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National Institute of Business Management

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Assignments of One Year MBA

Semester - I
Total Marks :100
1. Students are requested to go through the instructions carefully.
2. The Assignment is a part of the internal assessment.
3. Marks will be awarded for each Assignment, which will be added to
the total marks. Assignments carry equal marks.
4. Assignments should submit in your 'portal' on/before the
'completion date' mentioned.

1. Principles and Practices of Management

Explain the different activity levels of Management.

Ans: There are Five Activity Levels of Business Management

The management of an industry can be sub-divided into the
following different level:
1. Top Management It consists of the Board of Directors and the
principal officers such as the Chief Executive, Managing Director,
and others concerned with the general operation as distinct from
some functional specialization. They are the ultimate level of
authority in the operation of the enterprise.
They set the objectives, define the goals, establish the policies,
see that the policies are put into effect and judge the results.
Livingston has described the top management’s actual operation
by listing it as follows:
A. Decision-making
(i) Origination versus confirmation or veto
(ii) Planning
1. Setting of goals What, how much, at what price, when and
2. Mechanism
a ) Process
b) Structural organization and co-ordination
c) Appointment of key personnel.
(iii) Policy
1. Definition General versus specific
2. Integration.
(iv) Implementation
1. Release of authority
2. Integration.
(v) Financial
1. Selection of types of funds to be secured
2. Distribution of profit.
B. Judicial
(i) Comparison Of accomplishment with goal.
(ii) Evaluation
1. Of accomplishment with the cost.
2. Of alternative possibilities.
(iii) Counsel
In place of decision or command.
There are certain behavioral characteristics of top-level executives
given below:
i) Drive - Pure physical energy is an absolute necessity.
ii) A strong desire to become the top man.
iii) A willingness to work for long hours.
iv) Projecting an image of success.
v) Management’s effectiveness
2. Upper Middle Management
It consists of the head of the Personnel Administration
Department, Production or Works Manager, Sales Manager or
others responsible for research, finance, accounting and the like.
Thus, Upper Middle management consists of the executives
responsible for leading functions within the enterprise such as
Personnel Administration, Production, Sales, Research, etc.
3. Middle Management
‘Middle Management acts with and under Top Management to
accomplish these broad objectives of administration: 1. To run the
details of the organization, leaving the top officers as free as
possible of their other responsibilities. 2. To co-operate in making
a smoothly functioning organization. 3. To understand the
interlocking of departments in major policies. 4. To achieve the co-
ordination between the different parts of the organization. 5. To
build up a contented and efficient staff where regard is given
according to capacity and merit and not according to change or
length of service. 6. To develop leaders for the future by broad
training and experience. 7. To build up a company spirit where all
are working to provide a product or service wanted by others.”
4. Foreman
They are men who have direct supervision over the working force
in office, factory, sales field or other areas of activity of the
concern. The function of the foreman include the supervision of the
workmen, procurement of needed material and tools for his crew
from the stockrooms, the planning, scheduling and assignment of
work of each man, the training of workers, the issuing of orders,
the maintenance of quality, the care of machines and equipments,
the getting out of the required production, improving working
condition, developing morale and team spirit, maintaining
discipline, controlling absenteeism, adjusting grievances,
improving methods of production and representing the
management to the workmen and the workmen to the
5. Rank and File The responsibilities of the persons belonging to this
group are even more restricted and more specific than those of the
Concepts for Getting Results through People The well-known
American Management Consultant, Mr.Raymond.G.Leon in his
popular book captioned “Manage More by Doing Less”, has
outlined the following emerging concepts for getting results
through people:
1. Management by Communication (M.B.C.)
2. Management by System (M.B.S)
3. Management by Results (M.B.R.)
4. Management by Exception (M.B.E.)
5. Management by Participation (M.B.P.)
6. Management by Motivation (M.B.M.)
7. Management by Objectives (M.B.O.)
Some of these concepts are briefly explained in the following
Management by Communication : Communication means the
process of passing information and understanding from one person
to another. Since managing is getting things done through others,
it is an obvious requirement that the manager must communicate
with the members of his organization. Management by System The
Management by system may briefly be summarized as:
(i) Recognize the problem, analyze it and define objectives;
(ii) Gather and analyze the necessary data;
(iii) Synthesize possible alternatives;
(iv) Review and evaluate each alternative;
(v) Test conclusions, if possible;
(vi) Take selected action;
(vii) Review results and, if necessary correct action;
(viii) formulate and test principles based on experimental results
of many cases
Management by Results In any measurement, there are four
essential elements (i) Definition of the characteristic or quality to
be measured. (ii) Selection of the standard for that characteristic or
quality. (iii) Determination of the units in which measurement is to
be made, and (iv) Creation of accurate means to compare the
characteristic or quality, of a product, with the selected standard.
Management by Participation Well, this is possible under
Participative Management. The four corner-stones of philosophy
are: (i) belief in the doctrine of trusteeship advocated by Mahatma
Gandhi, (ii) reorganization that employee is not merely a means of
production, but above all a human being first and always, (iii)
realization that as an employer one is more of a ‘Giver’ and less of
a ‘Taker’, and (iv) that workers do not ‘want’ money they ‘need’
Management by Motivation Motivation actually relates to the will
to work. It seeks to know the motives for work and to find out ways
and means, by which their realization can be helped and
Management by Objectives M.B.O. is a system of management
involving effective participation and involvement by each member
of the organization. The disciple of M.B.O. makes each individual
output-centered, result-oriented, optimum-committed and
achievement-motivated. Once job responsibilities have been
adequately defined, there are five main steps to be taken in setting
and achieving objectives:
1. Objectives should, as far as possible, be quantified.
2. Managers must be relieved of constraints, which inhibit the
achievement of their objectives.
3. The manager must be aware of his performance.
4. The performance appraisal must be fair and result in an
appreciation management’s strength and weakness.
5. The performance appraisal must result in equitable reward
being established between managers of the same grade.
The Manager and His Job A Manager is a person who gets things
done through and with the people in formally organized groups
and he is the key man in the organization structure. The Manager
essentially deals with the people and resources. His job is to co-
ordinate the activities of people and optimizes the use of resources
to reach the defined goals. According to Haimann, Manager plans,
organizes, staffs, directs and controls. As observed by Peter
Drucker, the Manager performs three types of work
simultaneously: (i) manage a business (ii) managing managers; and
(iii) managing workers and work. Whatever decision is taken by a
Manager affects all these facets.
He occupies pivotal role in between the Board of Directors and the
Subordinate Managers. Since the Manager is a member of the
group next above and at the same time the leader of the group
reporting to him, he is best placed to bring to his group
interpretation of the goals decisions, attitude, and actions of the
higher group. The Manager, thus, becomes the interlocking tie
between higher and lower levels of the organization and the natural
and most effective channel for communication. Ordinarily, he is
responsible for: (1) Carrying on to effect the policy laid down by the
Board of Directors; (2) Communication and interpretation of policy
for information and instructions of subordinate executives; (3)
Keeping the operations of the company under constant review and
presenting to the board periodically the accounts and statistics
showing the progress and current position of company’s affairs; (4)
Maintaining definitions and structure of responsibilities of
executive and supervisory positions in the organization up-to-date
in requirements; (5) Approving the manufacturing , distributing,
development plans submitted by the senior executives concerned;
(6) Giving decisions and interpretation of policies when for good
reasons a departure from agreed policy arises; (7) Ensuring
adequate arrangement to safeguard the continuity of supplies to
the customers; (8) Having periodical meetings with the senior
executives to review performances against budget standard; (9)
Ensuring adequate coordination of activities throughout the
organization; and (10) Ensuring adequate facilities for development
of executive and supervisory staff.
Duties of the Manager (1) To consider suggestions from
subordinate executives in regard to company’s policy and submit
them objectively to the Board of Directors; (2) To review the reports
received from specialist executives in relation to their own fields;
(3) To ensure that all executives understand the nature and
importance of budgetary control principles and applications of
such principles to the activities carried out within their own
jurisdiction; (4) To give adequate attention and promoting high
level of morale among the executive staff and throughout the
2. Human Resources Management
Explain the functions of Human Resources Management covering
the major areas like Personnel Administration, Employee Welfare
and Functional Areas.
Human Resource Management Functions can be divided into the
following three main categories:
A. Personnel Administration
Functions may broadly be divided into the following eleven
groups: I. Recruitment and Selection (i) Recruitment and
Selection procedures a) Recruitment of personnel b) Knowledge of
sources of employee supply c) Physical tests, Trade tests and
Aptitude tests d) Investigation of references e) Selection
interviews. (ii) Job analysis, Job description and Job
specification. II. Induction a) Introduction to supervisor b)
Introduction to job and workplace c) Introduction to colleagues d)
Introduction to welfare activities and other facilities e) Authorities
and procedures f) Service conditions g) Sponsor system.
B. III. Compensation a) Wage scales, Increments and Efficiency Bar
b) Salary and Wage standardisation c) Incentives, Payments and
Allowances d) Working hours and Overtime e) Profit sharing,
Bonus f) Holidays, Leave g) Executive compensation plans.
C. IV. Discipline a) Instances of indiscipline and Misconduct b)
Causes of indiscipline c) How to deal with indiscipline; Domestic
enquiry d) Handicaps of management in the maintenance of
discipline and enforcement of certain rules. V. Transfer and
Promotion a) The procedure to be adopted b) Causes of transfer
and promotion c) Personnel for transfer and promotion d) Records
of transfer and promotion.
D. VI. Merit rating and evaluation of employees a) Assessment
techniques b) Counselling VII. Administration in relation to a)
Absenteeism b) Late coming c) Loitering d) Employee turnover, its
causes, incidence, effects, remedies, and statistical analysis.
E. VIII.Personnel training and Development Training for: a)
Apprentices b) Workers c) Foremen and supervisors (TWI i.e.,
Training Within Industry) d) Junior executives and e)
Management staff.
F. IX. Personnel records and Statistics a) Accident Records b)
Employee turnover studies c) Absenteeism and indebtedness d)
Wage levels and cost of living e) Research into Industrial
Relations and Personnel Management problems. X. Retirement a)
Provident fund and pension plans b) Gratuity provisions c) Exit
interviews d) Long service awards e) Retirement plans, housing,
medical aid etc.
G. XI. Statutory compliance of: a) Apprentice Act b) Employment
Exchange (Compulsory Notification of Vacancies Act) c) Payment
of Wages Act and Payment of Bonus Act d) Shops and
Establishment Act e) Employee’s Provident Fund Act. It should be
noted that the listing made by different authors is by no means
comprehensive or necessarily representative of the work of
personnel administration; it is only indicative of the nature of
activities which are usually included in the functional areas of a
modern company of large dimensions.

B. Employee welfare
Employee Welfare comes under two distinct areas as given below:
Welfare comes under two distinct areas as given below:
I. Conditions of Work Environment
(i) Working Condition a) Temperature b) Ventilation c) Lighting d)
Dust, smoke, fumes and gases e) Noise f) Humidity g) Hazard and
safety devices.
(ii) Factory Sanitation and Cleanliness a) Provision of urinals in
factories b) Provision of spittoons c) Provision for disposal of waste
and rubbish d) Provision for water disposal e) Provision for proper
bathing and washing facilities f) Cleanliness, white-washing and
repair of building and workshops g) Care and maintenance of open
spaces, gardens and roads.
(iii) Welfare Amenities a) Provision and care of drinking water b)
Canteen services c) Lunch d) Rest room e) Creches f) Cloak rooms g)
Other amenities

II. Employee’s Health Services

(i) Factory Health Services a) Medical examination of employees
b) Factory dispensary and clinic treatment c) First aid and
ambulance room d) Treatment of accidents e) Health
education and research.
(ii) Recreation a) Play grounds for physical recreation b) Social
and cultural recreation.
(iii) Workers Education a) Education to improve skills and earning
capacity b) Literacy c) Library, pictorial education, lecture
programmes d) Worker’s education scheme and its working.
(iv) Economic Services a) Employee’s Co-operative societies b)
Grain shops and fair price shops c) Housing co-operatives.
(v) Housing for Employees and Community Services
(vi) Study of the working of the Welfare Acts a) Factories Act b)
Employee’s State Insurance Act c) Minimum Wages Act.
(vii) Social work in Industrial setting a) Family planning b)
Employee counselling

C. Functional Areas
Functional Areas of Human Resource Management The functional
areas of human resource management may be set forth as follows:-
1. Organisational planning, and Development
2. Staffing and employment
3. Training and Development
4. Wage and salary administration
5. Motivation and incentives
6. Employee services and benefits
7. Employee records
8. Labour or Industrial Relations and
9. Personnel Research and Personnel Audit.
Organisational Planning and Development “Organisational Planning” is
concerned with the division of all the tasks to be performed into
manageable and efficient units and providing for their integration

(i) A determination of the needs of an organisation in terms of a

company’s short and long term objectives, utilisation of
technology of production, deciding about nature of the product
to be manufactured, keeping in view the external environment
and public policy. (ii) The planning, development and designing
of an organisational structure through the fixing of the
responsibility and authority of the employees. (iii) Developing an
inter-personal relationship through a division of positions, job
and task, the creation of a healthy and fruitful inter-personal
relationships; and the formation of a homogeneous, cohesive
and effectively interacting informal group.
2. Staffing and Employment The staffing process is a flow of events
which results in a continuous manning of organisational
positions at all levels from the top management to the operative
level. This process includes:- (i) Manpower planning is a process
of analysing the present and future vacancies that may occur as
a result of retirements, discharges, transfers, promotions or other
reasons and an analysis of present and future expansion or
curtailment in the various departments. (ii) Recruitment is
concerned with the process of attracting qualified and competent
personnel for different jobs. (iii) Selection process is concerned
with the development of selection policies and procedures and the
evaluation of potential employees in terms of job description and
job specification. (iv) Placement is concerned with the task of
placing an employee in a job for which he is best fitted. (v)
Induction programme is concerned with the introduction of an
employee to the organisation and the job. (vi) Transfer process is
concerned with the placement of an employee in a position in
which his ability can be best utilised. (vii) Promotion is concerned
with rewarding capable employees by putting them in higher
positions with more responsibility and higher pay. (viii)
Separation process is concerned with severing of employment
relationships on account of misconduct, dismissal, discharge,
superannuation, death, disablement etc. 3. Training and
Development It is a complete process and is concerned with
increasing the capabilities of individuals and groups so that they
may contribute effectively to the attainment of organisational
goals. This includes: (i) The determination of training needs of
personnel at all levels, skill training, employee development. (ii)
Self-initiated learning activities.
3. Wage and Salary Administration It is concerned with the
administering compensation policies and programmes directed
towards employee’s services and motivating them to attain
desired levels of performance. The components of this process
are: (i) Job Evaluation through which the relative worth of a job is
determined. (ii) Wage and Salary programme which consists of
developing and operating a suitable wage and salary programme,
taking into consideration certain facts such as ability of the
organisation to pay, the cost of living, the supply and the demand
conditions in labour market and the wage and salary levels in
other firms etc. It also consists of conducting systematic and
periodic wage and salary surveys and determining the
implementation possibilities of the same and its regular follow
up. (iii) The performance appraisal is concerned with evaluating
employee performance at work in terms of pre-determined norms
and standards with a view to develop a sound system of rewards
and punishments and identifying employees eligible for
promotion. For this purpose, performance appraisal plans,
techniques and programmes are chalked out, their
implementation evaluated and reports submitted to the
concerned authorities.
4. Motivation and incentives (i) Motivation is concerned with
motivating employees by creating conditions in which they may
get social and psychological satisfaction. For this purpose a plan
for non-financial incentives is formulated; a communication
system is developed, morale and attitude surveys are undertaken,
the health of human organisation is diagnosed and efforts are
made to improve human relations in the organisations. The line
management has to be advised on the implementation of the plan
and on the need, areas and ways and means of improving the
morale of employees. (ii) The incentive plan includes both
monetary and non-monetary incentives which have to be
developed, administered and reviewed from time to time with a
view to encouraging the efficiency of the employee.
5. Employee Services and Benefits These are concerned with the
process of sustaining and maintaining the work force in an
organisation. They include: 13 (i) Safety provisions within the
company:- For this purpose policies, techniques, and procedures
for the safety and health of the employees are developed; the line
management is advised on the implementation and operation of
safety programmes; training has to be given to first line
supervisors and workers in safety practices; the causes of
accidents have to be investigated and data collected on accidents;
and the effectiveness of the safety programmes evaluated
periodically. (ii) Employee counselling is the process in which
employees are given courses in solving their work problems and
their personal problems. (iii) Medical services include the
provision of curative and preventive medical and health
improvement facilities for employees. A periodical medical check-
up of employees, training in hygienic and preventive measures
are undertaken. (iv) The recreational and other welfare facilities
include entertainment services like film shows, sports and games,
housing, educational, transport and canteen facilities, free or at
subsidised rates. (v) Fringe benefits and supplementary items are
made available to the employees. Fringe benefits are classified
broadly into two. (1) Statutory and (2) Non-Statutory fringe
benefits. Under statutory fringe benefits the following are covered
in general: (i) Contribution to provident fund (ii) Administration of
ESI schemes (iii) Payment of gratuity (iv) Payment of bonus (v)
Provision for industrial canteen (vi) Provision of creche for the
kids of female employees etc. Non-statutory benefits include the
following: (i) Operation of conveyance facility (ii) Company
sponsored recreation schemes (iii) Interest free loan (iv)
Functioning of co-operative societies (v) Scholarship allowance to
employee’s children etc. These benefits are usually given to
employees in order to tempt them to remain in the organisation,
to provide them social security and to reduce absenteeism and
labour turnover. Policies and programmes for implementing these
have to be properly developed.
6. Employee Records Complete and up-to-date information is
maintained about employees, so that these may be utilised if
need be, at the time of making transfers/promotions, giving merit
pay or sanctioning leave. Such records include information
relating to personal qualifications, special interests, aptitudes,
results of tests and interviews, job performance, leave, rewards
and punishments.
7. Labour Relations By labour relations is meant the maintenance
of healthy and peaceful
8. labour-management relations so that production/work may go on
undisturbed. (i) Grievance handling policy and procedure are
developed, after finding out the nature and causes of grievances
and locating the most delicate areas of dissatisfaction. (ii) Rules
and Regulations are framed for the maintenance of discipline in
the organisation and proper system of reward and punishment is
developed. (iii) Efforts are made to acquire knowledge of and to
observe and comply with the labour laws of the country and
acquaint the line management with the provisions which are
directly concerned with organisation. Collective bargaining has to
be developed so that all the disputes may be settled by mutual
discussions without recourse to the law court. Such bargaining,
negotiating and administering agreements relate to wages, leave,
working conditions and employee-employer relationship.
9. Personnel Research and Personnel Audit This area is concerned
with:- (i) A systematic inquiry into any aspect of the broad question of
how to make more effective an organisation’s personnel programmes -
recruitment, selection, development and accommodation to human
resources. (ii) Procedures, policies and findings submitted to the top
executive. (iii) Data relating to quality, wages, productivity, grievances,
absenteeism, labour turnover, strikes, lockout, accidents etc., which
are collected and supplied to the top management so that it may
review, alter or improve existing personnel policies, programmes and
procedures. (iv) Morale and attitude surveys.
3. Financial Management
Explain the interface between finance and other functions.
Ans :


The finance manager depends upon the inputs provided by other
operating managers:

† the production manager or engineer, who is accountable for

optimum use of equipment and facilities and of the funds invested

† the marketing manager, answerable for the forecast of demand for

the product, customer satisfaction, credit policy etc;

† the top management, which is interested in ensuring that the

firm’s long-term goals are met
4. Marketing Management
Explain the different Marketing Environments and the role of culture
and sub culture.
Ans: The general marketing environment, therefore, consists of all the
factors and forces influencing the marketing function. This includes
both internal and external forces. Internal forces, i.e., the intra –firm
environment, are largely within the control of the firm. It is the
generally uncontrollable forces outside the firm in the macro-
environment that pose the most important sources of opportunities
and threats to the company. Kotler reserves the term ‘macro-
environment’ to denote other external forces such as demographic,
economic, political, technological, and socio-cultural forces. The
term ‘macro-environment’ denotes all these forces and agencies
external to the marketing firm. Some of these outside factors and
forces will be somewhat ‘closer’ to the firm than others, for example
immediate suppliers and competitors.
The only real certain thing in this world is change. Sometimes
change occurs so slowly that it is virtually imperceptible. We are
often unaware that change is occurring until it is too late to do
anything about it. At other times change is so rapid that, even
though it is obvious, we find it difficult to react quickly enough.
Although none of us possess the power to foresee the future, we can
be sure that it will be different from today, and that change is a fact
of life. We have little power to stop it, and the sensible course of
action is to welcome change and attempt to adapt to it. In order for a
firm to be able to adapt successfully to changing circumstances,
management needs to have an understanding and appreciation of
the factors and forces influencing such changes, Ideally, a firm
should be in a position to adapt to changes as they are occurring, or
even in advance. Firms should attempt to capitalize upon change
rather than merely reacting to it. By identifying environmental
trends soon enough, management should be able, at least in part, to
anticipate where such trends are leading and what future conditions
are likely to result from such changes. Unless firms are able to
identify and react to changes quickly enough, they are likely to be
dictated to by circumstances beyond their control. Instead of being
part of the changes occurring, and leading the market, they will, of
necessity, be forced into being market followers. Instead of adapting
to change and even going some way towards influencing events,
events will instead influence them, perhaps in an unfavourable way
In terms of its speed of response, and its ability to react to changing
conditions, we can generally classify three types of firm: 1. Firms
that identify and understand the forces and conditions bringing
about changes. Such firms adapt and move in line with such
changes. To a certain extent, such a firm may itself play a part in
influencing events. 2. Firms that fail to adapt to changes early
enough to become part of that change. Such firms have little
opportunity to influence events, but are usually forced to react to
changes eventually, out of the necessity to survive. 3. Firms that fail
to realize change has occurred, or refuse to adapt to changing
circumstances. Such firms are unlikely to survive in the long term
or, if they do, are unlikely to prosper.

The competitive environment

There are very few firms that are fortunate enough to have no
competitors. Except in the case of the centrally planned economies,
of which, of course, there are fewer and fewer as they increasingly
turn towards free-market mechanisms. On the other hand, there are
very few markets which possess all the characteristics of what the
economist calls a ‘perfectly competitive’ market structure where no
company has any differential advantage and where all products are
homogenous and companies therefore must accept the market price.
Rather, most markets fall somewhere in between these two extremes
but are characterized by intense competition. In some markets the
market structure is dominated by three or four very large companies
with a number of medium and smaller sized companies all vying for
position. In such competitive market structures, in an attempt to
reduce price competition and to secure a competitive advantage,
companies will seek to make their products and services stand out
in some way from their competitors. This attempt to ‘differentiate’
product/services from those of competitors is a key feature therefore
of modern marketing. Differentiation can be achieved in many ways,
but essentially the extent to which differentiation is successful or
otherwise is the responsibility of the marketing function. So, for
example, the marketer will seek to gain a competitive edge through,
say, branding, or perhaps packaging. Innovative distribution, or
excellent customer service can also be used to differentiate the
company’s offering from those of competitors. Clearly, marketing
decision therefore must reflect and indeed be based upon an
analysis of the competitive environment. In fact, the competitive
element of a company’s environment is probably one of the most
important elements in the development of marketing strategies and
plans, and therefore in affecting the extent of a company’s success,
or otherwise, in the market place. Traditionally, economists have
distinguished between market structures with different degrees of
competition. As already mentioned, at one extreme we have the
monopolistic market structure where there is only one supplier and
hence little or no competition. We have also suggested that this type
of market structure is increasingly rare apart from the centrally
planned economies or where fore some other reason an industry is
state run or protected. Also, as already mentioned, as the other
extreme is the perfectly competitive market structure where
products are undifferentiated between competitors. In the ‘real
world’ though the economists ‘oligopolistic’ (a market structure with
a few relatively large companies) or ‘monopolistic competition’ (a
market structure with many competitors and hence where product
differentiation of some kind is crucial) are more realistic.
Supplier environment
Suppliers are other business firms and individuals who provide the
resources needed by the marketing firm to produce goods and/or
services. Nearly every firm, whether engaged in manufacturing,
wholesaling or retailing., is likely to have suppliers. Large firms such
as Marks and Spencer or the Ford Motor Company are likely to have
numerous suppliers. For example, Ford must obtain glass
windscreens, headlamp units, brake pads, tyres, steel sheet, fabric
for interior upholstery and a number of other materials in order to
produce cars. While some of these product constituents will come
from major manufacturers such as British Steel, Pilkington’s Glass,
Lucas and Dunlop, other components, ranging from industrial
fasteners to engine gaskets, will often be supplied by a large number
of smaller, less well known companies. As you will appreciate, Ford
depends on possibly hundreds of suppliers for its manufacturing
capability and commercial prosperity. In the same way, hundreds of
firms depend on Ford for orders. The firms that supply Ford with
finished components are also likely to be supplied with raw
materials or semiprocessed goods by a host of other suppliers.
Purchasing is regarded as a very important management function in
many organizations. The reason for this is that firms must be able to
purchase product and services at an acceptable price and quality.
The firm must also ensure that its suppliers are capable of offering
an acceptable level of service on such matters as delivery, reliability,
stock availability, servicing arrangements and credit facilities
The buyer-supplier relationship is one of economic interdependence.
Both parties rely on each other for their commercial well being.
Changes in the terms of the relationship are usually based on
negotiation rather than on ad hoc unilateral decisions. Such
relationships are usually long term, with each party realizing its
dependence on the other. Both parties are seeking security and
long-term stability from their commercial relationship. This is not to
say that factors in the supplier environment do not change.
Suppliers may be forced to raise their prices and may also be
affected by industrial disputes which, in turn, will affect delivery of
materials to the buying firm. Some suppliers may find themselves in
financial difficulty and be forced into liquidation. In an attempt to
limit the effect of such factors, many buying firms use a ‘multiple
sourcing’ purchasing policy. This avoids over-dependency on any
one supplier and reduce the vulnerability of the buying firms.
The distributive environment
Many firms, particularly in industrial markets where products are
often buyer-specified market and deliver their products direct to the
final customer. Other firms use some form of intermediate
distribution system. The distribution system is then made up of one
or more ‘middlemen’ who can be individuals or other organizations.
They range from agents, distributors, factors and whole salers to
retailers. Because of the seeming permanence of the distributive
environment at any point in time, many firms make the mistake of
thinking it is static. In fact, distribution channels change and evolve
just like any other facet of business life. As Davidson explains:
Distribution channels resemble the hour hand of a watch. They are
always moving, but each individual movement is so small as to be
invisible in isolation. The cumulative movement over a number of
years can, however, be massive. Because distribution channels
change relatively slow, it is easy for manufacturers to respond too
slowly to their evolution. Existing channels may be declining in their
popularity of efficiency, while new potential channels of distribution
may be developing, unnoticed by the marketing firm.
Political environment To an increasing extent, the operation of
business firms is influenced by the political framework and
processes in our society. Marketing management must be alert to
changes in the political attitudes or ‘climate’, which depend on the
policies of the government of the day. The political environment
cannot be examined in a vacuum. Political philosophies on their own
are nothing without action. The outcome of political decisions can be
seen in the legislation and economic policies of government. In this
sense, you will appreciate that, although for clarity of exposition we
are examining the various macro-environmental forces in isolation,
in reality they are very much interrelated. Many of the legal,
economic and social developments in our society and other countries
are nothing more than the result of political decision put into action.
For example, in the 1980s the Conservative Party favored a
monetarist approach to the management of the UK economy. It
attached great importance to the control of money supply and hence
government public expenditure. The general philosophy of the
Conservatives was one of ‘self-help’ and free enterprise, preferring to
see business in the hands of private share holders rather than being
owned by the state. Its main concern was with the reduction of the
level of inflation which seen as being vital to long-term economic
growth and stability. Expenditure on services such as education and
social services was generally reduced as a percentage of total
expenditure doing the Conservatives’ 18 years in office. Business,
entrepreneurship, private ownership and profit were seen as being a
good thing, vital to the country’s future prosperity.
Economic environment Marketing management must understand
the effects of the mainly economic variables that are likely to affect
their business operations. We see in the mass media that inflation is
rising or falling, that exchange rates are affecting the value of the
currency or influencing the level of interest rates. We hear
discussions on the level of unemployment, industrial output, or the
current state of the balance of payments. Such economic factors are
of concern to marketing firms because they influence costs, prices
and demand. Although world economic forces are of paramount
importance to marketing firms, particularly those involved with
either importing or exporting, domestic economic forces usually have
the most immediate impact. The level of domestic unemployment
affects the demand for many consumer products, especially those
classed as ‘luxury goods’. This in turn affects the demand for many
industrial products, particularly manufacturing plant such as
machine tools. The rate of inflation and the cost of borrowing capital
affect the potential returns from new investment and inhibit the
adoption of new technologies. Governments of every persuasion
attempt to encourage economic growth through various policy
measures. Tax concessions, government grants, employment
subsides and capital depreciation allowances are some of the
measures that have been used. The marketing firm needs to monitor
continually the economic environment at both the domestic and
international level. The ‘ebb and flow’ of economic forces and the
policies that governments use to attempt to manage their economics
could have a significant impact on a firm’s business operations. As
with all other environmental factors, economic factors can be viewed
as a source of both opportunities and threats to the marketing firm.
By carefully monitoring and understanding the economic
environment, a firm management should be in a better position to
capitalize upon the opportunities and to do something about
reducing the threats

Technological environment Technology is a major environmental

influence upon the marketing firm. It affects not only the firm’s
operations and product, but also consumers’ life styles and
consumption patterns. Management must be aware of the impact of
technological changes. As Wilson explains in relation to electronics:
The development of the microprocessor and its large production has
revolutionized information collection, processing and dissemination
which in turn is affecting the whole spectrum of marketing activity.
The impact of new information technology has been particularly
marked in the marketing research area. For example, it is now
possible to design and administer questionnaires via computer
terminals. In the past this method has been used on a limited basis,
but is being more and more frequently used. Computer assisted
telephone interviewing (CATI) has revolutionized the speed with
which surveys can be completed. Responses are fed immediately into
a computer and a report ‘hard copy’ can be available immediately
after the final interview is completed As Thomasexplains: On-line
interviewing is now in widespread use in the larger data gathering
market research firms. Interviews, using telephones, work from a
questionnaire which is displayed on a VDU and responses are keyed
straight into the computer. 28 Sales forecasting has always been,
and always will be, an important marketing activity. Until recently,
the majority of firms tended to use subjective or judgmental sales
forecasting methods. The development of computers and available
software programs has brought the use of sophisticated forecasting
techniques within the reach of all companies. Technology also
affects the way in which goods are distributed and promoted.
Containerized freight and automated warehousing have increased
the efficiency with which products can be distributed. Sales
representatives can now use audio-visual equipment for
presentations and demonstrations. Technology is also affecting
marketing at the retail level. Electronic point-of scale (EPOS) data
capture is now used by the major retailers. The ‘laser check out’
automatically records consumer purchases and is used to analyse
sales and to control and re-order stock. Operation of the laser
checkout system depends on the electronic reading of codes. Many
fast-moving-consumer-goods (FMCG) manufacturers have responded
to these developments by incorporating ‘bar codes’ on their product
labels. Technology has influenced the development of products
themselves. Genetic engineering aerosol cans, digital television,
compact disc players-video recorders, word processors and instant
cameras have all come into widespread use over the past few
decades. While older industries are in decline, whole new industries
sometimes referred to as the ‘sunrise industries’, have developed
and grown to take their place. These new industries have capitalized
on developments in the technological environment (e.g. information
technology, biotechnology and aerospace)

The role of culture

A society’s culture is completely learned way of life which is handed
down from generation to generation. Cultural influences give each
society its own peculiar attributes. Although the norms and values
within a society are the result of many years of cultural
conditioning, they are not static. It is cultural changes, and the
resulting revised norms and values within a society, that is of
particular interest to the marketing firm. Nowhere is the aspect more
poignant than when the company is marketing internationally. The
English anthropologist, E.B. Taylor, 10 defined culture as: that
complex whole which includes knowledge, belief, art, morals, law,
custom, and any other capabilities and habits acquired by man as a
member of society. Taylor’s definition is an accepted classic in
defining some of the major facets of culture, and in emphasizing that
culture is very much a learned phenomenon. British culture has
historically been largely materialistic, derived as it is from the
Protestant work ethic of self-help, hard work, thrift and the
accumulation of wealth. Arguably, other Western cultures such as
the United States, Germany and Japan are even more
materialistically oriented. This factor is often thought to be one of
the reasons for these countries’ superior economic performance.
Cultural values do, however, change over time, and a number of
Western core values are currently undergoing major changes. Some
of the changing cultural values are particularly prevalent among the
young include: - A questioning of materialism and its values. - A
decline in respect for authority and the law. - A belief in the
rightness of militancy and conformation. - A desire for innovation
and change. - A shift towards informality
Sub-cultural influences Within each culture are numerous sub-
groups with their own distinguishing modes of behaviour. In the
United States black Americans represent the largest racial/ethnic
sub-culture. In the UK it is the Asian community. American
marketing firms realize that it is impossible to treat such a large
group of consumers as a homogeneous mass, a number studies
though indicate that their consumption habits are significantly
different from those of the remainder of Americans. As a result,
American firms are now designing products and advertising
campaigns aimed specifically at this large minority markets. This
has now also happened in the UK. Indeed, although the UK is more
culturally homogeneous than the USA, firms can no longer ignore
the cultural differences of the ethnic population. Ethnic
heterogeneity is slowly being recognized by more enlightened firms
as potential source of marketing opportunities. Cannonhighlights a
number if interesting examples of marketing opportunities and
problems related to sub-cultures. - Products may need to meet
special religious needs (e.g. kosher foods). - Marketing
intermediaries may be different (e.g. the importance of small, Asian-
run, shops) - Consumer tastes may differ (e.g. Cadbury Typhoo’s
poundo Yam, aimed mainly at consumers of Caribbean origin) -
Language can be a problem in marketing communications (e.g. in
the UK, 77 per cent of Pakistaniorigin women and 43 percent of
Pakistani-origin men cannot speak working English). The culturally
aware marketing firm will recognize that sub-cultures represent
distinct market segments and will seek to increase their awareness
of the needs, attitudes and motivations of sub-groups.
5. Organizational Behaviour
Explain Organisational Behaviour and its different major aspects.

We’ve made the case for the importance of people skills. But neither
this book nor the discipline upon which it rests is called People
Skills. The term that is widely used to describe the discipline is
called Organizational Behaviour.
Organizational Behaviour (frequently abbreviated as OB) is a field of
study that investigates the impact that individuals, groups, and
structure have on behaviour within organizations, for the purpose of
applying such knowledge toward improving an organization’s
effectiveness. That’s a lot if words, so let’s break it down.
Organizational Behaviour is a field of study. This means that it is a
distinct area of expertise with a common body of knowledge. What
does it study? It studies three determinants of behaviour in
organizations: individual, groups, and structure. Additionally, OB
applies the knowledge gained about individuals, groups and the
effect of structure on behaviour in order to make organizations work
more effectively.
To sum up our definition, OB is concerned with the study of what
people do in an organization and how that behaviour affects the
performance of the organization. And because OB is specially
concerned with employment related situation, you should not be
surprised to find that it emphasizes behaviour as related to jobs,
work, absenteeism, employment turnover, productivity, human
performance, and management.
There is increasing agreement as to the components or topics that
constitute the subject are of OB. While there is still considerable
debate as to the relative importance of each, there appears to be
general agreement that OB includes the core topics of motivation,
leader behaviour and power interpersonal communication, group
structure and process, learning, attitude development and
perception change processes, conflict, job design, and work stress.

Organisational behaviour provides solution as well as insight

towards solution to many challenges which are faced by the
organisations. Some of the important roles performed by
organisational behaviour in management of business are as
1. Globalisation- Due to globalisation, organisations are no longer
confined to one particular country. The Manager’s job is changing
with the expansion of the organisations across the national borders.
Example, Volkswagen builds its cars in Mexico, Mercedes and BMW
in South Africa. Due to globalisation, the management has to deal
with the problems of unfamiliar languages, laws, work ethics,
management styles etc. The functions of hiring, training, etc must
acquire a global perspective. Organisational Behaviour helps the
management to become flexible, and proactive and enables it to
execute the organisation on a global scale.
2. Managing work Force Diversity- Organisations are a hetrogeneous
mix of people in terms of age, gender, race etc. Managing the
workforce diversity has become a global concern. Managers have to
deal with individuals and groups belonging to different ethnic
cultures. They have to exercise control and channelize behaviour in
the desired direction. Organisational behaviour help the managers to
effectively deal with work force diversity by promoting its awareness,
increasing diversity skills, encouraging culture and gender diversity.
3. Improving Quality and Productivity- Industries are facing the
problem of excess supply. This has increased competition to a large
extent. Almost every Manager is confronting the same problem of
improving the productivity, quality of the goods and services their
organisation is providing. Programmes such as business process
reengineering, and total Quality Management are being implemented
to achieve these ends. Organisational Behaviour helps the Managers
to empower their employees, as they are the major forces for
implementing this change.
4. Improving customer service-Most of the employees work in service
sector. The jobs in the service sector, is very demanding. It requires
continuous interaction with the organisations clients i.e. the
customers. Management has to ensure that the employees do
everything to satisfy the customers of the organisation. The attitude
and behaviour of an employee affects the customer satisfaction.
Organisational Behaviour helps the managers to improve customer
service and organisational performance.
5. Improving people skills- Organisational Behaviour helps in better
management of business as it helps in improving the skills of the
people. It provides insight into the skills that the employees can use
on the job such as designing jobs and creating effective teams.
6. Innovation and Change- Organisational Behaviour helps in
stimulating innovation and change. Employees can either be a
hurdle or an instrument of change. It is organisational behaviour
which fosters ideas and techniques to promote innovation and
change by improving employees creativity.
7. Work life balance- Organisations that do not help employees to
achieve work life balance will not be able to retain their most
talented employees. Organisational behaviour helps i designing
flexible jobs which can help employees deal with work life balance
8. Promoting ethical Behaviour- Sometimes the organisations are in
a situation of ethical dilemma where they have to define right and
wrong. It is Organisational Behaviour which helps an important role
by helping the management to create such a woek environment
which is ethically healthy and increases work productivity, job
satisfaction and organisational citizenship behaviour.
9. Creating a positive Work Environment.- Organisational behaviour
helps in creating a positive work environment in today’s where
competitive pressures are stronger than before. OB helps to develop
resilience, human strength, and it fosters vitality.
6. Principles of Economics
How economics work and discuss the relations between the main
economic players and institutions.

Economics is the science, which studies economic problems.
Economic problems arise; due to following reasons;
(a) Man has unlimited wants or ends;
(b) The means or resources to satisfy them are limited
(c) These resources are not specific but have alternative uses; and
(d) Man has, therefore, to choose between wants.
Man has unlimited wants
Human beings experience wants for food, clothing, shelter,
education, entertainment, etc. Some of these want as, for example,
demand for food, result from biological needs, which must be
satisfied for the very preservation of life. Most other wants such as
the demand for clothing, education, entertainment, etc., however,
are products of life in civilized society. Even the wants, which result
from biological needs assume forms determined by the standards of
the particular civilization under which human being live. Human
experience clearly shows that wants are unlimited in number; the
satisfaction of one want gives rise to another. Multiplicity of wants is
an essential characteristic of human existence but multiplicity alone
cannot create economic problems. It means to satisfy unlimited
wants are also unlimited, economic problems cannot arise.
Resources to satisfy wants are limited
Wants can be satisfied by means of goods, such as rice, wheat, coal,
cattle, buildings, ships, railways, machinery, stocks of raw materials
etc. Goods and services are means or resources, which satisfy
human wants. Some resources, such as air or water, are so plentiful
that all wants, dependent up on these resources are fully satisfied.
Most resources like land or capital however are not plentiful; they
cannot meet all the wants dependent on them; in other words, these
resources are scarce. When resources are scarce, certain wants will
have to go unsatisfied.
Resources have alternative uses
Scarcity of resources in isolation cannot lead to an economic
problem. If a particular resource is limited but has to be used only
for one purpose, there is no problem. The resources at the disposal
of a country are not such that they can be put to one use only. A
plot of land can be put under cotton cultivation or for the production
of sugar cane. A worker can be employed in a cotton textile factory
or in a sugar cane factory. However, no single unit of a resource can
be used for two purposes at any one given time. It is, therefore,
necessary to choose the ends for which the limited resources are to
be used. Man has necessarily to choose. The choice is between ends
and scare resources. An economic problem arises wherever scare
resources are related to the achievement of one end in preference to
another. Suppose, for instance, that a consumer wishes to buy a
packet of tea and a tin of coffee, but the money he has is inadequate
to satisfy both wants. He must, therefore, choose to satisfy one want
in preference to the other. Likewise, the Indian economy may want
to produce more of both food grains and raw cotton. But since the
supply of land is limited it is not possible to increase both goods.
Increased use of land for food grains will be only at the expense of
raw cotton. India will have to decide as to how the limited volume of
land may be put to alternative uses. The choice may or may not be
correct; but the choice will have to be made. The problem of choice
arises because of scarce resources, which have alternative uses.

The relations between the main economic players and

The contention that “inclusive” institutions are the deep
determinants of economic growth remains unsatisfactory.
This paper develops an alternative theoretical and empirical case
that economic structures are the fundamental cause of economic
Economic structures determine the rate of structural learning, affect
institutional performance, influence the distribution of income and
establish the direction of political transitions, thereby, economic