion might need to be
implemented. Firms can try to predict what future environments will be like, but they cannot
guarantee the future external environment with much certainty.
Conclusion
We conclude with one final piece of advice: Like anything else, the learning benefits of case
analysis are dependent on the amount of effort you put into the analysis. Learning to think
critically and see the big picture are important lessons to be learned in a case course. Likewise,
learning how business activities (not just marketing activities) can be strategically integrated to
achieve superior results is the ultimate goal.

Exhibit 1
Hypothetical Pro Forma Assessment

Unfavorable
Environment

Neutral
Environment

Favorable
Environment

Sales
Dollars

$2,000,000

$3,500,000

$7,000,000

400,000

750,000

1,400,000

$250,000

$250,000

$250,000

$1,200,000
($3 per unit)

$2,062,500
($2.75 per unit)

$3,500,000
($2.50 per unit)

Advertising

$300,000

$300,000

$300,000

Sales commission (10%)

$200,000

$350,000

$700,000

Other selling expenses

$100,000

$135,000

$200,000

Earnings before taxes

$ -50,000

$402,500

$2,050,000

Units ($5 per unit)

Costs
Product development
Production costs

Exhibit 2
A Hypothetical Implementation Timeline

Weeks
Conduct customer surveys

Collect media information

Analyze data and present results

Develop point-of-purchase
materials

Develop sales force training

program

Conduct sales force training

program

Develop and send promotional

materials to dealers

Roll out program in selected regions

with both personal and mass
promotion

10

Business Communication

Today, globally, communication plays a vital role for effective and efficient functioning of
organization. Future leaders and managers to be successful have to master the art of both verbal
& non-verbal communication. The course equips the students to acquire core competencies &
skill sets to be better communicators.
Learning Objectives

To make the students understand the nuances of the communication process in todays dynamic
corporate world
To sharpen the analytical, written and spoken communication skills of the students
To teach them basic skills of making presentations and case analyses that are useful to them
not just in their academic pursuits, but throughout their careers

Unit I Introduction to Communication

(1 Hour)

Importance of communication, Process of communication, Barriers to communication Overcoming barriers to communication, Essentials of Good Communication
Unit II Communicating at Work

(1 Hour)

Cultural diversity and communication - The Nature of culture, Cultural differences in

international business
Verbal and Nonverbal Messages- Verbal Messages - Clarity and Ambiguity, Inflammatory
language, Nonverbal Communication -Types of Non-verbal communication, Characteristics of
Nonverbal communication
Communicating with Technology- Electronic communication Technologies- Telephone, and
computers for Internal and external purposes of organization
Unit III Written Communication & Effective Presentation
(1 Hour)
Principles of Letter Writing - Structure and layout of letters, Circular letters, Report writing Types of reports - Importance of reports - Structure of reports- Effectiveness of Communication
& Presentation

Topics

Topic- Break up

Unit 1

Introduction to Communication

Unit 2

Communicating at Work

Unit 3

Written Communication & Effective

Presentation

Teaching
Method
Lecture &
Case
Analysis
Lecture
&Activities
Lecture
&Activities

Case Study Barry and Communication Barriers

Effective Communication as a Motivator

One common complaint employees voice about supervisors is inconsistent messages meaning
one supervisor tells them one thing and another tells them something different. Imagine you are
the supervisor/manager for each of the employees described below. As you read their case, give
consideration to how you might help communicate with the employee to remedy the conflict.
Answer the critical thinking questions at the end of the case then compare your answers.
Barry is a 27-year old who is a foodservice manager at a casual dining restaurant. Barry is
responsible for supervising and managing all employees in the back of the house. Employees
working in the back of the house range in age from 18 years to 55 years.. In addition, the
employees come from diverse cultural and ethnic backgrounds. For many, English is not their
primary language.
Barry is ServSafe certified and tries his best to keep up with food safety issues in the kitchen
but he admits its not easy. Employees receive on the job training about food safety basics (for
example, appropriate hygiene and hand washing, time/temperature, and cleaning and sanitizing).
But with high turnover of employees, training is often rushed and some new employees are put
right into the job without training if it is a busy day. Eventually, most employees get some kind
of food safety training.
The owners of the restaurant are supportive of Barry in his food safety efforts because they know
if a food safety outbreak were ever linked to their restaurant; it would likely put them out of

business. Still, the owners note there are additional costs for training and making sure food is
handled safely.
One day Barry comes to work and is rather upset even before he steps into the restaurant. Things
havent been going well at home and he was lucky to rummage through some of the dirty
laundry and find a relatively clean outfit to wear for work. He admits he needs a haircut and a
good hand scrubbing, especially after working on his car last evening.
When he walks into the kitchen he notices several trays of uncooked meat sitting out in the
kitchen area. It appears these have been sitting at room temperature for quite some time. Barry is
frustrated and doesnt know what to do. He feels like he is beating his head against a brick wall
when it comes to getting employees to practice food safety.
Barry has taken many efforts to get employees to be safe in how they handle food. He has huge
signs posted all over the kitchen with these words: KEEP HOT FOOD HOT AND COLD FOOD
COLD and WASH YOUR HANDS ALWAYS AND OFTEN. All employees are given a
thermometer when they start so that they can temp food. Hand sinks, soap, and paper towels are
available for employees so that they are encouraged to wash their hands frequently.
Questions:
1. What are the communication challenges and barriers Barry faces?
2. What solutions might Barry consider in addressing each of these challenges and barriers?
3. What Standard Operating Procedures (SOPs) would be helpful for Barry to implement and
enforce?

Writing Etiquettes
Write to be understood, speak to be heard and read to grow Lawrence Powell
There are different forms of writing like the Email and regular letter written by hand.
Language- When writing a letter it should not have slangs in it and must be a formal note.
Vocabulary- when writing to an external customer a standard writing protocol must be
followed. Since your E-mail/letter speaks about the person writing and reflects their
organization, the standard punctuation and grammar rule stands strong.
Content- Content should be clear and self-explanatory. It should have all the details the other
party needs to know
Tone The tone of the letter must be Formal and polite.
Subject- the Subject should be precise and to the point, avoiding stories and unwanted
information. No one has time to go through a long mail patiently. It is very frustrating to
wade through an e-mail message that is twice as long as necessary.
The option of blind copy and courtesy copy should be used appropriately.
StructureBelow is the sample of how a formal business letter is written.

Speech by
N. R. Narayana Murthy
Dear Shareholders,
First of all, it is nice to be back here with you after missing
the 2012 AGM. I am overwhelmed by your affection. I thank
you for electing me as a member of the board. I thank
Mr. K.V. Kamath, Mr. Kris Gopalakrishnan and the other
members of the board for welcoming me so warmly. I am
grateful to Mr.KrisGopalakrishnan, Mr.Shibulal, Executive
Directors and every Infoscion for making me feel at home
so quickly. I promise to dedicate fully and wholeheartedly
to the task on hand.
In the recent months, our company has gone through
challenging times. However, we should all be optimists. We
have much to be proud of. We have overcome tougher and
bigger challenges before. Through our hard work, sacrifice,
intelligence and relentless execution, we have built this
company from a small two-room apartment in Pune to
a global company covering over 30 countries, 30million
square feet of space, `40,000 Crores of net worth, over
`130,000 Crores of market value, over `40,000 Crores of
revenue, over `9,400 Crores net profit, being listed on
the Mumbai/NSE/NYSE-EuroNext bourses, and winning
several prestigious awards. This company has a large pool
of world-class talent, a committed group of customers, and
a portfolio of over 440,000 well-wishing investors. But, we
have much more to do. The need of the day is to focus
on our employees; take quick, tough and firm decisions;
communicate these decisions with clarity and speed;
execute these decisions with speed, imagination and
excellence; and exceed the expectations of our customers
and investors. We will overcome the current challenges
too if we demonstrate the same aspiration, determination,
commitment and hard work as we did in the past.
The current strategy of the company aims at market
opportunities in the following three revenue streams:
1. Focusing on opportunities from consulting-led,
endtoend solutions leveraging technology for higher
margins.

2. Developing intellectual property-based solutions to

delink revenues from effort.
3. To win highly-competitive, large-revenue-yielding
outsourcing projects involving application
development, maintenance, testing, BPO, and
infrastructure management.
Historically, the company has relied primarily on the third
stream. This stream has become commoditized in recent
years. Our desire has been to ensure revenue growth while
maintaining decent margins. Hence, given the current
market reality, the company adopted this three-stream
strategy two years ago.
However, there are changes we need to make in executing
this strategy. We believe the first two streams of our strategy
are necessary for a better future. While we have performed
creditably in these two streams as of today, we should
continue our focus on these two streams since they have a
potential to improve our future.
During the last two years, our focus on the third stream
was blurred. We have to refocus on this (our bread and
butter business) in the short-term while also ensuring that
we accelerate our progress in the first two streams in the
medium to long term.
We have had a detailed discussion on this. Let me be clear.
By short-term I mean the next six to 12 months. By medium
to long term I mean the next three to five years. The entire
company is committed to refocusing on the third stream to
enhance our win ratio in large outsourcing deals. Such extra
focus on commoditized businesses has the potential to
accelerate our revenue growth while reducing our margins.
I want you all to be aware of the downside.
The current discussion on the new immigration bill in the
US is both an opportunity for innovation and a challenge
for growth. I would like every Infoscion to see this as an
opportunity.

Therefore, we will take the following actions with speed,

clarity and dedication to make our strategy yield the desired
results:
1. We will enhance the confidence, hope, trust and
enthusiasm of our employees. This initiative will require
better communication with Infoscions and spending
a few percentage points of our revenue on their
compensation.
2. We will strive to enhance the respect for the corporation
from our stakeholders customers, employees,
investors, vendor-partners, government of the land and
the society in every one of our decisions.
3. We will focus on cost optimization and elimination of
wasteful expenditure. We will divert the saved funds
towards some of the productive investments needed
to make Infosys the market leader.
4. We will make our sales force more effective by improving
the quality of sales talent, and by providing them with
incentives and every resource needed. We will adopt a
flexible pricing policy, where absolutely necessary, to
enhance our growth rate.

6. The predictability of our earnings forecast has weakened

during the last couple of years. This has resulted in our
inability to provide earnings guidance to the market.
We will refocus on building a more predictable earnings
model in the medium term.
Executing this strategy may require me to change some of
my long-held beliefs. But then, I too believe in Sir Winston
Churchill's words that improvements require change and
the quest for perfection requires us to change as often as
necessary.
The challenge is daunting and the task is tough. Therefore,
the task of rebuilding a desirable Infosys will take at least
36 months, even with a high quality team and the full
dedication of every Infoscion. In the process, there will be
some tough decisions resulting in pain as we move forward.
I need your understanding, support and encouragement in
this exciting and rewarding journey of the next three years.
Knowing you, I am confident that we will walk this journey
together as willing and enthusiastic partners.

5. We will innovate to improve the quality and productivity

of our software development teams to deliver even
better value to our customers. We will use such
innovations to improve our margins even in the most
competitive and commoditized businesses.

Thank you,

Bangalore
June 15, 2013

N. R. Narayana Murthy
Executive Chairman

This document does not purport to be a record of the proceedings of the Annual General Meeting.

Basics of Excel

Objective:
Microsoft Excel consists of a proprietary spreadsheet application developed by Microsoft. Its
significant features include calculations, functions, graphing tools, pivot tables among others.
In the industry, Microsoft Excel has varied uses for managers like

Planning
Estimation
Budgeting
Forecasting
Tracking
Reporting
Dashboard creation
Scenario Analysis
Financial modelling

Features which would help a student achieve these skills are the ones which every budding
manager has to possess. Spreadsheet programs are developed to automate tasks such as
technical calculations, inferential statistics, analysis of data and so on. These programs are
commonly used by managers in Production, Planning, Personnel Management, Marketing,
Payroll and Accounting.
Session Plan: (Total Number of Hours 4.5)
Sessions are conducted through handson training in the application. Students get to solve the
various practice exercises as part of the training. Practice exercises are designed to ensure the
contents of various sessions are learnt in a practical manner.
Session One 1.5 hours

Practice Exercises 1 &2

S No
1
2
3
4
5
6

Session Content
Introduction to Rows, Columns and Cells
Inserting and deleting rows and columns
Copying, Pasting, Paste Special
Viewing Data, Data types
Creating, Editing, Copying, Moving and Linking worksheets
Commands and Functions with reference to data manipulation
Functions Mathematical - (Autosum, Average, Min, Max, Count) &
Logical - IF
7
Absolute and Relative cell references
8
Formatting data
9
Charts Types & uses
E-content:
http://www.excel-easy.com/functions/cell-references.html
http://www.excel-easy.com/examples/pie-chart.html

Session Two 1.5 Hours

Practice Exercises 3 & 4

S No
Session Content
1
Functions Left, Right, Mid, Trim, Find
2
Functions Randbetween, Sqrt, Power
3
Countifs with VLookUp
4
Data Validation
5
Sorting & Filtering
6
Conditional Formatting
7
What if analysis
E-content:
http://www.excelfunctions.net/
http://www.excel-easy.com/functions/lookup-reference-functions.html
http://www.excel-easy.com/data-analysis/conditional-formatting.html
http://www.excel-easy.com/data-analysis/what-if-analysis.html

Session Three: 1.5 Hours

S No
1

Practice Exercise 5.1 & 5.2

Session Content
Completion of al exercises

Learning Outcome:
At the end of three sessions and completion of practice exercises, a student would be familiar
with the basic spreadsheet, able to organise data, create formulas and functions, create
various types of charts and present the data and the charts.
___________________________________________________________________________
_______

Exercise 1
With the help of an excel spread sheet, complete the following tasks:

Create a excel workbook with name Practice1

Create a table with 10 rows and 4 columns in worksheet. Name it as Quarter 1.
List ten products of a FMCG company in the row and enter the first quarter sales
figures in the column.
Calculate the total quarterly sales of each product in the last column with name total
sales.
Find the percentage contribution of each product in the total sales. Create a column by
name % contribution.
Find the average sales of all products in the month of February.
Which product was sold the maximum in the month of March?
Create a similar table for the next quarter sales in the next sheet and fill in the data.
Name the sheet as Quarter 2.
Ensure the sales figures in each cell are between 1,00,000 and 4,00,000 for this
quarter.
Delete the percentage contribution.
Round off the sales figures to single decimal.
Format the chart with title Sales of ABC company with font ALGERIAN and size
14.
Left justify all the numerical and centre-justify all the characters.
Change the font size of the data to 11.
Merge the title row and centre justify the same.
The file must look like this:

Product
Shampoo
Washing Soap
Conditioner
Face cream

January
2,15,548
..

..

February
1,54,342
.

..

March
3,54,232

.
.

Total Sales

___________________________________________________________________________
_______
Exercise 2:

Create a workbook Practice2

Create a table with 5 brands of cars as rows. Name this worksheet as sedan.
Create columns with models, fuel type, colour, list price and cost price.
Fill the columns with appropriate values.
3

Draw borders and center the column names.

Give a title to the table Car Information.
Modify the column width and row height for a perfect fit.
Find the margin made by selling each car.
Create another worksheet within the same workbook with name SUV.
Create a table with 5 brands of SUVs with their respective models.
Repeat the same procedure as before.
Give a title to this table as SUV information.
Increase the price of all SUVs by 12%.
Find the sedan which is making maximum profit after sales.

___________________________________________________________________________
_______
Exercise 3:

Create a work book Practice3.

Create a table with the details of 15 students in 5 subjects.
Details are Register no, Name, Age, English, Physics, Maths, Chemistry, Economics.
Enter marks out of 100. Ensure the marks range from 0 to 100.
Find the total marks of each student.
Name the range of each subject with the subject name.
Find the percentage marks of each student and list it in a newly created column.
Find the maximum marks scored in the subject Economics.
Find the average marks of all students in Maths.
Increase the total marks of all students by 3%. (Use referencing)
Find the average marks of all students only in Physics, Maths and Chemistry.
Give a title to this table Quarterly examination marks.
Draw an appropriate chart to depict this data graphically.
Name the chart as Quarterly examination marks.
Format the chart area with appropriate title and corresponding numbers.
Explore various types of charts.
Try to switch rows and columns are interpret the results.

___________________________________________________________________________
_______
Exercise 4

With the same data given in the Exercise 3, classify the students with grades as
follows:
Grade A - >80%, Grade B 60%-80%, Grade C 40% - 60%, Grade D - < 40%.
Create a column with the respective grades for each student.
Display only the first five characters of all the student names.
4

___________________________________________________________________________
_______
Exercise 5.1

Create a workbook by name Practice5.

Recreate this worksheet and complete the worksheet with the help of vlookup
function.
Ensure the price entered is between 150 and 350.
Format the table.
Create an appropriate chart at the end of this task.
Interpret your results.

Create another table within the same workbook.

Reduce the price of all products by 50 INR.
Sort all the products with the increased order of price.
Represent this data graphically and interpret.

Exercise 5.2

Scenario given above contains the daily budget of a small size manufacturing
company. Our goal would be to find out the number of units to sell to make a profit of
US $ 100.

___________________________________________________________________________
_______

Bridge Course Accounting

Week Zero June 2015

Financial Accounting for Managers - An introduction
Faculty Details:
Email id:
Mobile No. :

Sl
No.
1

Break up of Topic

Overview of the course,

objectives and expected
outcomes Understanding business
Discussion using annual
organisations - meaning of report of a listed company
accounting - users of
accounting information financial and management
accounting - Forms of
business organisations
Financial statements of an
entreprise
Accounting measurement - Discussion
conventions / assumptions
/ principles
Accounting equation

Teaching pedagogy

Applying accounting
conventions / assumptions
/ principles

Numerical: Solving a
numerical on accounting
equation
Discussion using Case:

URLs of Websites of ICAI, MCA & SEBI

http://icai.org
http://mca.gov.in/
www.sebi.gov.in

Reference

Assignment

Identify
- Extract of HUL components of
Annual report
Financial
statements
Go through the
First 3 videos of
Bridge course

- Solve exercises Go through the

on Accounting
Websites of
equation
ICAI, MCA and
SEBI
Ribbons an
Bows, Inc
Robert Anthony

Solve a few
more
numericals

Financial Accounting for Managers A prelude.

Dear Students,
A very warm welcome to all of you, to the Institute of Management, Christ University
and to the course Financial Accounting for Managers.
When you interact with practitioners in the industry and academicians, you come to
the conclusion that it is imperative for a Business manager to understand the key
aspects of finance in business. This includes preparation and interpretation of
financial statements. While preparation is mostly compliance related and is quite
elaborate, interpretation is key for decision making. As students of business
management all of you should understand the nuances of preparing and presenting the
financial statements of a business enterprise. However, it is more important for you to
know how to use these statements for both tactical and strategic decisions of the
business.
Business leaders from non-finance back grounds, would have excellent technical,
man-management and marketing skills, which are key to success of an organisation.
However, when you speak to them, they seem to have two things in common.
1. They seem to believe that they are Non-finance people
2. They normally feel that finance / accounting is something complicated and
beyond the scope of their understanding
So, it would not be surprising that many of you who come from different academic
backgrounds may also feel the same way. Some of you might also feel a bit daunted
by numbers. However, you might be pleased to hear that Financial accounting is very
logical and therefore, quite easy understand. All that it requires is a good clarity of
concepts and very importantly, eye for detail. With this in mind, this course has been
designed to give you a good grounding of process of preparation of books of accounts
and an in depth understanding of how to use financial statements.
In their book on Accounting texts and cases, Robert Anthony, David Hawkins and
Kenneth Merchant have written some of the key aspects of the learning of
Accounting. I am using some of those quotes to bring out the importance of our
approach to Financial Accounting course.
Most of the worlds work is done through organisations Groups of people who
work together to accomplish one or more objectives. In doing its work, an
organization uses resources labor, materials, various services, buildings and
equipment. These resources need to be financed or paid for. To work effectively, the
people in an organization need information about the amounts of these resources, the

means of financing them and the result achieved through using them. Parties outside
the organization need similar information to make judgments about the organization.
Accounting provides such information.
Both the for-profit and nonprofit organisations have to prepare and present their
financial statements to their stakeholders. Though the information provided may
differ greatly by the type of organisation, broadly speaking the information needs of
most organisations are similar. Therefore, they will have to have a working
accounting system.
Accounting can be approached from two directions, one from the point of view of
accountant the other from point of view of the user of accounting information. The
former approach emphasizes on the concepts and techniques that are involved in
collecting, summarizing and reporting accounting information. The latter emphasizes
on what the user needs to know about accounting. We mainly focus on the latter
approach. At the same time the users need to know what the accountant does,
otherwise, they are unlikely to understand the real meaning of the information that is
provided.
By the time you complete this trimester, we hope you would have a very good
understanding of key concepts used in financial accounting and would also be able to
understand how different users utilize the information in the Financial statements.
The course Financial Accounting for Managers is delivered in three parts as follows:
1. Week Zero (4.5 hours) Introduction to Financial Accounting, a birds eye
view of concepts For all students.
2. Week One to Ten (30 hours) Key concepts, processes, application of
principles in preparing the financial statements, analysis of financial
statements For all students
3. Week two to Four (online & self paced) - Introduction to the course, concepts
and processes of preparing financial statements For students from noncommerce background. Will run parallel to the regular classes.
We will also be providing you with a detailed course pack which will contain detailed
syllabus, course plan with details of prescribed text book, reference books,
assignments, evaluation criteria etc. Please go through this pack in its entirety and
come well prepared for the classes as directed by your respective faculty members, so
that you can have a wonderful learning experience.
Wish you all the success.
Prof. Krishna M C
Course coordinator

Hindustan Unilever Limited

ANNUAL REPORT 2013-14

Annual Report 2013-14

MAKING SUSTAINABLE
LIVING COMMONPLACE

OUR PURPOSE
TO MAKE SUSTAINABLE
LIVING COMMONPLACE

We work to create a better future every day, with brands and services that help
people feel good, look good and get more out of life.
Our first priority is to our consumers then customers, employees, suppliers and
communities. When we fulfil our responsibilities to them, we believe that our
shareholders will be rewarded.

Unilever Sustainable Living Plan (USLP)

Our Annual Report 2013-14 is complemented by the Business Responsibility Report and
also the online Unilever Sustainable Living Report - India 2013 Progress Report
published in April 2014. This details performance against our USLP targets for the period
1 January to 31 December 2013 except where indicated otherwise. The online report
carries a wealth of information on our approach to running a responsible business.
See www.hul.co.in/sustainable-living-2014/

WE MEET EVERY DAY NEEDS

FOR NUTRITION, HYGIENE
AND PERSONAL CARE WITH
BRANDS THAT HELP PEOPLE
FEEL GOOD, LOOK GOOD AND
GET MORE OUT OF LIFE.
While growing our business we will reduce our
environmental footprint and increase our positive
social impact.
We will lead for responsible growth, inspiring
people to take small everyday actions that will add
up to a big difference. We will grow by winning
shares and building markets everywhere.

Overview
02 Hindustan Unilever at a Glance
04 Financial Performance
05 Performance Trends
06 Chairmans Letter
07 Board of Directors
08 Our Business Model
10 Our Brands
12 Our People
14 Our Operations
16 Unilever Sustainable Living Plan
18 Awards and Felicitations
20 Management Committee
Reports
21 Notice of the Annual General Meeting
26 Profile of Directors and other
Directorships
30 Directors Report and Management
Discussion and Analysis
54 Corporate Governance Report
74 Secretarial Standards Report
Secretarial Audit Report
Financial Statements
Standalone Financial Statements
76 Balance Sheet
77 Statement of Profit and Loss
78 Cash Flow Statement
80 Notes
124 Independent Auditors Report
127 Economic Value Added
Consolidated Financial Statements
128 Balance Sheet
129 Statement of Profit and Loss
130 Cash Flow Statement
132 Notes
162 Independent Auditors Report
163 Statement Pursuant to Section 212
164 Subsidiary Companies Particulars
Shareholder information
165 Investor Safeguards
166 Corporate Information
  6KDUHKROGHUV6DWVIDFWRQ
Survey 2014
  (RPPXQFDWRQ
Registration Form
  3UR[\)RUP

HINDUSTAN UNILEVER
AT A GLANCE
WHO WE ARE

OPERATIONAL HIGHLIGHTS

Hindustan Unilever Limited is one of the

leading fast-moving consumer goods
companies in India. We own some of the
best-known and best-loved brands like
Dove, Surf, Kissan, Bru and Pureit.
We are passionate about them and proud
of the way they help people get more out
of life.

Despite a challenging environment, we

delivered broad-based growth and margin
improvement by stepping up investment in
brands and innovations, while driving cost
savings and operational efficiencies with
even greater rigour. We delivered
competitive and profitable growth:

WHAT WE DO

SEGMENTAL PERFORMANCE

We build our brands and develop our

products through extensive consumer
insight, relentless innovation, and
crystal-clear design and marketing. This
is a powerful blend that helps us excite
and inspire our customers and
consumers. We are committed to making
sustainable living commonplace and
work to develop new ways of doing
business that will reduce our
environmental footprint and increase our
positive social impact.

SEGMENTAL REVENUE (%)

Soaps and Detergents

Personal Products
Beverages
Packaged Foods
Others

22

49.0
29.1
11.9
5.9
4.1

 '
 RPHVWFFRQVXPHUEXVQHVVJUHZ
ZWKDQXQGHUO\QJYROXPHJURZWKRI
 2SHUDWQJPDUJQH[SDQGHGESV
 6WURQJWUDFNUHFRUGRIFDVKJHQHUDWRQ
was sustained with cash from
RSHUDWRQVDWRYHU5VFURUHVXS
Rs. 462 crores over the previous year.
 7RWDOGYGHQGRI5VSHUVKDUH
was declared for the Financial Year.

SEGMENTAL RESULTS (%)

Soaps and Detergents

Personal Products
Beverages

40.1
46.4
13.0

Packaged Foods
Others

1.4
-0.8

OUR KEY PERFORMANCE INDICATORS

We report our performance against key financial and

non-financial performance indicators below. The Directors
5HSRUWVWDUWQJRQSDJHJYHVGHWDOVRIRXUSHUIRUPDQFHQ
each of the business segments and functions. Details of the
progress made on the Unilever Sustainable Living Plan (USLP)
FRPPWPHQWVDUHJYHQRQWKHSDJHDQG

FINANCIAL
NET REVENUE

OPERATING PROFIT

EPS (BASIC)

CASH FROM
OPERATIONS









Rs.

Rs.

Rs.

Rs.

crores

28,019

The domestic consumer

EXVQHVVJUHZE\ZWK
underlying volume growth in
a challenging environment

crores

4,215

17.88

per share

crores

5,000+

2SHUDWQJSURIWJUHZE\
with operating margins
PSURYQJESV

Last year basic EPS:

5VSHUVKDUH

Cash from operations was up

Rs. 462 crores over the
previous year

















NON-FINANCIAL
MANUFACTURING

27%

37%

>84%

35

Reduction in CO2 per tonne

of production compared to
EDVHOQH

Reduction in water use per

tonne of production
FRPSDUHGWREDVHOQH

Reduction in total waste per

tonne of production
FRPSDUHGWREDVHOQH

BETTER LIVELIHOODS

SUSTAINABLE
SOURCING

HEALTH AND
WELL-BEING











0OORQ

65,000
No. of Shaktiammas (women
Shakti Entrepreneurs) selling
our products

Annual Report 2013-14

80%
Tomatoes used in Kissan
ketchup sourced sustainably

)DFWRUHVZWK]HUR
QRQKD]DUGRXVZDVWHWR
landfill

58 million
People reached with Lifebuoy
Handwashing Programme
VQFH

Hindustan Unilever at a Glance

BALANCE SHEET

As at 31st March, 2014

(All amounts in Rs. crores, unless otherwise stated)

As at
31st March, 2014

As at
31st March, 2013

3
4

216.27
3,060.78

216.25
2,457.77

5
6

278.82
838.69

476.25
706.34

7
9
10

5,793.89
852.94
1,957.01
12,998.40

5,167.69
616.15
1,872.02
11,512.47

12
13

2,397.94
24.12
312.08
7.70
636.17
161.73
605.51
0.68

2,256.79
36.11
205.32
10.32
548.03
204.78
384.29
296.84

2,457.95
2,747.53
816.43
2,220.97
537.68
71.91
12,998.40

1,782.63
2,526.99
833.48
1,707.89
648.26
70.74
11,512.47

Note

EQUITY AND LIABILITIES

Shareholders' funds
Share capital
Reserves and surplus
Non-current liabilities
Other long-term liabilities
Long-term provisions
Current liabilities
Trade payables
Other current liabilities
Short-term provisions
TOTAL

ASSETS
Non-current assets
Fixed Assets
Tangible assets
Intangible assets
Capital work-in-progress
Intangible assets under development
Non-current investments
Deferred tax assets (net)
Long-term loans and advances
Other non-current assets
Current assets
Current investments
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets
TOTAL
Summary of significant accounting policies
Contingent liabilities, capital and other commitments

14
15
16
17
18
19
20
21
22
23
2
24, 25

The accompanying notes are an integral part of these financial statements

As per our report of even date

For and on behalf of Board of Directors

For Lovelock & Lewes

Firm Registration No. 301056E
Chartered Accountants

Sanjiv Mehta

Managing Director and CEO

Aditya Narayan

Chairman - Audit Committee

Pradip Kanakia
Partner
Membership No. 39985

Ritesh Tiwari

Group Controller

Mumbai : 28th April, 2014

Mumbai : 28th April, 2014

76

Standalone

Sridhar Ramamurthy

Executive Director
(Finance & IT) and CFO

Dev Bajpai

Executive Director
Legal and Company
Secretary

Hindustan Unilever Limited

Overview

Reports

Financial Statements

Shareholder Information

STATEMENT OF PROFIT AND LOSS

For the year ended 31st March, 2014

(All amounts in Rs. crores, unless otherwise stated)

Note

REVENUE FROM OPERATIONS (GROSS)

Year ended
31st March, 2014

Year ended
31st March, 2013

29,557.90

27,283.59

(1,538.77)

(1,473.38)

28,019.13

25,810.21

621.03

606.90

28,640.16

26,417.11

27

Less: Excise duty

Revenue from operations (net)
Other income

28

TOTAL REVENUE

EXPENSES
Cost of materials consumed

29

11,159.81

10,284.66

Purchases of stock-in-trade

30

3,350.19

3,235.31

Changes in inventories of finished goods (including stock-intrade) and work-in-progress

31

(166.38)

(31.13)

Employee benefits expenses

32

1,435.95

1,318.34

Finance costs

33

36.03

25.15

Depreciation and amortisation expenses

34

260.55

236.02

Other expenses

35

TOTAL EXPENSES
Profit before exceptional items and tax
Exceptional items

7,764.30

6,999.28

23,840.45

22,067.63

4,799.71

4,349.48

228.68

608.40

5,028.39

4,957.88

(1,293.15)

(1,167.59)

Deferred tax

(24.83)

(9.45)

Tax adjustments of prior years (net)

157.08

15.83

3,867.49

3,796.67

Basic (Face value of Re. 1 each)

Rs. 17.88

Rs. 17.56

Diluted (Face value of Re. 1 each)

Rs. 17.87

Rs. 17.55

36

Profit before tax

Tax expenses
Current tax

PROFIT FOR THE YEAR

Earnings per equity share

37

Summary of significant accounting policies

The accompanying notes are an integral part of these financial statements

As per our report of even date

For and on behalf of Board of Directors

For Lovelock & Lewes

Firm Registration No. 301056E
Chartered Accountants

Sanjiv Mehta

Managing Director and CEO

Aditya Narayan

Chairman - Audit Committee

Pradip Kanakia
Partner
Membership No. 39985

Ritesh Tiwari

Group Controller

Mumbai : 28th April, 2014

Mumbai : 28th April, 2014

Annual Report 2013-14

Sridhar Ramamurthy

Executive Director
(Finance & IT) and CFO

Dev Bajpai

Executive Director
Legal and Company
Secretary

Standalone

77

CASH FLOW STATEMENT

For the year ended 31st March, 2014

(All amounts in Rs. crores, unless otherwise stated)

Year ended
31st March, 2013

4,799.71

4,349.48

260.55
(259.08)
12.25
(258.02)
(103.93)

236.02
(199.24)
10.84
(270.02)
(123.66)

7.00
13.46
(18.35)
22.11
17.33
36.03
(270.65)
4,529.06

12.20
18.12
5.63
5.50
3.37
25.15
(276.09)
4,073.39

13.04
70.61
(64.99)
608.87
51.12
(3.39)
368.96
(344.87)
(220.54)
478.81
5,007.87
(1,278.53)
3,729.34

(161.89)
(127.06)
(3.51)
541.36
49.78
(11.64)
49.40
146.56
(10.34)
472.66
4,546.05
(1,004.67)
3,541.38

(5.19)
3,724.15

(1.78)
(10.02)
3,529.58

(530.81)
19.66
(100.64)
(11.13)
9.13
(9,537.48)

(405.65)
0.80
(380.65)
(296.84)
(15,779.65)

CASH FLOW FROM OPERATING ACTIVITIES:

Profit before exceptional items and tax
Adjustments for:
Depreciation and amortisation expenses
Net gain on sale of investments
Deficit on fixed assets sold, scrapped, etc. (net)
Interest income
Dividend income
Provision for expenses on employee stock options/ performance share
schemes
Provision for diminution in the value of non-current investments
Provision/ (write back) for doubtful debts and advances (net)
Bad debts/ advances written off
Provision for Mark to Market loss on derivative instruments
Interest expense
Operating profit before working capital changes
Adjustments for:
(Increase)/decrease in trade receivables
(Increase)/decrease in short-term loans and advances
(Increase)/decrease in long-term loans and advances
Increase/(decrease) in trade payables
Increase/(decrease) in long-term provisions
Increase/(decrease) in short-term provisions
Increase/(decrease) in other current liabilities
Increase/(decrease) in other long-term liabilities
(Increase)/decrease in inventories

Cash generated from operations

Taxes paid (net of refunds)
Cash flow before exceptional items
Exceptional items:
Compensation paid under voluntary separation schemes
Amounts paid for other restructuring activities
Net cash generated from operating activities - [A]

CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of tangible/ intangible assets
Sale proceeds of tangible assets
Investment in equity shares of a subsidiary
Purchase of other non-current investments
Sale of non-current investments
Investment in long term deposits with banks
Purchase of current investments

78

Year ended
31st March, 2014

Standalone

Hindustan Unilever Limited

Overview

Reports

Financial Statements

Shareholder Information

CASH FLOW STATEMENT (CONTD.)

For the year ended 31st March, 2014

(All amounts in Rs. crores, unless otherwise stated)

Sale proceeds of current investments

Loans given to subsidiaries/ fellow subsidiaries
Loans repaid by subsidiaries/ fellow subsidiaries
Investment in bank deposits (having original maturity more than 3 months)
Redemption/ maturity of bank deposits (having original maturity
more than 3 months)
Interest received
Gain on sale of short term highly liquid investments
Dividend received from subsidiaries
Dividend received from others
Cash flow before exceptional items
Exceptional items:
Consideration received on disposal of surplus properties
Net cash (used in)/ generated from investing activities - [B]

CASH FLOW FROM FINANCING ACTIVITIES:

Dividends paid
Dividend distribution tax paid
Amounts deposited in bank accounts towards unpaid dividends
Interest paid
Proceeds from share allotment under employee stock options/ performance
share schemes
Net cash used in financing activities - [C]
Net increase/(decrease) in cash and cash equivalents - [A+B+C]
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

Year ended
31st March, 2014
9,091.73
(261.77)
135.74
(2,549.72)

Year ended
31st March, 2013
16,382.18
(117.86)
87.55
(4,310.94)

2,641.19
210.38
29.53
130.63
13.27
(710.29)

3,853.37
207.81
65.98
51.21
31.95
(610.74)

197.13
(513.16)

645.07
34.33

(2,472.70)
(406.39)
(14.19)
(25.02)

(3,550.31)
(575.51)
(16.81)
(25.15)

1.51
(2,916.79)
294.20
326.41
620.61

7.34
(4,160.44)
(596.53)
922.94
326.41

1.42

1.17

34.50
417.02

43.17
282.07

167.67
620.61

326.41

Cash and cash equivalents comprise of:

Cash on hand
Balances with banks
In current accounts
Term deposits with original maturity of less than three months
Short term, highly liquid investments
Treasury bills with original maturity of less than three months

As per our report of even date

For and on behalf of Board of Directors

For Lovelock & Lewes

Firm Registration No. 301056E
Chartered Accountants

Sanjiv Mehta

Managing Director and CEO

Aditya Narayan

Chairman - Audit Committee

Pradip Kanakia
Partner
Membership No. 39985

Ritesh Tiwari

Group Controller

Mumbai : 28th April, 2014

Mumbai : 28th April, 2014

Annual Report 2013-14

Sridhar Ramamurthy

Executive Director
(Finance & IT) and CFO

Dev Bajpai

Executive Director
Legal and Company
Secretary

Standalone

79

NOTES

to the financial statements for the year ended 31st March, 2014
(All amounts in Rs. crores, unless otherwise stated)

1) COMPANY INFORMATION
Hindustan Unilever Limited (the company) is a public limited
company domiciled in India and is listed on the Bombay Stock
Exchange (BSE) and the National Stock Exchange (NSE). The
company is a market leader in the FMCG business comprising
Home and Personal Care (HPC), Foods and Refreshments. The
company has manufacturing facilities across the country and
Research and Development centres in Mumbai and Bangalore
and sells primarily in India through independent distributors and
modern trade.

2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1. Basis of preparation
These financial statements have been prepared to comply in all
material aspects with applicable accounting principles in India,
the applicable Accounting Standards notified under Section
211(3C) of the Companies Act, 1956. Pursuant to Circular 15/ 2013
dated 13th September, 2013 read with circular 08/ 2014 dated 4th
April, 2014, till the standards of Accounting or any addendum
thereto are prescribed by Central Government in consultation and
recommendation of the National Financial Reporting Authority,
the existing Accounting Standards notified under the Companies
Act, 1956 shall continue to apply. Consequently, these financial
statements have been prepared to comply in all material aspects
with the accounting standards notified under Section 211(3C)
[Companies (Accounting Standards) Rules, 2006, as amended]
and other relevant provisions of the Companies Act, 1956.
All assets and liabilities have been classified as current or noncurrent as per the Companys normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act,
1956. Based on the nature of products and the time between
acquisition of assets for processing and their realisation in
cash and cash equivalents, the Company has ascertained its
operating cycle as 12 months for the purpose of current/ noncurrent classification of assets and liabilities.
Transactions and balances with values below the rounding off
norm adopted by the company have been reflected as 0.00 in
the relevant notes in these financial statements.
2.2. Revenue recognition
Revenue from sale of goods is recognised when all the significant
risks and rewards of ownership in the goods are transferred to
the buyer as per the terms of the contract, the Company retains
no effective control of the goods transferred to a degree usually
associated with ownership and no significant uncertainty exists
regarding the amount of the consideration that will be derived
from the sale of goods. Sales are recognised net of trade
discounts, rebates, sales taxes and excise duties (on goods
manufactured and outsourced).
80

Standalone

Income from export incentives such as duty drawback and

premium on sale of import licenses, and lease license fee are
recognised on accrual basis.
Income from services rendered is recognised based on
agreements/ arrangements with the customers as the service
is performed using the proportionate completion method when
no significant uncertainty exists regarding the amount of the
consideration that will be derived from rendering the service and
is recognised net of service tax, as applicable.
Interest on investments is recognised on a time proportion basis
taking into account the amounts invested and the rate of interest.
Dividend income on investments is recognised when the right to
receive dividend is established.
2.3. Expenditure
Expenses are accounted on accrual basis.
Revenue expenditure pertaining to research is charged to the
Statement of Profit and Loss. Development costs of products
are also charged to the Statement of Profit and Loss unless
a products technical feasibility and other criteria as set out
in paragraph 44 of AS 26 Intangible Assets have been
established, in which case such expenditure is capitalised. The
amount capitalised comprises expenditure that can be directly
attributed or allocated on a reasonable and consistent basis to
creating, producing and making the asset ready for its intended
use. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies
stated for Tangible Assets.
2.4. Tangible assets
Tangible assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any.
Subsequent expenditures related to an item of tangible asset are
added to its book value only if they increase the future benefits
from the existing asset beyond its previously assessed standard
of performance.
Items of tangible assets that have been retired from active use and
are held for disposal are stated at the lower of their net book value
and net realisable value and are shown separately in the financial
statements under Other current assets. Any expected loss is
recognised immediately in the Statement of Profit and Loss.
Losses arising from the retirement of, and gains or losses
arising from disposal of tangible assets which are carried at cost
are recognised in the Statement of Profit and Loss.
Depreciation is provided on a pro-rata basis on the straight line
method over the estimated useful lives of the assets or at the
Hindustan Unilever Limited

Overview

Reports

Financial Statements

Shareholder Information

NOTES

to the financial statements for the year ended 31st March, 2014 (Contd.)
(All amounts in Rs. crores, unless otherwise stated)

rates prescribed under Schedule XIV to the Companies Act, 1956,

whichever is higher. Accordingly,

A provision for diminution is made to recognise a decline, other

than temporary, in the value of non-current investments.

computers and related assets, included in office equipment

are depreciated over four years;

leasehold land is amortised over the primary period of the

lease;

certain assets of the cold chain, included in plant and

equipment, are depreciated over four/ seven years; and

Investments that are readily realisable and are intended to be

held for not more than one year from the date on which such
investments are made, are classified as Current investments.
All other investments are classified as Non-current
investments.

vehicles are depreciated over six years.

2.5. Intangible assets

Intangible assets are stated at acquisition cost, net of
accumulated amortisation and accumulated impairment losses,
if any. Intangible assets are amortised on a straight line basis as
per rates mentioned below:
Asset class
Goodwill
Brands/ trademarks
Computer software

Rate of amortisation
25%
25%
20%

2.6. Impairment
Assessment for impairment is done at each Balance Sheet date
as to whether there is any indication that an asset (tangible
and intangible) may be impaired. For the purpose of assessing
impairment, the smallest identifiable group of assets that
generates cash inflows from continuing use that are largely
independent of the cash inflows from other assets or groups
of assets is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
individual asset/ cash generating unit is made.
Assets whose carrying value exceeds their recoverable amount
are written down to the recoverable amount by recognising
the impairment loss as an expense in the Statement of Profit
and Loss. Recoverable amount is higher of an assets or cash
generating units net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected
to arise from the continuing use of an asset and from its disposal
at the end of its useful life. Assessment is also done at each
Balance Sheet date as to whether there is any indication that
an impairment loss recognised for an asset in prior accounting
periods may no longer exist or may have decreased.
2.7. Investments
Investments are classified into current and non-current
investments. Current investments are stated at the lower of cost
and fair value. Non-current investments are stated at cost.

Annual Report 2013-14

Investment in land and buildings that are not intended to be

occupied substantially for use by, or in the operations of the
company, have been classified as investment property. Investment
properties are carried at cost less accumulated depreciation
and accumulated impairment losses, if any. Depreciation on the
building component of the investment property is provided in line
with the policy on tangible assets.
2.8. Inventories
Inventories are valued at the lower of cost and net realisable
value. Cost is computed on a weighted average basis. The net
realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and
estimated costs necessary to make the sale. Finished goods
and work-in-progress include all costs of purchases, conversion
costs and other costs incurred in bringing the inventories to their
present location and condition.
2.9. Trade receivables and Loans and advances
Trade receivables and Loans and advances are stated after
making adequate provisions for doubtful balances.
2.10. Provisions and Contingent liabilities
Provisions are recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate of
the expenditure required to settle the present obligation at the
balance sheet date and are not discounted to its present value.
These are reviewed at each year end date and adjusted to reflect
the best current estimate.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will
be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of
the company or a present obligation that arises from past events
where it is either not probable that an outflow of resources will
be required to settle the obligation or a reliable estimate of the
amount cannot be made.

Standalone

81

NOTES

to the financial statements for the year ended 31st March, 2014 (Contd.)
(All amounts in Rs. crores, unless otherwise stated)

2.11. Retirement/ post retirement benefits

Defined contribution plans
Contributions to defined contribution schemes such as
employees state insurance, labour welfare fund, superannuation
scheme, employee pension scheme etc. are charged as an
expense based on the amount of contribution required to be
made as and when services are rendered by the employees.
Companys provident fund contribution, in respect of certain
employees, is made to a government administered fund and
charged as an expense to the Statement of Profit and Loss. The
above benefits are classified as Defined Contribution Schemes
as the company has no further defined obligations beyond the
monthly contributions.
Defined benefit plans
In respect of certain employees, provident fund contributions are
made to a trust administered by the company. The interest rate
payable to the members of the trust shall not be lower than the
statutory rate of interest declared by the Central Government
under the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 and shortfall, if any, shall be made good by
the Company. The liability in respect of the shortfall of interest
earnings of the Fund is determined on the basis of an actuarial
valuation. The Company also provides for retirement/ postretirement benefits in the form of gratuity, pensions (in respect
of certain employees), compensated absences and medical.
The Companys liability towards such defined benefit plans is
determined based on valuations, as at the balance sheet date,
made by independent actuaries using the projected unit credit
method. Actuarial gains and losses in respect of the defined
benefit plans are recognised in the Statement of Profit and
Loss in the year in which they arise. The classification of the
companys net obligation into current and non- current is as per
the actuarial valuation report.
Termination benefits
Termination benefits, in the nature of voluntary retirement
benefits or termination benefits arising from restructuring, are
recognised in the Statement of Profit and Loss when: a) the
company has a present obligation as a result of past event; b) a
reliable estimate can be made of the amount of the obligation;
and c) it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation.
2.12. Income Taxes
Tax expense for the year comprises current tax and deferred tax.
Current tax is measured at the amount expected to be paid to
(recovered from) the taxation authorities using the applicable tax
rates and tax laws.

82

Standalone

Deferred tax is recognised for all the timing differences, subject

to the consideration of prudence in respect of deferred tax
assets. Deferred tax assets and liabilities are measured using
the tax rates and tax laws that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are
recognised and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
In situations where the Company has unabsorbed depreciation or
carry forward tax losses, all deferred tax assets are recognised only
if there is virtual certainty supported by convincing evidence that
they can be realised against future taxable profits. The carrying
amount of deferred tax assets is reviewed at each balance sheet
date for any write down or reversal, as considered appropriate.
Current tax assets and current tax liabilities are offset when
there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle the asset and the
liability on a net basis. Deferred tax assets and deferred tax
liabilities are offset when there is a legally enforceable right to
set off assets against liabilities representing current tax and
where the deferred tax assets and deferred tax liabilities relate
to taxes on income levied by the same governing taxation laws.
2.13. Foreign currency translations
Foreign currency transactions are accounted for at the exchange
rates prevailing at the date of the transaction. Gains and losses
resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated
in foreign currencies are recognised in the Statement of Profit
and Loss.
Forward exchange contracts outstanding as at the year end
on account of firm commitment transactions are marked to
market and the losses, if any are recognised in the Statement
of Profit and Loss, and gains are ignored in accordance with the
announcement of the Institute of Chartered Accountants of India
on Accounting for Derivatives issued in March 2008.
2.14. Operating leases
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. The company is both a lessee and a lessor under such
arrangements. Payments and receipts under such leases are
charged or credited to the Statement of Profit and Loss on a
straight line basis over the primary period of the lease.
2.15. Segment reporting
The accounting policies adopted for segment reporting are in
conformity with the accounting policies adopted for the company.
Further,

Hindustan Unilever Limited

Overview

Reports

Financial Statements

Shareholder Information

NOTES

to the financial statements for the year ended 31st March, 2014 (Contd.)
(All amounts in Rs. crores, unless otherwise stated)

a)

Inter segment revenue has been accounted for based on

the transaction price agreed to between segments which is
primarily market based.

b)

Revenue and expenses have been identified to segments on

the basis of their relationship to the operating activities of
the segment. Revenue and expenses, which relate to the
company as a whole and are not allocable to segments on a
reasonable basis, have been included under Un-allocated
corporate expenses net of un-allocated income.

number of equity shares outstanding, without a corresponding

change in resources. For the purpose of calculating diluted
earnings per share, the net profit for the period attributable to
equity shareholders and the weighted average number of shares
outstanding during the period is adjusted for the effects of all
dilutive potential equity shares.
2.18. Employee share based payments

In the cash flow statement, cash and cash equivalents include

cash in hand, term deposits with banks and other short-term
highly liquid investments with original maturities of three
months or less.

Equity settled stock options granted under HUL ESOP/

Performance Shares Schemes are accounted for under
the intrinsic value method as per the accounting treatment
prescribed by Employee Stock Option Scheme and Employee
Stock Purchase Guidelines, 1999, issued by Securities and
Exchange Board of India and the Guidance Note on Employee
Share-based Payments issued by the Institute of Chartered
Accountants of India.

2.17. Earnings per share

2.19. Use of estimates

2.16. Cash and cash equivalents

Basic earnings per share is calculated by dividing the net

profit for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during
the period. The weighted average number of equity shares
outstanding during the period and for all periods presented
is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares, that have changed the

The preparation of the financial statements in conformity with

the generally accepted accounting principles requires that the
management makes estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of the financial statements,
and the reported amounts of revenue and expenses during the
reported period. Actual results could differ from those estimates.

3) SHARE CAPITAL
As at
31st March, 2014

As at
31st March, 2013

225.00

225.00

Authorised
2,250,000,000 (March 31, 2013: 2,250,000,000) equity shares of Re. 1 each
Issued, subscribed and fully paid up
2,162,696,292 (March 31, 2013: 2,162,472,310) equity shares of Re. 1 each

a)

216.27

216.25

216.27

216.25

Reconciliation of the number of shares

Equity Shares:
Balance as at the beginning of the year
Add: ESOP shares issued during the year (Refer note 49)
Balance as at the end of the year

Annual Report 2013-14

As at
31st March, 2014
Number of shares

Amount

As at
31st March, 2013
Number of shares

Amount

2,162,472,310
223,982
2,162,696,292

216.25
0.02
216.27

2,161,512,492
959,818
2,162,472,310

216.15
0.10
216.25

Standalone

83

Scanned by CamScanner

Scanned by CamScanner

Source: Accounting: Text and Cases 12e Instructors Manual

Anthony/Hawkins/Merchant

Case: Ribbons an Bows, Inc.

In January 2006, Carmen Diaz, a recent arrival from Cuba, decided to open a small ribbon shop
in Coconut Grove section of Miami, Florida. During the month, she put together a simple
business plan, which she took to several relatives whom she believed would be interested in
helping her finance the new venture. Two of her cousins agreed to loan the business a total of
$10,000 for one year at a 6 per cent interest rate. For her part Carmen agreed to invest $1,000 in
the equity of the business.
On March 1, 2006, with the help of an uncle who practiced law, Carmen formally incorporated her
business, which she named Ribbons an Bows. Normally, the uncle would have charged a fee of $600
for handling the legal aspects of a simple incorporations, but since Carmen was family, he waived the fee.
As soon as the new business was incorporated, Carmen opened a bank account and deposited the cousins
$10,000 loan and her $1,000 equity contribution. The same day, she signed an agreement to rent store
space for $600 per month, paid on the last day of the month. The agreement was for an 18-month period
beginning April 1. The agreement called for a prepayment of the last two months rent, which Carmen
paid out of company bank account at the signing.
Over the next few weeks, Carmen was actively engaged in getting ready to open the store for business on
April 1. Fortunately for Carmen, the previous tenant had left counters and display furniture that Carmen
could use at no cost to her. In addition, the landlord agreed to repaint the store at no cost, using colors of
Carmens choice. For her part, Carmen ordered, received and paid for the stores opening inventory of
ribbons and ribbons accessories; acquired for free a simple cash register with credit-card processing
capabilities from the local credit-card charge processing company after paying a refundable deposit;
signed service agreements with the local phone and utility companies; ordered, received, and paid for
some store supplies; and placed and paid for advertising announcing the store opening in the April 2
edition of the local paper. In addition, she bought and paid for a used desktop computer with basic
business software already installed to keep track of her business transactions and correspondence.
On March 31, before opening for business the next day, Carmen reviewed the activity in the companys
cash bank account. Following the deposit of the loans and equity contribution, the following payments
were made.
1. Last two months rent

$1,200

2. Opening merchandise inventory

$3,300

3. Cash register deposit

$ 250

4. Store supplies

$ 100

5. April 2 edition advertising

$ 150

6. Used computer purchase

$2,000

After reviewing her cash transaction records, Carmen prepared a list of Ribbons an Bows assets and
sources of capital (See Exhibit 1).
Carmen eventually decided to expand her business by selling custom-designed ribbon table arrangements
for wedding and other special events. This decision led to the purchase of a used commercial sewing
machine for $1,800 cash on May 1.

Source: Accounting: Text and Cases 12e Instructors Manual

Anthony/Hawkins/Merchant

Later, at a family Fourth of July celebration, one of Carmens cousins reminded her that she had
promised to send the cousins a financial report covering the four month period from March1 to
June 30.
The next day, Carmen reviewed the following Ribbons an Bows information she had gathered
over the last four months.
1. Customers had paid $7,400 cash for ribbons and accessories, but she was still owed $320 for
ribbon arrangements for a large wedding delivered to the customer on June 30,
2. A part-time employee had been paid $1,510 but was still owed $90 for work performed
during the last week of June.
3. Rent for the three-month period had been paid in cash at the end of each month, as stipulated
in the rental agreement.
4. Inventory replenishments costing $2,900 had been delivered and paid for by June 30, Carmen
estimated the June 30 merchandise inventory on hand had cost $ 4,100.
5. The small opening office supplies inventory was nearly all gone. She estimate supplies
costing $20 had not been used.
Carmen believed that the initial three months of business had been profitable, but she was puzzled
by the fact that the cash in the companys June 30 bank account was $3,390. Which was less than
the April 1 balance of $4,000.
Carmen also was concerned about how she should reflect the following in her financial report.
1. No interest had been paid on the cousins loan.
2. The expenditure made for the desktop computer and its related software and the commercial
sewing machine. She believed these expenditure would be beneficial to the business long
after June 30. At the time she purchased the commercial sewing machine, Carmen estimated
that it would be used for about five years from its May 1 purchase date, when it would then
have to be replaced. Similarly, on March 31, she had estimated the desktop computer and its
software would have to be replaced in two years time. Carmen believed the sewing machine
and the computer along with its software would have no resale value at the end of their useful
life.
3. The free legal work performed by her uncle and the free cash register provided by the local
credit-card charge processor.
4. Carmen had not paid herself a salary or dividends during the four months of operations. If
cash was available, she anticipated that some time in July she would pay herself some
compensation for the four months spent working in the business. Before starting her business,
Carmen had worked for $1,300 a month as a cashier in a local grocery store.
Questions:
1. How would you report on the three-month operations of Ribbons an Bows Inc., through
June-30? Was the company profitable? (Ignore income taxes). Why did its cash in the bank
decline during the three-month operating period?
2. How would you report the financial conditions of the business on June 30, 2006?
3. Do you believe Carmens first three months of operations could be characterized as
successful? Explain your answer.

Source: Accounting: Text and Cases 12e Instructors Manual

Anthony/Hawkins/Merchant

EXHIBIT 1
Assets

Liabilities

Cash

4,000

Cousins Loan

Inventory

3,300

Carmens equity

Supplies
Prepaid rent
Prepaid advertising

10,000
1,000

100
1,200
150

Computer / Software

2000

Cash register deposit

250

TOTAL

11,000

TOTAL

11,000

On-line Bridge course in Accounting through Learning Management System (LMS)

Moodle
Instructions
1. Go to courses.christuniversity.in
2. Select the course titled Bridge Course Accounting-2015 and you will see the
following screen as in Picture 1 where the video lessons are uploaded topic wise.
Picture 1

3. You will have to proceed with taking the lessons sequentially and if you open video
lesson under topic 1, you will find the screen appearing in Picture 2 where you have
to click the icon linked media click here to view as highlighted

Picture 2

4. That will enable playing a video for stipulated time as seen in Picture 3

Picture 3

5. You can listen to the complete video and then start answering the self test questions as
appearing in the screen. If the answer selected in incorrect, it will come back to the
2

same question and if it is correct, the screen would pop up the explanation to the
question as in Picture 4
Picture 4

After attempting all the questions the screen similar to Picture 5 will show end of the lesson
and if you want, you can attempt the questions a number of times.
Picture5

You can also refer the reading / reference materials which are found in the videos as
highlighted in Picture 6
3

Picture6

Other points to be noted:

There are totally 8 video lessons and they have to be taken only sequentially
that is lesson 2 can be attempted only after completing Lesson 1 and so on.
The grade appearing after the lessons are only for self improvement and not a
part of assessment
You will have quiz at regular intervals as a part of assessments which could
come from the concepts discussed in the videos and the prescribed text book.
You may actively participate in the discussion forum to register your doubts
which could be answered by the fellow students or the faculty.

Happy learning

Bridge Course Statistics

Week Zero June 2015

Managerial Statistics
Faculty Details:
Email id:
Mobile No. :
Objective of the course
This course is intended to help students to understand and appreciate the role of statistics in
business decision making

Units
Module 1
(90
minutes)

Module 2
(90
minutes)

Break up of Topic
Introduction to
statistics, Types of
statistical data and
Measures of central
tendency Introduction
Practical aspects of
Measures of central
tendency

Week #

Teaching pedagogy

Zero

Discussion

Zero

Measures of variability

Module 3
(90
minutes)

Skweness and Kurtosis

Index numbers

Assignments / Chapter
Ref.
Ref.
Go through Fist
video - Data
Page 3 of
Handlingthe material
Collecting &
- Exercises
Organizing Data
1- 2

Discussion and Problem Go through Self Page 3 & 4

test exercises 3,
of the
solving
4, and 5
material
- Exercises
3-5
Discussion and Problem Go through Self Page 7 of
test exercises 6 the material
solving
and 7
Exercises 6
and 7

Zero

Discussion and Problem Go through

Second video solving
Distribution
moments
(mean,
variance, skew,
kurtosis)
Go through
Self test
exercises 8 and
9

Page 11 of
the material
Exercises
8 and 9

Outcome of the course

After the completion of the course, the students should be in a position to gain a broad
perspective on fundamentals of statistics in business decision making

"Statistical thinking will one day be as necessary for efficient citizenship as the ability
to read and write"- H.G. Wells
I. Introduction to Statistics
Definition: Statistics can be defined as the collection presentation and interpretation
of numerical data.
- Croxton and Crowed.
Statistics in business and management
1. Marketing: Statistical analysis are frequently used in providing information
for making decision in the field of marketing it is necessary first to find out
what can be sold and the to evolve suitable strategy, so that the goods which to
the ultimate consumer. A skill full analysis of data on production purchasing
power, man power, habits of compotators, habits of consumer, transportation
cost should be consider to take any attempt to establish a new market.
2. Production: In the field of production statistical data and method play a very
important role. The decision about what to produce? How to produce? When
to produce? For whom to produce is based largely on statistical analysis.
3. Finance: The financial organization discharging their finance function
effectively depend very heavily on statistical analysis of peat and tigers.
4. Banking: Banking institute have found if increasingly to establish research
department within their organization for the purpose of gathering and analysis
information, not only regarding their own business but also regarding general
economic situation and every segment of business in which they may have
interest.
5. Investment: Statistics greatly assists investors in making clear and valued
judgment in his investment decision in selecting securities which are safe and
have the best prospects of yielding a good income.
6. Purchase: the purchase department in discharging their function makes use of
statistical data to frame suitable purchase policies such as what to buy? What
quantity to buy? What time to buy? Where to buy? Whom to buy?
7. Accounting: statistical data are also employer in accounting particularly in
auditing function, the technique of sampling and destination is frequently
used.
8. Control: the management control process combines statistical and accounting
method in making the overall budget for the coming year including sales,
materials, labor and other costs and net profits and capital requirement.
Descriptive and Inferential statistics
a) Descriptive Statistics: A statistical technique that produces a number or
figure that summarizes or describes a set of data. The basic idea is that a
descriptive statistic summarizes a set of data with one number or graph.
b) Inferential Statistics: A method that takes chance factors into account when
samples are used to reach conclusions (or make inferences about) populations.
II.

Types of statistical data

Categorical or Qualitative
Numerical or Quantitative

Examples of categorical data: Yes or No, male or female, pass or fail etc
Examples of numerical data: Income, marks, runs scored etc
Data Types

Qualitative/ Categorical

Discrete

Nominal

Quantitative / Numerical

Discrete/ Continuous

Ordinal

Interval

Ratio

Example for Nominal data: Roll number, telephone number, house number, car
number, colour of a vehicle etc
Example for Ordinal data: Ratings of hotels, grades of students etc
Example for Interval data: Temperature, dress size, calendar dates etc
Example for Ratio data: Number of computers you own, weight, height, a bank
balance, number of people watching a movie, goals scored
by country in the world cup etc
III. Measures of central Tendency and application
Mean, Median, Mode
Mean: Also known as the average. The mean is found by adding up all of the given
data and dividing by the number of data entries.

Example:
The grade 10 math class recently had a mathematics test and the grades were as
follows:
78
66
82
89
75
.
+ 74
464
464 / 6 = 77.3
Hence, 77.3 is the mean average of the class

Median:
The median is the middle number. First you arrange the numbers in order from
lowest to highest, then you find the middle number by crossing off the numbers until
you reach the middle.
Example:
Use the above data to find the median:
66 74 75 78 82 89
As you can see we have two numbers, there is no middle number. What do we do?
It is simple; we take the two middle numbers and find the average, (or mean).
75 + 78 = 153
153 / 2 = 76.5
Hence, the middle number is 76.5.
Mode: This is the number that occurs most often.
Example:
Find the mode of the following data:
78 56 68 92 84 76 74 56 68 66 78 72 66
65 53 61 62 78 84 61 90 87 77 62 88 81
The mode is 78.

Self test Exercise 1

Following data relates to class size of five colleges
46
54
42
46
32
Calculate Mean
Self test Exercise 2
Following data relates to the starting salary of 12 business college undergraduate
students
3310 3355 3450 3480 3490 3250 3540 3550 3650 3730 3925
Calculate Median
Self test Exercise 3
J. D. Powers and Associates surveyed cell phone users in order to learn about the
minutes of cell phone usage per month (Associated Press, June 2002). Minutes per
month for a sample of 15 cell phone users are shown here.
615
135
395
430
830
1180
690
250
420
265
245
210
180
380
105
a. What is the mean number of minutes of usage per month?
b. What is the median number of minutes of usage per month?
c. What is the 85th percentile?
d. J. D. Powers and Associates reported that the average wireless subscriber plan
allows up to 750 minutes of usage per month. What do the data suggest about
cell phone subscribers' utilization of their monthly plan?

Self test Exercise 4

An American Hospital Association survey found that most hospital emergency rooms
are operating at full capacity (Associated Press, April 9, 2002). The survey collected
data on the emergency room waiting times for hospitals where the emergency room is
operating at full capacity and for hospitals where the emergency room is in balance
and rarely operates at capacity. Sample data showing waiting times in minutes are as
follows.
ER Waiting Times for
ER Waiting Times for
Hospitals at Full Capacity
Hospitals in Balance
87
59
60
39
80
110
54
32
47
83
18
56
73
79
29
26
50
50
45
37
93
66
34
38
72
115
a. Compute the mean and median emergency room waiting times for hospitals
operating at full capacity.
b. Compute the mean and median emergency room waiting times for hospitals
operating in balance.
c. What observations can you make about emergency room waiting times based on
these results? Would the American Hospital Association express concern with the
statistical results shown here?
Self test Exercise 5
In automobile mileage and gasoline-consumption testing, 13 automobiles were road
tested for 300 miles in both city and highway driving conditions. The following data
were recorded for miles-per-gallon performance.
City:
16.2 16.7 15.9 14.4 13.2 15.3 16.8 16.0 16.1 15.3 15.2 15.3 16.2
Highway: 19.4 20.6 18.3 18.6 19.2 17.4 17.2 18.6 19.0 21.1 19.4 18.5 18.7
Use the mean, median, and mode to make a statement about the difference in
performance for city and highway driving.

IV. Measures of Variation

Range
Standard Deviation (Variance)
Co-efficient of Variation

Variance
Find the mean, median, mode, and range for the following list of values:
13, 18, 13, 14, 13, 16, 14, 21, 13
Mean
(13 + 18 + 13 + 14 + 13 + 16 + 14 + 21 + 13) 9 = 15
Median
The median is the middle value, Rewrite the list in increasing order:
13, 13, 13, 13, 14, 14, 16, 18, 21
There are nine numbers in the list, so the middle one will be the (9 + 1) 2
= 10 2 = 5th number:
13, 13, 13, 13, 14, 14, 16, 18, 21
So the median is 14
Mode is the number that is repeated more often than any other, so 13 is the mode.
The largest value in the list is 21, and the smallest is 13, so the range is 21 13 = 8.
Following is the length of a product in MM
9, 2, 5, 4, 12, 7, 8, 11, 9, 3, 7, 4, 12, 5, 4, 10, 9, 6, 9, 4
Calculate Variance

Solution
Mean =(9+2+5+4+12+7+8+11+9+3+7+4+12+5+4+10+9+6+9+4) / 20 = 140/20 = 7
Variance
(9 - 7)2 = (2)2 = 4
(2 - 7)2 = (-5)2 = 25
(5 - 7)2 = (-2)2 = 4
(4 - 7)2 = (-3)2 = 9
(12 - 7)2 = (5)2 = 25
(7 - 7)2 = (0)2 = 0
(8 - 7)2 = (1)2 = 1
(11 - 7)2 = (4)2 = 16
(9 - 7)2 = (2)2 = 4
(3 - 7)2 = (-4)2 = 16
(7 - 7)2 = (0)2 = 0
(4 - 7)2 = (-3)2 = 9
(12 - 7)2 = (5)2 = 25
(5 - 7)2 = (-2)2 = 4
(4 - 7)2 = (-3)2 = 9
(10 - 7)2 = (3)2 = 9
(9 - 7)2 = (2)2 = 4
(6 - 7)2 = (-1)2 = 1
(9 - 7)2 = (2)2 = 4
(4 - 7)2 = (-3)2 = 9
Sample Variance
(4+25+4+9+25+0+1+16+4+16+0+9+25+4+9+9+4+1+4+9) / 19 = 178/19 = 9.368

Standard deviation
9.368 3.061
Coefficient of Variation
Month

Price of Stock X Price of Stock Y

Jan

Feb

Mar

Apr

May

10

Total

30

30

Mean = x N
X = 30 5 = 6
Y = 30 5 = 6

Price of Price of
Month Stock X Stock Y Dx (x- 6) Dx2 Dy (y-6) Dy2
Jan
4
8
-2
4
2
4
Feb
5
6
-1
1
0
0
Mar
8
4
2
4
-2
4
Apr
3
7
-3
9
1
1
May
10
5
4
16
-1
1
30
30
0
34
0
10

( x)

dx 2
34
34

8.5 2.92
N 1
5 1
4

( y)

dy 2
10
10

2.5 1.58
N 1
5 1
4

CV ( x)
CV ( y )

2.92
100 48.66%
6
1.58
100 26.33%
6

Self test Exercise 6

The following data were used to construct the histograms of the number of days
required to fill orders for Dawson Supply, Inc., and J.C. Clark Distributors
Dawson Supply Days for Delivery:
11 10 9 10 11 11 10 11 10 10
Clark Distributors Days for Delivery: 8 10 13 7
10 11 10 7
15 12
Use the range and standard deviation to support that Dawson Supply provides the
more consistent and reliable delivery times.
Self test Exercise 7
How do grocery costs compare across the country? Using a market basket of 10 items
including meat, milk, bread, eggs, coffee, potatoes, cereal, and orange juice, Where to
Retire magazine calculated the cost of the market basket in six cities and in six
retirement areas across the country {Where to Retire, November/December 2003).
The data with market basket cost to the nearest dollar are as follows:
City
Cost
Retirement Area
Cost
Buffalo, NY
$33
Biloxi-Gulfport. MS
$29
DesMoines, IA
27
Asheville. NC
32
Hartford, CT
32
Flagstaff. AZ
32
Los Angeles, CA
38
Hilton Head, SC
34
Miami, FL
36
Fort Myers, FL
34
Pittsburgh, PA
32
Santa Fe. NM
31
a. Compute the mean, variance, and standard deviation for the sample of cities
and the sample of retirement areas.
b. What observations can be made based on the two samples?

V. Index numbers
Index numbers are statistical measures designed to show changes in a variable or
group of related variables with respect to time,
Index numbers are quantitative measures of growth of prices, production, inventory
and other quantities of economic interest.
-Ronold
Types of Index numbers
Consumer price Index
Wholesale price index
Index of industrial production
SENSEX

CPI Calculation
(1) Aggregate expenditure Method

(2) Family Budget Method

Base Shifting
Example

Determination of Purchasing power of money

Example 1

Example 2

10

Self test Exercise 8

Starting faculty salaries (nine-month basis) for assistant professors of business
administration at a major Midwestern university follow. Use the CPI to deflate the
salary data to constant dollars. Comment on the trend in salaries in higher education
as indicated by these data.
CPI Year
1970
1975
1980
1985
1990
1995
2000
2005

Starling Salary ($)

14,000
17,500
23,000
37,000
53.000
65,000
80,000
110,000

(1982-1984 Base)
38.8
53.8
82.4
107.6
130.7
152.4
172.2
195.3

Self test Exercise 9

The five-year historical prices per share for a particular stock and the Consumer Price
Index with a 1982-1984 base period follow.
Year
Price per share ($)
CPI (1982-1984)
2001
51.00
177.1
2002
54.00
179.9
2003
58.00
184.0
2004
59 50
188.9
2005
59.00
195.3
Deflate the stock price series and comment on the investment aspects of this stock.

VI. Skewness and Kurtosis

Skewness: indicator used in distribution analysis as a sign of asymmetry and
deviation from a normal distribution.
Interpretation:
Skewness > 0: Right skewed distribution - most values are concentrated on left
of the mean, with extreme values to the right.
Skewness < 0: Left skewed distribution - most values are concentrated on the
right of the mean, with extreme values to the left.
Skewness = 0: mean = median, the distribution is symmetrical around the
mean.

11

Example 1

Example 2

12

Kurtosis - indicator used in distribution analysis as a sign of flattening or

"peakedness" of a distribution.
Interpretation:
Kurtosis > 3: Leptokurtic distribution, sharper than a normal distribution, with
values concentrated around the mean and thicker tails. This means high
probability for extreme values.
Kurtosis < 3: Platykurtic distribution, flatter than a normal distribution with a
wider peak. The probability for extreme values is less than for a normal
distribution, and the values are wider spread around the mean.
Kurtosis = 3: Mesokurtic distribution - normal distribution for example.
Example 1

13

Example 2

14

15

Organizational Structures

Organizational Structures

1. Objective of the module:

a. To increase students understanding about the concept of organizations.

b. To increase students ability to understand the various types of organization
structures, their advantages and disadvantages
c. To make aware to students how organization structures influence people
working in organizations.

2. Session plan:

Session
1

Content
Definition of
organization organization
structuresadvantages disadvantages
and
contemporary
structures

Pedagogy
Interactive sessions ,
discussion based on
OST experiences
and videos

References
Robbins,S.P, Judge,T.A
&Vohra,N (2012)
Organizational Behaviour :
Pearson

3. Assessment: Mentors can mark the students on the basis of their OST presentations
as part of their Industrial Domain Knowledge Marks.

4. Handout :

Organization Structures

Meaning of Organisation:
Organisation is the foundation upon which the whole structure of management is built.
Organisation is related with developing a frame work where the total work is divided into
manageable components in order to facilitate the achievement of objectives or goals. Thus,
organisation is the structure or mechanism (machinery) that enables living things to work
together. In a static sense, an organisation is a structure or machinery manned by group of
individuals who are working together towards a common goal. The term 'organisation' has
also been used in a number of ways. Broadly speaking, the term 'organisation' is used in four
different senses: as a process, as a structure of relationship, as a group of persons and as a
system, as given below:
Organisation as a Process: In this first sense, organisation is treated as a dynamic process
and a managerial activity which is essential for planning the utilization of company's
resources, plant and equipment materials, money and people to accomplish the various
objectives.
Organisation as a Framework of Relationship: In the second sense organisation refers to
the structure of relationships and among position jobs which is created to release certain
objectives.
Organisation as a Group of persons: In the third sense, organisation is very often viewed as
a group of persons contributing their efforts towards certain goals. Organisation begins when
people combine their efforts for some common purpose..
Organisation as a System: In the fourth sense, the organisation is viewed as system. System
concepts recognize that organizations are made up of components each of which has unique
properties, capabilities and mutual relationship. The constituent element of a system are

linked together in such complex ways that actions taken by one producer have far reaching
effect on others.
Definitions of Organisation

Different authors have defined organisation in different ways. The main definitions of
organisation are as follows:
According to Keith Davis, "Organisation may be defined as a group of individuals, large of
small, that is cooperating under the direction of executive leadership in accomplishment of
certain common object."
According to Chester I. Barnard, "Organisation is a system of co-operative activities of two
or more persons."

Steps in the Process of Organisation

Organisation means identifying, arranging and integrating different elements of organisation

into efficient working order. It requires the management to follow the following process of
organisation.
Division of work
The main function is divided into sub-functions and entrusted to the different departmental
heads. The result is the establishment of departments like Purchase, Sales, Production,
Accounts, Publicity and Public relations. The departments can be further classified just as
production department into (1) Planning (2) Designing, (3) Operations, (4) Production
Control and (5) Repairs and Maintenance. The division of the work is based upon the fact
that specialization is keynote of efficient organisation.
Grouping of Job and Departmentation
The second step is to group similar or related jobs into larger units, called departments,
divisions or sections. Grouping process is called departmentation.
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The department may be based upon functions such as manufacturing, marketing and
financing etc. Department may also be based on products, such as textiles, cosmetic,
stationery etc. These departments may have different sections as per requirement.
Grouping jobs or Departmentation aims at achieving coordination and facilitates unity of
efforts. The departments are linked together on the basis of interdependence. The divided task
is assigned to specific individual or group of individuals who are supposed to be the most
qualified and specialized persons for the task.
Assigning duties
The work to be performed by every individual is clearly defined and made known to him.
Every one must know, what he is required to do in order to avoid any misunderstanding,
duplication or overlapping in the work.
Granting authorities and fixing responsibilities
Assigning of duties to individuals must coincide with the appropriate and relevant authorities.
Every employee must know, what the authorities granted to him and for what and to whom
he will be responsible, liable and accountable.
Delegation of authority
Those who are made responsible for specific tasks are given due authority. Both
responsibility and authority go hand in hand together. Reasonable powers are delegated to
heads and supervisory staff to enable them to do their work with ease and efficiency.
Effective communication
Effective communication is the keynote of efficient organisation. There should be proper
arrangement of communication messages from executives to subordinates and vice-versa.
Proper communication system establishes harmonious relationship between employees and
enables execution of work in the right manner at the appropriate time and in an atmosphere of
perfect mutual adjustment.
Co-ordination of activities for common objectives
Business activity is a team work or the group activity, so the efforts of every employee must
be co-ordinate effectively to achieve the common objectives of the enterprise.
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Types of Organisation Structures: Advantages and Disadvantages

In order to achieve the desired goals, sound and effective organizational structure is
necessary. Organizational structure, as we know is the system of job positions, roles assigned
to these positions and specifying authority, responsibility and task of every positions. The
structure undoubtedly provides basic framework for executive and employees to perform
their task smoothly. There are two organisations they must deal with-one formal and the
other informal.
The formal organisation in usually delineated by an organisational chart and job descriptions.
The official reporting relationships are clearly known to every manager.
Alongside the formal organisation exists are informal organisation which is a set of evolving
relationships and patterns of human interaction within an organisation that are not officially
prescribed.
Formal organisational structures are categorised as:
1.

Simple structure

2.

Functional Structure

3.

Divisional organizational Structure.

4.

Matrix organisational structure and

5.

Project organisational structure.

These organisational structures are briefly described in the following paragraphs:

Simple Organisational Structure:

A simple organisation has only direct, vertical relationships between different levels in the
firm. There are only -departments directly involved in accomplishing the primary goal of the
organisation. The exhibit below illustrates a simple organisational structure.

Some of the advantages of simple organisation structure are:

(i) A simple structure tends to simplify and clarify responsibility, authority and accountability
relationships. The levels of responsibility and authority are likely to be precise and
understandable.
(ii) A simple structure promotes fast decision making and flexibility.
(iii) Because simple organisations are usually small, managements and employees have
greater closeness.
However, there are some disadvantages also. They are:
(i) As the firm grows larger, simple organisation becomes more ineffective.
(ii) Improved speed and flexibility may not offset the lack of specialized knowledge.
(iii) Managers may have to become experts in too many fields.
(iv) There is a tendency to become overly dependent on the few key people who an perform
numerous jobs.
Functional Structure

A functional structure is one of the most common organizational structures. Under this
structure, the organization groups employees according to a specialized or similar set of roles
or tasks. While functional structures operate well in stable environments where business
strategies are less inclined to changes or dynamism, the level of bureaucracy makes it
difficult for organizations to respond to changes in the market quickly.

The advantages of functional structure is

Economies :

One main benefit of the functional organizational structure derives from

grouping like jobs together. Equipment and personnel aren't repeated across different
departments, which saves a business money. The scope of activities within a department is
larger than it would be if it were spread across a company, allowing for greater expertise and
specialization. This, in turn, leads to "economies of scale," which refers to efficiency and
productivity increases as operational scope increases.
Management : Functional organization makes for clear lines -- lines of communication, lines
between departments and jobs, and the line that is the chain of command. The advantage of
these clear-cut delineations lies smoother management. People understand boundaries, who
answers to whom and who takes the blame or credit for results. Decision-making is
centralized, both for departments and for the organization as a whole. This unity of command
structure fosters a sense of direction and coordination, especially within functional areas.

Exhibit: Functional Structure

The disadvantages of functional Structure are

Isolation : Though the functional organizational structure gives employees a sense of
belonging within each departmental area, the structure creates space between departments.
Communication between them suffers, and with it goes easy coordination and cooperation.
Functional division also makes it difficult for departments to understand larger company
concerns. If managers become myopic, they may put department before company and resent
other departments.
Cumbersomeness : Functional organizational structures are not nimble, flexible or easily
adaptable. Indeed, this type of structure is the most rigid of all possible structures. The
hierarchy creates bureaucracy, an impediment to change. When shifts in the market
environment occur, decisions on how to react come slowly as proposed changes are forced to
travel through various chains of command. This same situation also stifles innovation. The
rigidity of the functional organizational structure makes it a poor fit for dynamic
environments.(See Exhibit )
Divisional Structure :

Grouping of activities or Departmentation on the basis of product lines and areas is known as
divisional structure of organisation. Divisional structure has been finding favor with the
multiple large scale enterprise. Under this structure the top level delegates extensive
authorities to the divisional heads. The divisional head is the in charge of the manufacturing,
purchase, sales, engineering and other departments of the division under his command. He is
also made responsible for the profit or loss of his division.
Product and product line is an important basis for Departmentation. It facilitates the use of
specialized and specialist services of the divisional managers in their product line. He can use
his personal skill and his specialized knowledge for the development of his department.
Organizations having their business all over the country may adopt divisional structure on the
basis of area, such as north division, south division, east, west and central division. The
organisation structure of LIC and Railways is also upon divisional structure.
The manufacturing enterprise producing variety of goods may have different division for
different products such as textile division, plastic division, stationary division etc.
In this type of structure, the organisation can have different basis on which departments are
formed. They ,(i) Product,(ii) Geographic territory,(iii) Project and(iv) Combination (See
Exhibit)

Divisional

Organisational

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Structure:

Matrix Organisational Structure:

It is a permanent organisation designed to achieve specific results by using teams of
specialists from different functional areas in the organisation. This type of organisation is
often used when the firm has to be highly responsive to a rapidly changing external
environment.
In matrix structures, there are functional managers and product (or project or business group)
managers. Functional manager are in charge of specialized resources such as production,
quality control, inventories, scheduling and marketing. Product or business group managers
are incharge of one or more products and are authorized to prepare product strategies or
business group strategies and call on the various functional managers for the necessary
resources.
The problem with this structure is the negative effects of dual authority similar to that of
project organisation. The functional managers may lose some of their authority because
product managers are given the budgets to purchase internal resources. In a matrix
organisation, the product or business group managers and functional managers have
somewhat equal power. There is possibility of conflict and frustration but the opportunity for
prompt and efficient accomplishment is quite high.

Feature:
Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical
functional structure
Advantages:
1. Decentralised decision making.
2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change.
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5. Flexible use of resources.

6. Efficient use of support systems.

Disadvantages:
i.

High administration cost.

ii.

Potential confusion over authority and responsibility.

iii.

High prospects of conflict.

iv.

Overemphasis on group decision making.

v.

Excessive focus on internal relations.

Project Organisational Structure:

Temporary organisation designed to achieve specific results by using teams of specialists
from different functional areas in the organisation.
Characteristics of project organisation:
1. Personnel are assigned to a project from the existing permanent organisation and are under
the direction and control of the project manager.

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2. The project manager specifies what effort is needed and when work will be performed
whereas the concerned department manager executes the work using his resources.
3. The project manager gets the needed support from production, quality control, engineering
etc. for completion of the project.
4. The authority over the project team members is shared by project manager and the
respective functional managers in the permanent organisation.
5. The services of the specialists (project team members) are temporarily loaned to the project
manager till the completion of the project.
6. There may be conflict between the project manager and the departmental manager on the
issue of exercising authority over team members.
7. Since authority relationships are overlapping with possibilities of conflicts, informal
relationships between project manager and departmental managers (functional managers)
become more important than formal prescription of authority.
8. Full and free communication is essential among those working on the project.

.
Importance of Project Organisational Structure:
Project organisational structure is most valuable when:
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(i) Work is defined by a specific goal and target date for completion.
(ii) Work is unique and unfamiliar to the organisation.
(iii) Work is complex having independent activities and specialized skills are necessary for
accomplishment.
(iv) Work is critical in terms of possible gains or losses.
(v) Work is not repetitive in nature.
Virtual organization:
The term virtual organization is used to describe a network of independent firms that join
together, often temporarily, to produce a service or product. Virtual organization is often
associated with such terms as virtual office, virtual teams, and virtual leadership. The
ultimate goal of the virtual organization is to provide innovative, high-quality products or
services instantaneously in response to customer demands
Ray Grenier and George Metes discuss the shift to this new organizational structure as a
response to unprecedented customer expectations and alternatives, global competition, time
compression, complexity, rapid change, and increased use of technology. They describe the
virtual model as a lead organization that creates alliances with groups and individuals from
different organizations who possess the highest competencies to build a specific product or
service in a short period of time (see Figure ).

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Figure

The Virtual Corporation - A network of organizations working independently

to bring a product to market

Partners in virtual organizations share risks, costs, and rewards in pursuit of a global market.
The common characteristics of these organizations include a purpose that is motivated by
specific market opportunities, world-class core competence, information networks,
interdependent relationships, and permeable boundaries.

The Informal Organisation:

An informal organisation is the set of evolving relationships and patterns of human
interaction within an organisation which are not officially presented. Alongside the formal
organisation, an informal organisation structure exists which consists of informal
relationships created not by officially designated managers but by organisational members at
every level. Since managers cannot avoid these informal relationships, they must be trained
to cope with it
The informal organisation has the following characteristics
(i) Its members are joined together to satisfy their personal needs (needs for affiliation,
friendship etc.)
(ii) It is continuously changing:
The informal organisation is dynamic.
(iii) It involves members from various organisational levels.
(iv) It is affected by relationship outside the firm.
(v) It has a pecking order: certain people are assigned greater importance than others by the
informal group.
Even though an informal organisational structure does not have its own formal organisational
chart, it has its own chain of command:

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Advantages of Informal Organisation:

(i) Assists in accomplishing the work faster.
(ii) Helps to remove weakness in the formal structure.
(iii) Lengthens the effective span of control.
(iv) Compensation for violations of formal organisational principles.
(v) Provides an additional channel of communication.
(vi) Provides emotional support for employees.
(vii) Encourages better management.
Disadvantages of informal organisation:
(i) May work against the purpose of formal organisation.
(ii) Reduces the degree of predictability and control.
(iii) Reduces the number of practical alternatives.
(iv) Increases the time required to complete activities.

Conclusion:
The study of organization structure is important because it aids in decision making.. Flat
structures enable small companies to make quicker decisions as they are growing rapidly and
need flexibility. Organizational structure indicates distribution of authority which results in
better communication and achievement of goals Organizational structure enables companies
to better manage change in the marketplace, including consumer needs, government
regulation and new technology.

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5 Website Links.

https://www.youtube.com/watch?v=NxJvS92uCus
https://www.youtube.com/watch?v=Chb3Mk7wVVQ

Learning outcomes:
a. Understanding of a concept of organization and organization structure
b. Ability to distinguish between various organization structures, its advantages
and disadvantages
c. Understand the impact of organization structure on employee behaviour

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