MAHARASHTRA NATIONAL LAW UNIVERSITY, NAGPUR

Reading Material

Module 2 Student Notes

BBA1.3 BUSINESS STUDIES

BBA.LL.B.(Hons.) Five-Year Integrated Degree Course

Academic Year: 2022-23
1st YEAR, SEMESTER-I

Designed and Developed by:

Raman R. Tirpude
Assistant Professor of Management
Dr. Purnima Singh
Assistant Professor of Management

Course Instructor:
Raman R. Tirpude
Assistant Professor of Management
Dr. Purnima Singh
Assistant Professor of Management

(For Internal Circulation Only)

 Module – II (Unit-I)
In the current scenario of competition, the horizon and sphere of business have changed in a
vast manner. In today’s time there are enterprises who run the economy of any nation. With
the advent of modification and modernization, here the enterprises are divided into three
basic groups:
• Public Sector Enterprises
• Private Sector Enterprises
• Global Enterprises

Since the Indian economy consists of privately owned and government-owned business
enterprises, it is known as a mixed economy.
Public Sector Enterprises:
Public enterprises are those business organizations which are wholly or partially owned by
the state and are controlled through a public authority. Public enterprises are normally
intended to be operated in the public interest. Also, this gives rise to a number of
organizational and commercial issues. Public enterprises were formed by the government to
participate in the economic activities of the country. These public enterprises are owned by
the public and accountable to the public through the parliament. A public enterprise may take
any particular form of organization depending upon the nature of its operation and its
relationship with the government. The forms of organization that a public enterprise may take
are as follows:
Departmental Undertaking: This is the earliest kind of public sector enterprise and is
considered as one of the government’s departments. It does not have an individual existence
other than the government and operates under one government department or ministry. For
example, post and telegraph, broadcasting, railways, telephone service, etc.
Features: The main characteristics of Departmental Undertaking are as follows-
1. The funding of these undertakings comes directly from the government.

2. They are subject to accounting and audit controls applicable to other govt. activities.

3. The recruitment and conditions of employment are the same as any other employee
directly under the government.

4. It is subject to direct control of the concerned ministry.

5. Accountability of such enterprise is to the concerned ministry.

Merits: Departmental undertakings have certain advantages which are as follows-

• • These facilitate the Parliament to exercise effective control over its operations.

• • These ensure a high degree of public accountability.

• • The revenue earned is a source of income for the govt. as it goes directly to the
treasury.

• • National security is not at all at risk as it is under the direct control of the
government.
Demerits: This form of organization has some drawbacks too, which are-
• • It fails to provide flexibility.
• • No scope for the employees and heads to take independent decisions.

• • These enterprises fail to take advantage of business opportunities.

• • There is red-tapism involved.

• • It also suffers from a lot of political interference.

Statutory Corporation: It is a body found by the state or central legislature or by a special

act of parliament. It is entirely government-funded, and the act of the legislature determines
all the decisions, objects, limitations, powers, etc. For example, the State Bank of India, Life
Insurance Corporation of India, and Food Corporation of India.
Features: Statutory Corporations have certain distinct features, which are discussed as
below-
1. These are set up under an Act of Parliament and are governed by the provisions of the Act.

2. This type of organization is wholly owned by the state.

3. These act as a corporate body and can sue or be sued, enter into a contract and own
property in its own name.

4. This type of organization is usually independently financed.

5. These are not subject to the same accounting and audit controls applicable to other govt.
departments.

Merits: This form of organization enjoys certain advantages in its working which are as
follows-
• • They enjoy independence in their functioning and a high degree of operational
flexibility.

• • Govt. interference in these types of organizations is less.

• • They frame their policies and procedures within the powers assigned to them.

• • It plays a vital role in economic development.

Demerits: This type of organization suffers from several limitations, which are as follows-
• • All actions of a Statutory Corporation are subject to many rules and regulations.

• • Government and Political inferences are always there in major decisions.

• • Where there is dealing with the public, rampant corruptions exist.

• • Any important decision or action is always delayed due to advisors appointed by the
govt. in the corporation board.

Government Company: According to the section 2(45) of the Companies Act 2013, a
government company means any company in which not less than 51 per cent of the paid up
capital is held by the central government, or by any state government or partly by Central
government and partly by one or more State governments and includes a company which is a
subsidiary of a government company. A government company may be formed as a private
limited company or a public limited company. For example, Hindustan Machine Tools, Steel
Authority of India, and State Trading Corporation.
Features: Government Company has certain characteristics which makes them distinct from
other forms of organizations. These are discussed as follows-
1. It is an organization created by the Indian Companies Act 2013.

2. It has a legal identity.

3. The management of the company is regulated by the provisions of the Companies Act, like
any other Public Limited Co.

4. The employees of the organization are appointed according to their own rules and
regulations.

5. These companies are exempted from the accounting and audit rule procedures. An
appointed auditor by the central or state govt. presents the Annual Report directly in the
parliament or state legislature.

Merits: Government companies have certain advantages which are as follows-

• • A separate Act in the parliament is not required to set up a Government Company.

• • It has a separate legal entity, apart from the government.

• • It enjoys autonomy in all management decisions.

• • These companies provide goods and services at reasonable prices and curb
unhealthy business practices.

Demerits: Despite the autonomy given to these companies, they have certain disadvantages-
• • Since the Government is the only shareholder in some of the Companies, the
provisions of the Companies Act are not of much relevance.

• • As it is not answerable directly to the parliament, it evades constitutional

responsibility which a company financed by the govt. should have.

• • The management and administration of such companies rest in the hands of govt., so
the main purpose of a government company, registered like other companies is defeated.

A Private Limited Company is a company that is created and incorporated under the
Companies Act, 2013, or any other act being in force. It is a company that is not listed on a
recognized stock exchange and whose shares are not traded publicly. It restricts the right to
transfer shares the liability of the company is limited to the number of shares held by them
There is a limit on the maximum number of members, i.e., the number of members cannot be
more than 200, excluding current employees and ex-employees who were members of the
company when they were employed and continued to become members even after they left
the company. Further, one should take note of the fact that joint holders of shares are treated
as single members.
Further, in a private company, any sort of invitation to the public to subscribe for shares is
prohibited.
• • At least two adults are required to act as the Director of the Company.

• • It can have a maximum of 15 Directors

• • At least one director has to be an Indian Citizen and Resident, while the others can
be foreign nationals.

• • Two persons must act as a shareholder.

A Public Limited Company or PLC is a joint-stock company that is created and

incorporated under The Indian Companies Act, 2013 or any other act being in force
previously. It is listed on a recognized stock exchange to raise capital from the general public.
It is a company with limited liability and is permitted to issue registered securities i.e. shares
or debentures to the public, by inviting them to subscribe for its shares through IPO and is
traded openly on at least one stock exchange. The liability of the shareholders is limited to
the extent of the amount contributed by them.
• • Minimum number of 3 directors are required to form a public company.

• • Minimum 7 shareholders are required to form a public company.

• • Digital Signature Certificate (DSC) of any one director is required, in case self-
attested copies of identity proof and address proof are submitted.

• • Director Identification Number (DIN) is a must.

• • An application containing the object clause of the company is to be made.

Changing role of public sector

When India gained independence in 1947, the economic condition of the country was very
poor. There were hardly any public sector enterprises other than the Railways and the Postal
Services. It was determined that going forward public sector would play a big hand in our
economic development. And then again in the 1990’s the trend changed again.
In 1991 India opened up its economy and started the process of globalization. But also,
through the same changes in economic policies, we embraced privatization. Up until then in
the post-independence period, the public sector was an integral part of the development and
progress of our country.
The government took the responsibility of investing huge capital infrastructure and
manufacturing industries. The private sector was not equipped to handle such immense
projects with heavy capital inflow and long gestation periods. So the central and state
government relied on public enterprises to provide these services to the economy.
The first few Five-Year Plans were all designed to promote and safeguard the public sector.
But then came the era of privatization and globalization in 1991. The role of public sector
companies was revaluated. Now the public sector was to actively participate in a competitive
market with the private enterprises. Inefficiency and uninspired management were not
tolerated.
The public sector was also held responsible for the huge losses of their companies. And so
the role of public sector in our economy saw an overhaul. Let us take a look at the Changing
Role of Public Sector.
Importance of the Public Sector
Let us first understand the importance and role of public sector undertakings in our economy.
These are the reasons that till early 1990, the public sector dominated our economy over the
private sector.
• • Developing Infrastructure: In a newly independent country, with a nascent
economy, it is not suitable for private enterprises to invest huge capitals into infrastructure
projects. So this responsibility falls to the public sector. And the development of
infrastructure is absolutely essential for the development of an economy. For example, all the
rail, road, and air transport projects were carried out by public sector undertakings in the
post-independence era.

• • Regional Balance: Private sector companies tend to focus on industrial areas. This
results in the backward areas and the smaller towns and villages to be excluded from
economic growth. But the government can ensure that growth happens throughout the
country in a balanced manner. Public sectors set up units and factories in backward areas
bring employment opportunities and economic development to such areas.

• • Check on the Concentration of Economic Power: When the private sector

sometimes the wealth gets concentrated in the hands of a few. This may lead to monopolistic
tendencies and concentration of economic power. The public sector helps keep this in check.
The income generated by a public enterprise is shared by a large number of employees and
also the public at large. this helps restore some economic equality.

Change in Government Policy

In the overhaul of our economic policies and reforms in 1991, the government of India
introduced four major changes regarding the public sector. These four changes forever
changed the role of public sector in our country
Reduction in Industries Reserved for the Public Sector
In the first Five Year Plan, the government had reserved seventeen industries for the public
sector. This meant that only the government could operate in these industries, no private
capital would be involved. But by 1991 this number was down to 8. And now there are only
3, which include the railways and atomic energy.
While the public sector must be credited with developing these industries, now the private
sector is quite capable of taking them forward. Now the private and public companies co-
exist and complement each other in these industries, for example, mining, air transport etc.
Disinvestment
Disinvestment from the public sector means to sell equity shares in public companies to the
private sector and the public at large. Also, disinvestment allows for the new influx of capital
and better efficiency and financial discipline in private hands. It also ensures that the
government has additional funds to invest in social programs and causes, things such as
public health and sanitation.
Disinvestment also shifts the commercial and financial risks to the private sector. It brings the
companies under the purview of corporate governance and reduces the amount of public debt.
In some cases such as the telecom industries, disinvestment has also benefitted the consumers
by raising competition and lowering prices.
Closure of Sick Units
After the change in policies, all public sector units were to be reviewed by the Board of
Industrial and Financial Reconstruction. This board would review the condition of the units
and decide whether they were capable of rehabilitation or were to be shut down permanently.
But this upset the workers and employees of the sick units that were shut down.
Since the government was not able to sustain such sick units they had to be shut down. The
workers were provided with a safety net as to their loss of income. A National Renewal Fund
was set up to finance Voluntary Separation Scheme and Voluntary Retirement Scheme for
such workers. But in the end, they were insufficient measures.
Memorandum of Understanding
This was a system to give the public sector units a chance at revival. The management of the
unit and the concerned government authorities would sign a MoU. Clear standards will be
given for the enterprise to meet. If the targets were met the company would continue.
Otherwise, it would be shut down or disinvested.
Private Sector Enterprises
A Private Enterprise is an entity which operates under the ownership and management of
individuals who are free to decide and to develop a given business idea. Under a market
economy, of a nation, private enterprise should be enforced to promote the nation’s
development and growth. The individuals are empowered here and are motivated to pursue
their self-interest through creating business enterprises in this hemisphere. They are entirely
managed by the private individuals, and thus exclude governments from having a vote in
their company’s decisions and managing the courses of action. Since the sector’s primary
objective is the business generation and profit maximization, customer satisfaction becomes a
must for survival. Due to the high availability of alternatives at the same rate, consumers
have the advantage of switching to a competitor if a private business underperforms. As a
result, the cut-throat competition has created a fast-paced and performance-oriented
momentum in the sector over the years.
Features:
• • Individuals and incorporations operate in this sector. It functions under various
means, such as companies, partnerships, sole proprietorship, NGOs, etc. We will talk about it
in detail later in the article.

• • A private business is funded by owners, shareholders’ funds (equity), bank loans

(debt), or any combination.
• • Certain main objectives of a private business are profit maximization, business
generation, customer and brand expansion. The profit is either distributed amongst the
members or reinvested in the business for further growth.

• • For companies, the business goals also involve acting in the stakeholders’ best
interest. Stakeholders could be customers, shareholders, employees, local laws, etc. Customer
satisfaction is a must for survival. Likewise, shareholders need a higher return on their
investment. Local laws require a business to be law-abiding and tax-paying.

• • Barring some industries, private sector companies and enterprises dominate across
most economies in many nations.

Types of Private Sector

They are majorly categorized into three types. Each formation has its benefits and legalities
depending on the number of employees, funding source, business scale, and government
regulations.
1. Sole Proprietorship: A business owned, incorporated, and sustained by one person. The
proprietor can employ others to conduct and manage the business. It bears an unlimited
liability towards the business debts. The word “sole” implies “only”, and “proprietor” refers
to “owner”. Hence, a sole proprietor is the one who is the only owner of a business.

2. Partnerships: In partnerships, two or more people conduct a business. It has fewer legal
complications than a company. The partners are subjected to unlimited personal liability on
the business debts. Partnership serves as an answer to the needs of greater capital investment,
varied skills and sharing of risks.

3. Joint Hindu Family Business: Joint Hindu family business is a specific form of business
organisation found only in India. It refers to a form of organisation wherein the business is
owned and carried on by the members of the Hindu Undivided Family (HUF). It is governed
by the Hindu Law. The basis of membership in the business is birth in a particular family and
three successive generations can be members in the business. The business is controlled by
the head of the family who is the eldest member and is called ‘karta’. All members have
equal ownership right over the property of an ancestor and they are known as ‘co-parceners’.

4. Cooperatives: The cooperative society is a voluntary association of persons, who join

together with the motive of welfare of the members. They are driven by the need to protect
their economic interests in the face of possible exploitation at the hands of middlemen
obsessed with the desire to earn greater profits. The cooperative society is compulsorily
required to be registered under the Cooperative Societies Act 1912. The society acquires a
distinct legal identity after its registration.

Role of Private Sector

The private sector has many roles concerning the society and national economy.
• • Employment: Private firms employ a major portion of the skilled resources and
hence act as the backbone of employment services in many nations. As per a World Bank
Report of 2013, the private sector provided around 90% of jobs in developing countries.
• Moreover, these jobs provide innumerable benefits like frequent pay-raise, easy
switching, diverse job description, and responsibilities.

• • Development: Although government companies focus on national development,

this sector’s role in a country’s development often goes understated. When private firms
develop industrial areas, plants, and job-hubs, they also develop the areas around them. For
example, as per a 2017 study, the private sector’s share in providing jobs had been over 90%
in India, while it also contributed over 75% to domestic capital formation. They enhance the
GDP, per capita income, infrastructure, and quality of life.

• • Better Goods and Services: The sector is responsible for providing essential goods
and services at a competitively low cost. The lack of monopoly has made these amenities
accessible to most country citizens.

• • Welfare: Private firms have always stepped in the time of need. May it be a disaster
or a virus outbreak, they have come up with various solutions to serve the citizens to end their
woes. In response to Covid-19, private businesses have been giving monetary support and
donating life-saving instruments to the health industry. It has massively helped the citizens
and governments around the globe.

• • CSR: Although the private sector has often been called out for how it had achieved
profit maximization in the past. Corporate Social Responsibility (CSR) has been a result of
this. CSR is a mandatory practice for private firms as it ensures that they give back to society
in terms of welfare. CSR programs have uplifted many underprivileged sections of society. It
has also provided sustainable business growth.

• • Innovation: The intense competition forces the companies to develop newer

technologies and ways to cut down resource wastage. Also, to satisfy the customers better,
companies create innovative products and services that have improved the quality of life.

Global Enterprises
Global enterprises are those companies that operate around the globe. They are categories
which are based on their huge size, a large number of products, advancements in technology,
they strategize, markets, and networks operations all over the world. With the network of
branches in several countries, the global enterprises expand their industrial and marketing
operations over all. Their vision to work across many global frontiers is to earn in
international currencies from many countries. These organizations have books of accounts for
various countries, which at the end of financial year of respective countries are consolidated
together, according to its requirement.
Global Business Services
Instead of operating numerous shared service centres and managing outsourcing vendors
independently, they are:
• • implementing global business services,

• • providing integration of governance, locations and business practices to all shared

services and,
• • outsourcing activities across the enterprises.

A global enterprise is one which owns and manages the functions in two or more countries.
for example- Unilever Ltd, Coca-Cola, Samsung etc.
Features of Global Enterprise
Huge Capital Resources
These enterprises have huge financial resources. They have the ability to raise funds from
different sources. Funds are raised by the issue of issuing equity shares, debentures, etc to the
public. The investors of the host countries are always willing to invest in them because of
their high credibility in the market.
Foreign Collaborations
With companies of the host countries, these enterprises enter into agreements. These
agreements are made in respect of the sale of technology, production of goods, patents,
resources, etc.
Advanced Technologies
These enterprises use advanced technology for production, hence goods/services provided by
the MNCs conform the international standard and quality specifications.
Product Innovations
These enterprises have efficient teams doing research and development at their own R &D
centres. The main task is to develop new products and design existing products into new
shapes in such a manner as to make them looks and new and attractive and also creates
satisfies the demands of the customers.
Expansion of Market Territory
They expand their market territory when the network of operations of these enterprises
extends beyond their existing physical boundaries. They occupy dominant positions in
various markets by operating through their branches, subsidiaries in host countries.
Centralized Control
Despite the fact the branches of these branches of these enterprises are spread over in many
countries, they are managed and controlled by their Head Office (HO) in their home country
only. All these branches have to work within the broad policy framework of their parent
company.
 Unit 2: Human Resource Management
Human Resource Management is the process of recruiting, selecting, inducting employees,
providing orientation, imparting training and development, appraising the performance of
employees, deciding compensation and providing benefits, motivating employees,
maintaining proper relations with employees and their trade unions, ensuring employees
safety, welfare and health measures in compliance with labour laws.
Human Resource Management is the composition of three words, which means:
Human: refers to the skilled workforce in an organization.
Resource: refers to limited availability or scarce.
Management: refers how to optimize and make best use of such limited or scarce resource
so as to meet the organization goals and objectives.
Therefore, human resource management is meant for proper utilisation of available skilled
workforce and also to make efficient use of existing human resource in the organisation.
Today many experts claim that machines and technology are replacing human resource and
minimizing their role or effort. However, machines and technology are built by the humans
only and they need to be operated or at least monitored by humans and this is the reason why
companies are always in hunt for talented, skilled and qualified professionals for continuous
development of the organization.
Therefore, humans are crucial assets for any organisation, although today many tasks have
been handing over to the artificial intelligence but they lack judgement skills which cannot be
matched with human mind.
Definitions of Human Resource Management
Many great scholars had defined human resource management in different ways and with
different words, but the core meaning of the human resource management deals with how to
manage people or employees in the organisation.
According to Edwin Flippo: Human Resource Management as “planning, organizing,
directing, controlling of procurement, development, compensation, integration, maintenance
and separation of human resources to the end that individual, organizational and social
objectives are achieved.”
According to The National Institute of Personal Management of India: Human resources
– personal management as “that part of management which is concerned with people at work
and with their relationship within an enterprise. Its aim is to bring together and develop into
an effective organization of the men and women who make up enterprise and having regard
for the well – being of the individuals and of working groups, to enable them to make their
best contribution to its success”.
According to Decenzo and Robbins: Human Resource Management is concerned with the
people dimension” in management. Since every organization is made up of people, acquiring
their services, developing their skills, motivating them to higher levels of performance and
ensuring that they continue to maintain their commitment to the organization is essential to
achieve organsational objectives. This is true, regardless of the type of organization –
government, business, education, health or social action.
Importance of Human Resource Management:
Human Resource Management (HRM) is a development-oriented approach of acting toward
people at the workplace, which centres on talent acquisition, engagement, and development
of human resources. It is crucial for managers of all levels and provides scope for employee
association, performance, and growth. More companies around the world are switching from
personnel management to HRM because it is a more advanced and effective way of handling
employees at a workspace. It focuses explicitly on maximizing employee performance with
employers’ strategic objectives in mind. Besides, there are several vital functions of HR
management as given below:
Quality of Work-Life (QWL)
Quality of work life refers to how conducive and unconducive a job environment could be for
the employees working in an organization. QWL speaks volumes about the employees’
perception of their work environment and their physical and psychological well-being at
work. HRM based processes, therefore, aim at improving the quality of work life for
employees by facilitating work autonomy, freedom, work recognition, belongingness, etc.
Maximizing Profit and Productivity
HR management focuses on both the quality and quantity of employees in an organization. In
addition to this, it provides ample opportunities to motivate and enable employees to grow
and advance their careers. Inspired employees strive hard to achieve their professional goals,
which straight away influences organization productivity. In essence, productivity is cost
minimization and profit maximization.
Adaptability of Employees
Essentially the purpose of human resource management is to enhance the productivity and
efficiency of employees via training and development programs. Such programs are useful in
keeping employees updated with skills that are imperative for keeping up with the ever-
changing environment, structure, and technology of organizations.
Meeting Demand-Supply Gap of Human Resource
The importance of HR management in an organization is not just limited to managing
employees but also ascertaining the adequacy of available human resources. In case the
organization has inadequate employees, HR managers conduct recruitment and selection
drives to fill the gap. Similarly, laying off unproductive employees comes under the purview
of human resource management.
Helping Employees Achieve Company’s Goal
Harnessing human resources to the fullest extent and building a sense of belonging among
them is also an essential purpose of human resource management. For this purpose, HRM
carries out activities such as rewards, compensation, and fringe benefits to the deserving
people. Such activities not only boost the morale of employees but lead organizations one
step closer to their objectives.
Employee Recognition
When employees get recognition for their merits and contributions, they see meaning and
purpose in their job. Moreover, human resource managers must conduct timely appraisals to
differentiate between high and low performers.
Infusing Team Spirit
The onus to make every employee feel important is on human resource managers. They
emphasize the importance of teamwork within departments and devise ample strategies that
highlight the importance of teamwork. Hence, infusing team spirit is critical to help
employees contribute best from their side.
Business Sustenance
Human resource management ensures that the organization gets the best employees because a
talented and capable workforce can work wonders for the company. Organization’s success
and sustenance are dependent on its workforce.
Conflict Resolution
Organizations, whether big or small, cannot stay aloof from conflicts that may arise between
small teams or bigger groups. Such unforeseen instances are inevitable and are hard to let go
of. HR management is responsible for sorting out such differences in a systematic way and
facilitates smooth operations of the organization.
Building a Corporate Image
Sustainability for organizations means maintaining a venerable ideal image in the market.
Everyone would like to associate with a company that’s prominent for its moral and social
responsibility towards its employees. On the contrary, companies that consider their
employees as resources and not humans are on the verge of losing everything.
Function of Human Resource Management:
Managerial Functions:
Managerial functions of human resource management involve planning, organising, directing
and controlling. All these functions influence the operative functions.
A) Planning: It is a predetermined course of action. Planning pertains to formulating
strategies of programmes and changes in advance that will contribute to the organisational
goals. In other words, it involves planning of human resources, requirements, recruitment,
selection, training etc. It also involves forecasting of HR needs, changing values, attitudes
and behaviour of employees and their impact on the organisation.
B) Organising: Organising is essential to carry out the determined course of action. In the
words of J.C. Massie, an organisation is a “structure and a process by which a co-operative
group of human beings allocates its task among its members, identifies relationships and
integrates its activities towards a common objective.” Thus, an organisation establishes
relationships among the employees so that they can collectively contribute to the attainment
of company goals.
C) Directing: The next logical function after completing planning and organising is the
execution of the plan. The willing and effective co-operation of employees for the attainment
of organisational goals is possible through proper direction. Tapping the maximum
potentialities of the people is possible through motivation and command. Co-ordination deals
with the task of blending efforts in order to ensure successful attainment of an objective.
D) Controlling: Controlling involves checking, verifying and comparing of the actuals with
the plans, identification of deviations if any and correcting of identified deviations. Thus,
action and operation are adjusted to pre-determined plans and standards through control.
Auditing training programmes, analysing labour turnover records, directing morale surveys,
conducting separate interviews are some of the means for controlling the HRM function and
making it effective.
Operative Functions: The operative functions of human resources management are related
to specific activities of managing employees, viz., employment, development, compensation
and relations. All these functions are interacted with managerial functions. There are five
major operative functions that HR managers carry out.
A. HR Sourcing
B. Performance and development.
C. Compensation management
D. Integration
E. Employee relations
With the changing business scenario these are emerging functions which HR managers carry
out. All these functions will be dealt in detail in the subsequent blocks of the course;
however, an essence is presented in the following paragraphs.
1. HR Resourcing: It is the first operative function of Human Resources Management
(HRM). It is concerned with employing the people possessing the required kind and level of
human resources necessary to achieve the organisational objectives. It covers functions such
as job analysis, human resources planning, recruitment, selection, placement, induction and
orientation.
i) Job Analysis: It is the process of study and collection of information relating to the
operations and responsibilities of a specific job. It includes:
• Collection of data, information, facts and ideas relating to various aspects of jobs including
men, machines and materials.
• Preparation of job description, job specifications, job requirements and employee
specifications which will help in identifying the nature, levels and quantum of human
resources.
• Providing the guides, plans and basis for job design and for all operative functions of HRM.
ii) Human Resources Planning: It is a process for determination and assuring that the
organisation will have an adequate number of qualified persons, available at proper times,
performing jobs which would meet the needs of the organisation and which would provide
satisfaction for the individuals involved. It involves:
• Estimation of present and future requirements and supply of human resources based on
objectives and long range plans of the organisation.
• Calculation of net human resources requirements based on present inventory of human
resources.
• Taking steps to mould, change and develop the strength of existing employees in the
organisation so as to meet the future human resources requirements.
• Preparation of action programmes to get the rest of human resources from outside the
organisation and to develop the human resources in terms of existing employees.
iii) Recruitment: It is the process of searching for prospective employees and stimulating
them to apply for jobs in an organisation. It deals with:
• Identification of existing sources of applicants and developing them.
• Creation/identification of new sources of applicants.
• Stimulating the candidates to apply for jobs in the organisation.
• Striking a balance between internal and external sources.
iv) Selection: It is the process of ascertaining the qualifications, experiences, skills,
knowledge etc., of an applicant with a view to appraising his/her suitability to a job. This
function includes: Framing and developing application blanks.
• Creating and developing valid and reliable testing techniques.
• Formulating interviewing techniques.
• Checking of references.
• Setting up a medical examination policy and procedure.
• Line manager‟s decision.
• Sending letters of appointment and rejection.
• Employing the selected candidates who report for duty.
v) Placement: It is the process of assigning the selected candidate with the most suitable job
in terms of job requirements. It is matching of employee specifications with job requirements.
This function includes:
• Counselling the functional managers regarding placement.
• Conducting follow-up study, appraising employee performance in order to determine
employee adjustment with the job.
• Correcting misplacements, if any.
vi) Induction and Orientation: Induction and orientation are the techniques by which a new
employee is rehabilitated in the changed surrounding and introduced to the practices, policies,
purposes and people etc., of the organisation.
• Acquaint the employee with the company philosophy, objectives, policies, career planning
and development, opportunities, product, market share, social and community standing,
company history, culture etc.
• Introduce the employee to the people with whom he has to work such as peers, supervisors
and subordinates.
• Mould the employees’ attitude by orienting him to the new working and social environment.
2. Performance and Development: It is the process of improving, moulding and changing
the skills, knowledge, creative ability, aptitude, attitude, values, commitment etc., based on
present and future job and organisational requirements.
i) Performance Appraisal: It is the systematic evaluation of individuals with respect to their
performance on the job and their potential for development. It includes:
• Developing policies, procedures and techniques.
• Helping the functional managers.
• Reviewing of reports and consolidation of reports.
• Evaluating the effectiveness of various programmes.
ii) Training: It is the process of imparting to the employees technical and operating skills and
knowledge. It includes:
• Identification of training needs of the individuals and the company.
• Developing suitable training programmes.
• Helping and advising line management in the conduct of training programmes.
• Imparting of requisite job skills and knowledge to employees.
• Evaluating the effectiveness of training programmes.
iii) Management Development: It is the process of designing and conducting suitable
executive development programmes so as to develop the managerial and human relations
skill of employees. It includes:
• Identification of the areas in which management development is needed.
• Conducting development programmes.
• Motivating the executives.
• Designing special development programmes for promotions.
• Using the services of specialists, and/or utilising of the institutional executive development
programmes.
• Evaluating the effectiveness of executive development programmes.
iv) Career Planning and Development: It is the planning of one’s career and
implementation of career plans by means of education, training, job search and acquisition of
work experiences. It includes internal and external mobility.
v) Internal Mobility: It includes vertical and horizontal movement of an employee within an
organisation. It consists of transfer, promotion and demotion.
vi) Transfer: It is the process of placing employees in the same level jobs where they can be
utilised more effectively in consistence with their potentialities and needs of the employees
and the organisation. It also deals with:
• Developing transfer policies and procedures.
• Guiding employees and line management on transfers.
• Evaluating the execution of transfer policies and procedures.
vii) Promotion: It deals with upward reassignment given to an employee in the organisation
to occupy higher position which commands better status and/or pay keeping in view the
human resources of the employees and the job requirements. This function covers.
• Formulating of equitable, fair and consistent promotion policies and procedures.
• Advising line management and employees on matters relating to promotions.
• Evaluating the execution of promotion policies and procedures.
viii) Demotion: It deals with downward reassignment to an employee in the organisation.
• Develop equitable, fair and consistent demotion policies and procedures.
• Advising line managers on matters relating to demotions.
• Oversee the implementations of demotion policies and procedures.
ix) Retention and Retrenchment Management: Employers prefer to retain more talented
employees while they retrench less talented employees. Employers modify existing human
resource strategies and craft new strategies in order to pay more salaries, provide more
benefits and create high quality of work life to retain the best employees. And managements
pay less to the less talented employees and plan to retrench the misfits as well as unwanted
employees depending upon the negative business trends.
x) Change and Organisation Development: Change implies the creation of imbalances in
the existing pattern or situation. Organisation development is a planned process designed to
improve organisational effectiveness and health through modifications in individual and
group behaviour, culture and systems of the organisation using knowledge and technology of
applied behavioural sciences. C. Compensation Management: It is the process of providing
adequate, equitable and fair remuneration to the employees. It includes job evaluation, wage
and salary administration, incentives, bonus, fringe benefits, social security measures etc.
i) Job Evaluation: It is the process of determining relative worth of jobs.
• Select suitable job evaluation techniques
• Classify jobs into various categories.
• Determining relative value of jobs in various categories.
ii) Wage and Salary Administration: This is the process of developing and operating a
suitable wage and salary programme. It covers:
• Conducting wage and salary survey.
• Determining wage and salary rates based on various factors.
• Administering wage and salary programmes.
• Evaluating its effectiveness.
iii) Incentives: It is the process of formulating, administering and reviewing the schemes of
financial incentives in addition to regular payment of wages and salary. It includes:
• Formulating incentive payment schemes.
• Helping functional managers on the operation.
• Review them periodically to evaluate effectiveness.
iv) Bonus: It includes payment of statutory bonus according to the Payment of Bonus Act,
1965 and its latest amendments.
v) Fringe Benefits: These are the various benefits at the fringe of the wage. Management
provides these benefits to motivate the employees and to meet their life’s contingencies.
These benefits include:
Disablement benefit.
• Housing facilities.
• Educational facilities to employees and children.
• Canteen facilities.
• Recreational facilities.
• Conveyance facilities.
• Credit facilities.
• Legal clinics.
• Medical, maternity and welfare facilities.
• Company stores.
vi) Social Security Measures: Managements provide social security to their employees in
addition to the fringe benefits. These measures include:
• Workmen’s compensation to those workers (or their dependents) who involve in accidents.
• Maternity benefits to women employees.
• Sickness benefits and medical benefits.
• Disablement benefits/allowance.
• Dependent benefits.
• Retirement benefits like provident fund, pension, gratuity etc.
D. Integration: Practicing various human resources policies and programmes like
employment, development, compensation and interaction among employees create a sense of
relationship between the individual worker and management, among workers and trade
unions and the management. It is the process of interaction among human beings. Human
relations is an area of management in integrating people into work situations in a way that
motivates them to work together productively, co-operatively and with economic,
psychological and social satisfaction. It includes:
• Employee engagement
• Understanding and applying the models of perception, personality, learning, intra- and inter-
personal relations, intra- and inter-group relations.
• Motivating the employees.
• Boosting employee morale.
• Developing the communication skills.
• Developing the leadership skills.
• Grievance redressal
• Handling disciplinary cases by means of an established disciplinary procedure.
• Counselling the employees in solving their personal, family and work problems and
releasing their stress, strain and tensions.
• Providing a comfortable work environment by reducing fatigue, monotony, boredom and
industrial accidents.
• Improving quality of work life of employees through participation and other means.
E. Employee Relations: The term „industrial relations‟ refers to the study of relations among
employees, employers, government and trade unions. Industrial relations include:
• Trade unionism
• Collective bargaining
• Industrial conflicts
• Workers‟ participation in management
Emerging Functions in HRM: Apart from the above-mentioned functions of HRM, these
are some emerging functions. Human Resources Management has been advancing at a fast
rate. The recent trends in HRM include:
• Strategic HRM
• Ethics and HRM
• HR accounting, audit and research and
• International HRM
• HR outsourcing
Current Trends in Human Resource Management
The world of work is rapidly changing. As a part of organization, Human Resource
Management (HRM) must be prepared to deal with effects of changing world of work. For
the HR people it means understanding the implications of globalization, work-force diversity,
changing skill requirements, corporate downsizing, continuous improvement initiatives, re-
engineering, the contingent work force, decentralized work sites and employee involvement.
Let us consider each of them one by one.
1. Consequences of Globalization
Business today doesn’t have national boundaries – it reaches around the world. The rise of
multinational corporations places new requirements on human resource managers. The HR
department needs to ensure that the appropriate mix of employees in terms of knowledge,
skills and cultural adaptability is available to handle global assignments. In order to meet this
goal, the organizations must train individuals to meet the challenges of globalization. The
employees must have working knowledge of the language and culture (in terms of values,
morals, customs and laws) of the host country.
Human Resource Management (HRM) must also develop mechanisms that will help
multicultural individuals work together. As background, language, custom or age differences
become more prevalent, there are indications that employee conflict will increase. HRM
would be required to train management to be more flexible in its practices. Because
tomorrow’s workers will come in different colours, nationalities and so on, managers will be
required to change their ways. This will necessitate managers being trained to recognize
differences in workers and to appreciate and even celebrate these differences.
2. Workforce Diversity
In the past HRM was considerably simpler because our work force was strikingly
homogeneous. Today’s work force comprises of people of different gender, age, social class
sexual orientation, values, personality characteristics, ethnicity, religion, education, language,
physical appearance, martial status, lifestyle, beliefs, ideologies and background
characteristics such as geographic origin, tenure with the organization, and economic status
and the list could go on. Diversity is critically linked to the organization’s strategic direction.
Where diversity flourishes, the potential benefits from better creativity and decision making
and greater innovation can be accrued to help increase organization’s competitiveness. One
means of achieving that is through the organization’s benefits package. This includes HRM
offerings that fall under the heading of the family friendly organization. A family friendly
organization is one that has flexible work schedules and provides such employee benefits
such as child care. In addition to the diversity brought by gender and nationality, HRM must
be aware of the age differences that exist in today’s work force. HRM must train people of
different age groups to effectively mange and to deal with each other and to respect the
diversity of views that each offers. In situations like these a participative approach seems to
work better.
3. Updated skill requirement
Recruiting and developing skilled labour is important for any company concerned about
competitiveness, productivity, quality and managing a diverse work force effectively. Skill
deficiencies translate into significant losses for the organization in terms of poor-quality work
and lower productivity, increase in employee accidents and customer complaints. Since a
growing number of jobs will require more education and higher levels of language than
current ones , HRM practitioners and specialists will have to communicate this to educators
and community leaders etc. Strategic human resource planning will have to carefully weigh
the skill deficiencies and shortages. HRM department will have to devise suitable training
and short term programmes to bridge the skill gaps & deficiencies.
4. Corporate downsizing
Whenever an organization attempts to delayer, it is attempting to create greater efficiency.
The premise of downsizing is to reduce the number of workers employed by the organization.
HRM department has a very important role to play in downsizing. HRM people must ensure
that proper communication must take place during this time. They must minimize the
negative effects of rumors and ensure that individuals are kept informed with factual data.
HRM must also deal with actual layoff. HRM dept is key to the downsizing discussions that
have to take place.
5. Continuous improvement programs
Continuous improvement programs focus on the long term well-being of the organization. It
is a process whereby an organization focuses on quality and builds a better foundation to
serve its customers. This often involves a company wide initiative to improve quality and
productivity. The company changes its operations to focus on the customer and to involve
workers in matters affecting them. Companies strive to improve everything that they do, from
hiring quality people, to administrative paper processing, to meeting customer needs.
Unfortunately, such initiatives are not something that can be easily implemented, nor dictated
down through the many levels in an organization. Rather, they are like an organization wide
development process and the process must be accepted and supported by top management
and driven by collaborative efforts, throughout each segment in the organization. HRM plays
an important role in the implementation of continuous improvement programs. Whenever an
organization embarks on any improvement effort, it is introducing change into the
organization. At this point organization development initiatives dominate. Specifically, HRM
must prepare individuals for the change. This requires clear and extensive communications of
why the change will occur, what is to be expected and what effect it will have on employees.
6. Re-engineering work procedures for improved efficiency
Although continuous improvement initiatives are positive starts in many of our organizations,
they typically focus on ongoing incremental change. Such action is intuitively appealing —
the constant and permanent search to make things better. Yet many companies function in an
environment that is dynamic- facing rapid and constant change. As a result, continuous
improvement programs may not be in the best interest of the organization. The problem with
them is that they may provide a false sense of security. Ongoing incremental change avoids
facing up to the possibility that what the organization may really need is radical or quantum
change. Such drastic change results in the re-engineering of the organization.
e-engineering occurs when more than 70% of the work processes in an organization are
evaluated and altered. It requires organizational members to rethink what work should be
done, how it is to be done and how to best implement these decisions. Re-engineering
changes how organizations do their business and directly affects the employees. Re-
engineering may leave certain employees frustrated and angry and unsure of what to expect.
Accordingly, HRM must have mechanisms in place for employees to get appropriate
direction of what to do and what to expect as well as assistance in dealing with the conflict
that may permeate the organization. For re-engineering to generate its benefits HRM needs to
offer skill training to its employees. Whether it’s a new process, a technology enhancement,
working in teams, having more decision-making authority, or the like, employees would need
new skills as a result of the re-engineering process.
7. Contingent workforce
A very substantial part of the modern-day workforce are the contingent workers. Contingent
workers are individuals who are typically hired for shorter periods of time. They perform
specific tasks that often require special job skills and are employed when an organization is
experiencing significant deviations in its workflow. When an organization makes its strategic
decision to employ a sizable portion of its workforce from the contingency ranks, several
HRM issues come to the forefront. These include being able to have these virtual employees
available when needed, providing scheduling options that meet their needs and making
decisions about whether or not benefits will be offered to the contingent work force.
No organization can make the transition to a contingent workforce without sufficient
planning. As such, when these strategic decisions are being made, HRM must be an active
partner in these discussions. After all its HRM department’s responsibility to locate and bring
into the organization these temporary workers. As temporary workers are brought in, HRM
will also
have the responsibility of quickly adapting them to the organization. HRM will also have to
give some thought to how it will attract quality temporaries.
8. Decentralized work sites
Work sites are getting more and more decentralized. Telecommuting capabilities that exist
today have made it possible for the employees to be located anywhere on the globe. With this
potential, the employers no longer have to consider locating a business near its work force.
Telecommuting also offers an opportunity for a business tin a high-cost area to have its work
done in an area where lower wages prevail.
Decentralized work sites also offer opportunities that may meet the needs of the diversified
workforce. Those who have family responsibilities like child care, or those who have
disabilities may prefer to work in their homes rather than travel to the organization’s facility.
For HRM, decentralized work sites present a challenge. Much of that challenge revolves
around training managers in how to establish and ensure appropriate work quality and on-
time completion. Work at home may also require HRM to rethink its compensation policy.
Will it pay by the hour, on a salary basis, or by the job performed. Also, because employees
in decentralized work sites are full time employees of the organization as opposed to
contingent workers, it will be organization’s responsibility to ensure health and safety of the
decentralized work force.
9. Employee involvement
For today’s organization’s to be successful, there are a number of employee involvement
concepts that appear to be accepted. These are delegation, participative management, work
teams, goal setting, employee training and empowering of employees. HRM has a significant
role to play in employee involvement. What is needed is demonstrated leadership as well as
supportive management. Employees need to be trained and that’s where human resource
management has a significant role to play. Employees expected to delegate, to have decisions
participatively handled, to work in teams, or to set goals cannot do so unless they know and
understand what it is that they are to do. Empowering employees requires extensive training
in all aspects of the job. Workers may need to understand how new job design processes.
They may need training in interpersonal skills to make participative and work teams function
properly.
Unit 3-Marketing Management
IMPORTANCE AND SCOPE OF MARKETING

Marketing is defined by the American Marketing Association as "the activity, set of

institutions, and processes for creating, communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and society at large." The term developed from
the original meaning which referred literally to going to market with goods for sale. From a
sales process engineering perspective, marketing is "a set of processes that are interconnected
and interdependent with other functions" of a business aimed at achieving customer interest
and satisfaction.
Philip Kotler defines marketing as:-marketing is about Satisfying needs and wants through
an exchange process.
The Chartered Institute of Marketing defines marketing as "the management process
responsible for identifying, anticipating and satisfying customer requirements profitably." A
similar concept is the value-based marketing which states the role of marketing to contribute
to increasing shareholder value. In this context, marketing can be defined as "the management
process that seeks to maximize returns to shareholders by developing relationships with valued
customers and creating a competitive advantage."
The process of marketing is that of bringing a product to market in which includes these
steps: broad market research; market targeting and market segmentation; determining
distribution, pricing and promotion strategies; developing a communications strategy;
budgeting; and visioning long-term market development goals. Many parts of the marketing
process (e.g. product design, art director, brand management, advertising, copywriting etc.)
involve use of the creative arts.
CORE MARKETING CONCEPTS
The 'marketing concept' proposes that in order to satisfy the organizational objectives, an
organization should anticipate the needs and wants of potential consumers and satisfy them
more effectively than its competitors. This concept originated from Adam Smith's book The
Wealth of Nations, but would not become widely used until nearly 200 years later. Marketing
and Marketing Concepts are directly related. Given the centrality of customer needs and wants
in marketing, a rich understanding of these concepts is essential:
Needs: Something necessary for people to live a healthy, stable and safe life. When needs
remain unfulfilled, there is a clear adverse outcome: a dysfunction or death. Needs can be
objective and physical, such as the need for food, water and shelter; or subjective and
psychological, such as the need to belong to a family or social group and the need for self-
esteem.

Wants-Something that is desired wished for or aspired to. Wants are not essential for basic
survival and are often shaped by culture or peer-groups.

Demands: When needs and wants are backed by the ability to pay, they have the potential to
become economic demands.

Definition of Marketing Management

According to Philip Kotler, "Marketing Management is the analysis, planning, implementation

and control of programmes designed to bring about desired exchanges with target audiences
for the purpose of personal and of mutual gain. It relies heavily on the adoption and
coordination of product, price, promotion and place for achieving responses.".
Marketing management is a business process, to manage marketing activities in profit seeking
and non-profit organisations at different levels of management. Marketing management
decisions are based on strong knowledge of marketing functions and clear understanding and
application of supervisory and managerial techniques.

ALTHOUGH IT IS DIFFICULT OT DEFINE MARKETNG AS SUCH BECAUSE,

MARKETING ITSELF IS A DYNAMIC TERM WHICH KEEPS ON CHANGING AND
GIVES FREE HAND TO ORGAIZATION TO USE THEIR CREATIVITY AND REEACH
TO THE CUSTOMERS. Some basic components which are very important while defining
marketing management are-

Marketing Management is the process which involves Exploring i.e. Understanding and
analysing the Customers need and wants, Production i.e. producing such products and services
which will satisfy the customers’ expectations, creating value and earning profit through
customer satisfaction with an intention to build healthy customer relation.

Nature of Marketing Management

It Combines the Fields of Marketing and Management As the name implies, marketing
management combines the fields of marketing and management. Marketing consists of
discovering consumer needs and wants, creating the goods and services that meet those needs
and wants; and pricing, promoting, and delivering those goods and services. Doing so requires
attention to six major areas - markets, products, prices, places, promotion, and people.
Management is getting things done through other people. Managers engage in five key
activities -

Planning, organising, staffing, directing, and controlling. Marketing management implies the
integration of these concepts. Marketing Management is a Business Process Marketing
management is a business process, to manage marketing activities in profit seeking and on
profit organisations at different levels of management, i.e. supervisory, middle-management,
and executive levels. Marketing management decisions are based on strong knowledge of
marketing functions and clear understanding and application of supervisory and managerial
techniques. Marketing managers and product managers are there to execute the processes of
marketing management. We, as customers, see the results of such process in the form of
products, prices, advertisements, promotions, etc.

Marketing Management is Both Science and Art

“Marketing management is art and science of choosing target markets and getting, keeping
and growing customers through creating, delivering and communicating superior customer
value.”(Kotler, 2006). Marketing management is a science because it follows general
principles that guides the marketing managers in decision making. The Art of Marketing
management consists in tackling every situation in a creative and effective manner.
Marketing Management is thus a science as well as an art.
Importance of Marketing Management:

Marketing management has gained importance to meet increasing competition and the need for
improved methods of distribution to reduce costs and increase profits. Marketing management
today is the most important function in a commercial and business enterprise.

The following are the other factors showing the importance of the marketing management:

 Introduction of new products in the market.

 Increasing the production of existing products.
 Reducing cost of sales and distribution.
 Export market.
 Development in the means of communication and modes of transportation within and
outside the country.
 Rise in per capita income and demand for more goods by the consumers

Scope of marketing

1. Setting Marketing Goals: The prime task of a marketing manager is to set marketing
goals and objectives. Clearly and precisely defined objectives can help marketing manager to
direct marketing efforts effectively. The goals and objectives (whether strategic and
operating, or short-term and long-term) must be suitably communicated with the employee’s
concern. As far as possible, objectives should be expressed in quantifiable terms.

2. Selecting Target Market: Segmenting the total market and selecting the target market is a
fundamental task of marketing management. Modern marketing practice is based on the
target market, and not on the total market. The marketing manager cannot satisfy the needs
and wants of the entire market. He must concentrate his efforts only on well-defined specific
groups of customers, known as the target market. All the marketing functions are directed to
cater needs and want of the target market only. Based on the company’s overall capacity, the
target market should be selected.

3. Formulating Suitable Marketing Organisation: To implement marketing plan, a suitable

organisation structure is essential. On the basis of analysis of type of products, type of market,
geographical concentration of market, and many other relevant factors, appropriate
organisation must be designed. Various alternative structures are available, such as product
organisation, geographic organisation, functional organisation, matrix organisation, etc. Based
upon requirements, the appropriate structure should be prepared and modified as per needs.

4. Maintaining Healthy Relations with other Departments:

Marketing department needs cooperation from other departments of organisation, including
financial department, personnel department, and production department, to satisfy customers
effectively. Their support is considered to be important to satisfy consumers. Thus, for
integrated efforts, marketing manager should try to establish good relations with them.
Likewise, within marketing department, he must establish coordination among various
personnel.

5. Establishing and Maintaining Profitable Relations with Outside Parties: Alike internal
support, external relations are also extremely necessary. Marketers, in order to carry out
marketing activities effectively, must establish and maintain healthy relations with various
parties, such as suppliers, service providers, government agencies, dealers, consultants, and so
forth. Without their support, a marketing manager cannot carry out functions successfully. Due
to the important role of external relations, contemporary marketing practices can be said as
relationship marketing.

6. Marketing Research Activities: Marketing research is one of the important functions of

modern marketing. Marketing research involves the systematic collection, analysis, and
interpretation of data on any problem related to marketing. It provides the manager with
valuable information on which marketing decisions can be taken. Marketing research is
essential to know adequately about consumers and market situations. It is a basic function to
satisfy consumers. Marketing efforts are based on marketing research information.

7. Sales Management: Sales management is one of the important functions of marketing

management. Sales management is concerned with planning, implementing, and controlling
selling efforts. It performs all the activities directly related to the execution of sales. The sales
department carries out selling functions. The sales department formulates sales policies,
ensures the adequate quantity of products maintains sales records, formulates structures for
the sales department, manages the sales force (salesmen), and controls selling efforts.

8. Exercising Effective Control on Marketing Activities: Control is essential to ensure that

activities are performed as per plan. Control involves establishing standards, measuring actual
performance, comparing actual performance with standards, and taking corrective actions if
needed. Control keeps the entire marketing department alert, active, and regular. A marketing
manager should set up an effective controlling system to monitor marketing efforts.

Marketing Management is a social and managerial process by which individuals or firms obtain
what they need or want through creating, offering, and exchanging products of value with each
other.

Evolution of Marketing Concept

Under the marketing management philosophy, we shall study the following five concepts:

(1) Production Concept

(2) Product Concept

(3) Selling Concept

(4) Marketing Concept

(5) Societal Marketing Concept

1. Production Concept-

Those companies who believe in this philosophy think that if the goods/services are cheap and
they can be made available in many places, there cannot be any problem regarding sales.
Keeping in mind the same philosophy these companies put in all their marketing efforts in
reducing the cost of production and strengthening their distribution system. In order to reduce
the cost of production and to bring it down to the minimum level, these companies indulge in
large-scale production. This helps them in affecting the economics of large-scale production.
Consequently, the cost of production per unit is reduced.

The utility of this philosophy is apparent only when demand exceeds supply. Its greatest
drawback is that it is not always necessary that the customer every time purchases cheap and
easily available goods or services.

2. Product Concept-

Those companies who believe in this philosophy are of the opinion that if the quality of goods
or services is of a good standard, the customers can be easily attracted. The basis of this
thinking is that the customers get attracted to products of good quality. On the basis of this
philosophy or idea, these companies direct their marketing efforts to increase the quality of
their product. It is a firm belief of the followers of the product concept that the customers get
attracted the products of good quality. This is not the absolute truth because it is not the only
basis for buying goods. The customers do take care of the price of the products and their
availability, etc. A good quality product and high price can upset the budget of a customer.
Therefore, it can be said that only the quality of the product is not the only way to the success
of marketing.

3. Selling Concept

Those companies who believe in this concept think that leaving alone the customers will not
help. Instead, there is a need to attract customers to them. They think that goods are not bought
but have to be sold. The basis of this thinking is that the customers can be attracted. Keeping
in view this concept these companies concentrate their marketing efforts on educating and
attracting customers. In such a case their main thinking is ‘selling what you have’.
This concept offers the idea that by repeated efforts one can sell anything to customers. This
may be right for some time, but you cannot do it for a long-time. If you succeed in enticing the

customer once, he cannot be won over every time. On the contrary, he will work for damaging
your reputation. Therefore, it can be asserted that this philosophy offers only a short-term
advantage and is not for long-term gains.

4. Marketing Concept

Those companies who believe in this concept are of the opinion that success can be achieved
only through consumer satisfaction. The basis of this thinking is that only those goods/services
should be made available that the consumers want or desire and not the things which you can
do. In other words, they do not sell what they can make but they make what they can sell.
Keeping in mind this idea, these companies direct their marketing efforts to achieve consumer
satisfaction. In short, it can be said that it is a modern concept and by adopting it profit can be
earned on a long-term basis. The drawback of this concept is that no attention is paid to social
welfare.

5. Societal Marketing Concept

This concept stresses not only customer satisfaction but also gives importance to Consumer
Welfare/Societal Welfare. This concept is almost a step further than the marketing concept.
Under this concept, it is believed that mere satisfaction of the consumers would not help and
the welfare of the whole society has to be kept in mind.

For example, if a company produces a vehicle that consumes less petrol but spreads pollution,
it will result in only consumer satisfaction and not social welfare. Primarily two elements are
included under social welfare-high-level of human life and a pollution-free atmosphere.
Therefore, the companies believing in this concept direct all their marketing effort towards the
achievement of consumer satisfaction and social welfare. In short, it can be said that this is the
latest concept of marketing. Companies adopting this concept can achieve long-term profit.

CONCEPT AND COMPONENTS OF MARKETING MIX

Marketing involves a number of activities. To begin with, the organization may decide on its
target group of customers to be served. Once the target group is decided, the product Is to be
placed in the market by providing the appropriate product, price, distribution, and promotional
efforts. These are to be combined or mixed in an appropriate proportion so as to achieve the
marketing goal. Such a mix of product, price, distribution, and promotional efforts is known as
a ‘Marketing Mix.

According to Philip Kotler, “Marketing Mix is the set of controllable variables that the firm
can use to influence the buyer’s response”. The controllable variables in this context refer to
the 4 ‘P’s [product, price, place (distribution) and promotion]. Each firm strives to build up
such a composition of 4‘P’s, which can create highest level of consumer satisfaction and at the
same time meet its organizational objectives. Thus, this mix is assembled keeping in mind the
needs of target customers, and it varies from one organization to another depending upon its
available resources and marketing objectives. Let us now have a brief idea about the four
components of the marketing mix.

Product: Product refers to the goods and services prepared by the organizations. A pair of
shoes, a plate of dahi-vada, a skincare cream, all our products. All these are purchased because
they satisfy one or more of our needs. We are paying not for the tangible product but for the
benefit, it will provide. So, in simple words, a product can be described as a bundle of benefits
that a marketer offers to the consumer for a price. While buying a pair of shoes, we are actually
buying comfort for our feet, while buying face cream we are actually paying for beauty because
lipstick is likely to make us look good. The product can also take the form of a service like air
travel, telecommunication, etc. Thus, the term product refers to goods and services
organizations for sale.

Price: Price is the amount charged for a product or service. It is the second most important
element in the marketing mix. Fixing the price of the product is a tricky job. Many factors like
demand for a product, the cost involved, consumer’s ability to pay, prices charged by
competitors for similar products, government restrictions, etc. have to be kept in mind while
fixing the price. In fact, pricing is a very crucial decision area as it has an effect on demand for
the product and also on the profitability of the firm.

Place: Goods are produced to be sold to consumers. They must be made available to consumers
at a place where they can conveniently make purchases. Woolen is manufactured on a large
scale in Ludhiana and you purchase them at a store from the nearby market in your town. So,
it is necessary that the product is available at shops in your town. This involves a chain of
individuals and institutions like distributors, wholesalers, and retailers who constitute the
firm’s distribution network (also called a channel of distribution). The organization has to
decide whether to sell directly to the retailer or through the distributors/wholesaler etc. It can
even plan to sell it directly to consumers.

Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly
priced and made available at outlets convenient to them but the consumer is not made aware
about its price, features, availability etc, its marketing effort may not be successful. Therefore
promotion is an important ingredient of marketing mix as it refers to a process of informing,
persuading and influencing a consumer to make the choice of the product to be bought.
Promotion is done through means of personal selling, advertising, publicity, and sales
promotion. It is done mainly with a view to provide information to prospective consumers
about the availability, characteristics and uses of a product. It arouses potential consumer’s
interest in the product, compare it with competitors’ product and make their choice. The
proliferation of print and electronic media has immensely helped the process of promotion
Unit 4-Finance Management

Finance means handling money and involves various activities, like borrowing, investing,
budgeting, lending, forecasting, and saving. Finance has always played a crucial role in our
lives. From managing personal finances to investing in stocks, finance helps us live better.
Finance, therefore, is called the life blood of any business. The requirements of funds by
business to carry out its various activities is called business finance. A business cannot
function unless adequate funds are made available to it. The initial capital contributed by the
entrepreneur is not always sufficient to take care of all financial requirements of the business.
A business person, therefore, has to look for different other sources from where the need for
funds can be met. A clear assessment of the financial needs and the identification of various
sources of finance, therefore, is a significant aspect of running a business organisation.
Importance of finance
Helpful in the smooth running of the operations
Companies try to gain a large amount of revenue on a daily basis. They used it to sponsor
business activities, pay bills, and give their employees’ salaries. Without finance, any
business will not perform the things mentioned above.
If a business cannot manage its expenses, revenue, and funds, it won’t be easy to manage
operations effectively.
Helpful in generating profits
There is a famous saying that “you require money to generate more money,” and it is
absolutely true in the case of business. If you are thinking of forming a brand-new business,
you have to invest capital in establishing your business efficiently.
The business needs finance not only at the time of its commencement but it needs finance for
its whole lifespan. Hiring employees, buying materials, business promotion, and new product
development all depend on the availability of adequate finance. Moreover, every business is
also required to do appropriate financial management.
If any business is facing the problem of non-availability of adequate funds, then it will not be
able to operate effectively.
Helpful in expanding business
The successful business consistently develops and expands to acquire more market share. It
includes the new market expansion and growth of new products. But this expansion requires
capital for purchasing new equipment, materials, and more finding marketing actions.
An absence of a proper financial structure will hinder the growth of the business. Moreover,
the businesses that are not focusing on expansion will be dumped by their competitors
because they will offer only the same products in the market. That is why the importance of
finance in business is one that helps in running a business smoothly.
Helpful in achieving long-term objectives
If a business wants to achieve long-term objectives, then the importance of finance comes
into the picture. Attaining these objectives will help grow the business and improve customer
satisfaction.
Without proper financial support, a business will not be able to achieve its goals. For
instance, a business may need extra financial support for further expansion.
Proper financial investment helps businesses achieve their objectives and enhances their
financial stability through long-term development.
Helpful in sustaining the unfavourable economic situations
One of the importance of finance in business is that it helps businesses sustain adverse
economic conditions. For any firm, the global economic situation may be a rollercoaster. It
includes unforeseen recessions and depressions, which should be anticipated by every firm.
Furthermore, the advancement of any organisation is never linear. There are always ups and
downs in business, as some goods prosper while others fail.
Every business will only succeed if they prepare themselves for the possible economic
adverse situations. Also, it will need proper financial management to secure that your
business has the right financial plan that will help in business development.
Now you know the importance of finance in business from the above points. Next, we will
explain some of the finance tricks for entrepreneurs.
Sources of Finance
A business can raise funds from various sources. Each of the source has unique
characteristics, which must be properly understood so that the best available source of raising
funds can be identified. There is not a single best source of funds for all organisations.
Depending on the situation, purpose, cost and associated risk, a choice may be made about
the source to be used. For example, if a business wants to raise funds for meeting fixed
capital requirements, long term funds may be required which can be raised in the form of
owned funds or borrowed funds. Similarly, if the purpose is to meet the day-to-day
requirements of business, the short-term sources may be tapped. A brief description of
various sources, along with their advantages and limitations is given below.
Personal Investment: Personal investing is one of the more important components of
personal finance. Essentially, this type of investing activity centres on the investment activity
that is undertaken by an individual. Often, the investing efforts are focused on creating a
secure financial cushion for use in later years, and may include investment activity such as
Certificates of Deposit, savings accounts, participating in pension plans, and the purchase of
stocks, bonds and other options.
Since the focus of personal investing is often a key part of retirement planning, many people
choose to create a personal investment portfolio that is composed of several different options.
The foundation for the portfolio may be a series of very safe investments that provide a small
but consistent return. Investments of this type would include savings accounts, individual
retirement accounts, and similar saving strategies offered at local banks.
In our fast-paced world, personal investment can go a long way in helping you achieve
financial security. It is crucial to look into private investments to build wealth. Personal
investments help avoid financial hurdles.
Bank Loan: Commercial banks occupy a vital position as they provide funds for different
purposes as well as for different time periods. Banks extend loans to firms of all sizes and in
many ways, like, cash credits, overdrafts, term loans, purchase/discounting of bills, and issue
of letter of credit. The rate of interest charged by banks depends on various factors such as
the characteristics of the firm and the level of interest rates in the economy. The loan is repaid
either in lump sum or in instalments. Bank credit is not a permanent source of funds. Though
banks have started extending loans for longer periods, generally such loans are used for
medium to short periods. The borrower is required to provide some security or create a
charge on the assets of the firm before a loan is sanctioned by a commercial bank.
Government Grant and Subsidies: A government grant is a sum of money given to a
business or individual by the government to support them in implementing or establishing the
ideas or projects that ultimately contribute to societal development. Examples of different
types include government grants for housing and dental implants.
Grants applications require extensive planning and work, and they are very competitive. Law
or governing agencies determine the amount of funding for each grant, the types of projects
that require funding, and the terms of the grant. The grant process follows a linear life cycle
that involves various steps, such as developing the funding opportunity, receiving
applications, deciding who gets the grant, and successfully implementing the grant.
Governments grant is the financial assistance from the government side to qualified entities
that introduce ideas or projects that is useful to the public and contributes to the economy.
Applying for a grant involves various steps such as learning about the process, checking
eligibility, searching for the apt opportunity, registering with the grant.gov website,
completing and submitting the application, and finally tracking the submission status. The
grants help the awardee, or the grantee, build the business’s reputation and generate revenues
over time. In contrast, it is time-consuming and requires a lot of documentation.
Issue of Shares: The capital obtained by issue of shares is known as share capital. The
capital of a company is divided into small units called shares. Each share has its nominal
value. For example, a company can issue 1,00,000 shares of Rs. 10 each for a total value of
Rs. 10,00,000. The person holding the share is known as shareholder. There are two types of
shares normally issued by a company. These are equity shares and preference shares. The
money raised by issue of equity shares is called equity share capital, while the money raised
by issue of preference shares is called preference share capital.
Lease Financing: A lease is a contractual agreement whereby one party i.e., the owner of an
asset grants the other party the right to use the asset in return for a periodic payment. In other
words, it is a renting of an asset for some specified period. The owner of the assets is called
the ‘lessor’ while the party that uses the assets is known as the ‘lessee’. The lessee pays a
fixed periodic amount called lease rental to the lessor for the use of the asset. The terms and
conditions regulating the lease arrangements are given in the lease contract. At the end of the
lease period, the asset goes back to the lessor. Lease finance provides an important means of
modernisation and diversification to the firm. Such type of financing is more prevalent in the
acquisition of such assets as computers and electronic equipment which become obsolete
quicker because of the fast-changing technological developments. While making the leasing
decision, the cost of leasing an asset must be compared with the cost of owning the same.
The importance of lease financing are as follows:
i (i) It enables the lessee to acquire the asset with a lower investment
i (ii) Simple documentation makes it easier to finance assets
ii (iii) Lease rentals paid by the lessee are deductible for computing taxable profits
iii (iv) It provides finance without diluting the ownership or control of business
iv (v) The lease agreement does not affect the debt raising capacity of an enterprise
v (vi) The risk of obsolescence is borne by the lesser. This allows greater flexibility to
the lessee to replace the asset.
Unit 5-Operations Management

Operations management is concerned with the design, management, and improvement of the
systems that create the organization’s goods or services. It is the management of the
processes that transform inputs into the goods and services that add value for the customer. A
transformation process is any activity or group of activities that takes one or more inputs,
transforms and adds value to them, and provides outputs for customers or clients.
As Figure 1.1 demonstrates, transformation processes can be categorized into four groups:
manufacture (the physical creation of products, e.g., automobiles), service (the treatment of
customers or storage of products, e.g., hospitals or warehouses), supply (a change in
ownership of goods, e.g., retail), and transport (the movement of materials or customers, e.g.,
taxi service).

Figure 1.1: Categories of transformation processes.

Several different transformations are usually required to produce a good or service. The
overall transformation can be described as the macro-operation, and the more detailed
transformations within this macro-operation as micro-operations.

Functions of Operation Management

The operation function of an organization is the part that produces the organization’s
products. The product may be physical goods or services. This function performs several
activities to ‘transform’ a set of inputs into a useful output using a conversion process. The
conversion process is the process of changing inputs of labor, materials, capital and
management into outputs of goods and services.
The production process consists of number of activities and operations. These operations and
activities can be applied in different combinations and order to achieve the desired objective.
The operations can be purchase of raw materials, maintenance of inventories, transportation
of goods etc. The combination of two or more constitutes a system. In any production process
two or more systems can be combined in series or parallel e.g., number of factories producing
produce similar products to supply several markets areas then they constitute a parallel
system.
According to Webster “System is a regularly interacting or interdependent group of items
forming a unified whole.” Any systems may have many components and variation in one
component is likely to effect the other components of a system e.g. change in rate of
production will affect inventory, overtime hours etc.
Broadly speaking an ‘operation function’ or operations management is a systematic approach
to address all the issues pertaining to the transformation process that converts some inputs
into outputs that are useful and could fetch revenue to the organization. Four aspects of this
definition merit closer attention.
A systematic approach involves understanding, nature of issues and problems to be studied,
establishing measures of performance, collecting relevant data, using scientific tools and
techniques to analyse and effective and efficient solutions to the problem. Therefore, for
successful operation management, the focus should be on developing a set of tools and
techniques to analyse problems within operation systems.
The second aspect of operation management pertains to addressing several issues that an
organization face. These issues vary markedly in terms of the time horizon, the nature of the
problem to be solved and commitment of the required resources, the problems may include
deciding how to re-route jobs when a machine breaks down on a shop floor or how to handle
a surge in demand in a service system. On the other hand, decisions such as where to locate
the plant, what capacity to build in the system and what type of products and services need to
be offered to the customers is to be done? Operation management provides alternative
methodologies to address such wide-ranging issues to an organization.
Transformation processes are central to operation systems. The transformation process
ensures that inputs are converted into useful outputs. Therefore, the focus of the operation
management is to address the various aspects of design in the transformation process as well
as planning and operational control.
Finally, the goal of operation management is to ensure that through careful planning and
control of operations the organization is able to keep the costs. In order to ensure this an
appropriate performance evaluation system is required. Therefore, the operation management
discipline also involves the development of such a system of performance evaluation and
methods by which the operating system could make improvements to meet targeted
performance measures.
Importance of Operations Management
A smooth operations management process has many benefits for an organisation, including:
Product/service quality: How do you ensure that your product/service is of the best quality?
Having a checklist that meets the objectives and goals of the company as well as meeting the
customer’s needs.
The operations manager will have a set list of processes and a checklist to determine that
everything is in order during the pre-production process. This includes making sure that
everyone is aware of what the product/service needs and informing every one of the
product/service objectives.
Once the final product has been created, the operations manager will assess to ensure it meets
the organisation goals and that the customer’s needs are met. Thereafter, the operations
manager will review the pre-production process to ensure efficiency for the next creation.
Customer satisfaction: A customer review can make or break a business. If a negative word
spreads, it could be a challenge to retain clients. This is why it’s important to ensure that your
customers’ needs are at the forefront of your product or service.
The operations manager will conduct a quality management process, a methodology uses to
create a product/service that will meet the customers’ needs. If the organisation is a service
provider, the customer is the lifeblood. The operations manager will have processes in place
to make sure that the service quality is the best. A returning customer means more for the
bottom line.
Revenue Increase: An organisation will have a good reputation thanks to great
product/service quality and customer satisfaction. This leads to increased revenue from a new
customer base. The revenue growth could help with the launch of new and innovative
products/services or an increase in resources and technology.
Competitive advantage: An effective operations management plan also means a business
could be ahead of its competition. If internal and external factors are managed well within an
organisation, it could mean a good standing within the market.
Compliance: There are certain rules and regulations an organisation needs to adhere to. The
operations manager will have certain controls in place to avoid fines and to make sure the
organisation is running within a lawful manner.
Motivated employees: Overall, the operations manager ensures that employees know the
roles within a company. This is important because often, employees feel left out and
demotivated if they feel they’re not contributing in a meaningful way. An operations manager
helps define these roles to ensure that production is maximised and efficient.
Scope and Nature of Operations Management
The scope of operations management can be quite broad, as it covers all aspects of an
organisation’s operations. For example, operations managers may be responsible for
managing the supply chain, designing and supervising manufacturing processes, overseeing
quality control, or managing customer service.
No doubt, operations management is a critical function in any organisation, as it is vital in
ensuring that its operations are efficient and effective. In today’s competitive business
environment, organisations must be able to operate efficiently and effectively to survive and
thrive. Thus, operations managers play a pivotal role in ensuring that an organisation’s
operations are up to par.
There is a wide range of techniques and tools that operations managers use to improve an
organisation’s operations. These tools and techniques include process improvement, quality
control, Six Sigma, and lean manufacturing. Using these tools and techniques, operations
managers can help organisations save time, money, and resources while improving quality
and productivity.
Operations management (OM) is indeed a challenging and complex vertical, but it is also
significant. Organisations cannot survive and thrive without effective operations
management. Thus, those who enter this field can expect to find plenty of opportunities for
career growth and advancement.
Types of Scope in Operations Management
OM is critical to business growth concerned with the production of goods and services and
involves the management of resources, processes, and people.
Scopes in operations management can be divided into three broad categories:
• • Strategic Scope: This type of scope deals with long-term goals and objectives. It
includes decisions about what products or services to offer, what markets to operate in, and
how to allocate resources.
• • Tactical Scope: This type of scope deals with short-term decisions that are
necessary to achieve the organisation’s strategic objectives. It includes decisions about
production plans, schedules, and inventory levels.
• • Operational Scope: This type of scope deals with the day-to-day decisions that are
necessary to keep the organisation’s operations running smoothly. It includes decisions about
resources, processes, and people.

The scope of operations management is constantly evolving as the field adapts to changes in
technology, markets, and customer demands. As a result, operations managers must be able
to adjust their strategies and tactics to meet the needs of their organisations.
Increasing Revenue
Operations management is the business area concerned with producing goods and services. It
includes ensuring efficient business operations with the required resources meeting the
customer requirements.
It is all about managing the process that transforms inputs (labour, capital, land, and raw
materials) into outputs (goods and services). Revenue is the lifeblood of any business. There
is no doubt in asserting that one of the primary goals of operations management is to increase
revenue. This can be done by increasing the efficiency of production processes and by
increasing the effectiveness of marketing and sales efforts.
Benefits of increasing revenue
• • More money to reinvest in the business: This can be used to fund expansion,
research and development, or to improve working conditions and employee benefits.
• • Greater financial security: This can help to weather tough times and provide a
buffer against unexpected setbacks.
• • Improved shareholder value can make the business more attractive to potential
investors.

Reducing Need For Investment

Another goal of operations management is to reduce the need for investment. This can be
done by improving the efficiency of production processes and/or by reducing the amount of
inventory that is kept on hand. When operations management is placed in the right place, it
will reduce the need for investment, which can free up funds to be used in other business
areas.
In other words, the scope of operations management is quite vast and covers many different
aspects of a business. By understanding the goals and objectives of operations management,
businesses can ensure that they are making the most of their resources and improving their
overall efficiency.
Benefits of reducing the need for investment
• • Reduced overhead costs: Less need to spend on inventory, production processes,
etc.
• • Increased cash flow: More funds available to invest in other areas of the business
• • Improved efficiency and productivity: Less requirement for investment can lead
to improved operations management and, as a result, improved efficiency and productivity.

Improving Customer Service

Operations management ensures that an organisation’s products or services are delivered
efficiently and effectively. This includes managing the resources needed to produce and
provide the products or services and planning and controlling the operations process.
Operations management plays a vital role in improving customer service. By streamlining
processes and improving efficiency, operations managers can help to ensure that customers
are satisfied with the products or services they receive. In addition, by constantly monitoring
the operations process, operations managers can identify potential problems and take steps to
prevent them.
As you can see, the scope of operations management is quite broad. By taking responsibility
for the efficient and effective delivery of an organisation’s products or services, operations
managers can have a significant impact on the overall success of the organisation.
Benefits of improved customer satisfaction
• • Repeat customers: Customers who are satisfied with their experience are more
likely to come back.
• • Improved reputation: A business with a good reputation is more likely to attract
new customers.
• • Lower costs: Satisfied customers are less likely to demand refunds or file
complaints, which can save the business money in the long run.

Enhance Goodwill
Operations management has a direct impact on an organization’s goodwill. Goodwill is the
intangible value customers assign to a company based on their experiences and perceptions.
Goodwill can lead to repeat business and referrals. When customers have positive
experiences with a company, they are more likely to come back and recommend the company
to others.
Goodwill is also crucial because it can help company weather tough times. If customers have
positive experiences and perceptions of a company, they may be more likely to continue
doing business with it even during difficult economic periods. Therefore, improving goodwill
should be a key goal of operations management.
There are several ways that operations management can improve goodwill. One is by
improving customer service, which is done by ensuring that customers have a positive
experience every when they interact with the company, either in person, online or over the
phone. Another way to improve goodwill is by providing high-quality products and services.
Benefits of Improved Goodwill:
• • Increased loyalty: When customers have positive experiences with a company, they
are more likely to be loyal to the company. They may continue doing business with the
company even during tough economic periods.
• • Recommendations: Customers who have positive experiences with a company are
more likely to recommend the company to others. This can lead to increased business for the
company.
• • Better reputation: A company with a good reputation is more likely to attract new
customers and retain existing ones.

Increase Innovation
Organisations must innovate regularly to steer clear of the competition. This means that
operations managers must be proactive in identifying new ways to improve the efficiency of
their operations. Additionally, they must effectively communicate these ideas to other
members of the organisation.
One of the most critical aspects of operations management is the ability to utilise resources
effectively. This includes both human and financial resources. Operations managers must be
able to identify ways to save the organisation money while maintaining high quality and
productivity levels.
Innovation will bring about new opportunities for the organisation. However, it is essential to
remember that not all innovations will be successful. It is the responsibility of operations
managers to carefully evaluate new ideas and determine which ones have the potential to be
beneficial for the organisation. They must also be prepared to implement these ideas to
minimise any negative impact on the organisation.
Benefits of Increased innovation
• • Helps the organisation stay ahead of the competition: By continually innovating,
operations managers can help the organization stay ahead of the competition.
• • Can lead to cost savings: Operations managers can identify ways to save the
organization money through innovation.
• • Creates new opportunities for the organization: Innovation can bring about new
opportunities for the organization.
• • Allows the organization to be more flexible: By being innovative, operations
managers can help the organization be more flexible and adapt to change.

Augment Productivity
This scope mainly concerns efficiently using resources to produce goods and services. The
objective is to find ways to make the best use of people, machines, materials, information,
and energy to bring more value to the customer. The focus is on achieving economies of scale
and scope through process improvement, technology innovation, and better management of
people and resources.
Operations managers are responsible for running an organisation and ensuring that all
activities are carried out efficiently and effectively. They work in various industries,
including manufacturing, healthcare, retail, and logistics.
Benefits of augmented productivity
• • Improved quality of products and services: When resources are used more
efficiently, it results in improved quality of products and services.
• • Increased competitiveness: More efficient operations lead to increased
competitiveness as businesses can produce goods and services at lower costs.
• • Improved customer satisfaction: When products and services are of better quality
and delivered faster, it leads to improved customer satisfaction.
• • Increased shareholder value: All of the above benefits lead to increased
shareholder value as businesses become more profitable.