Management: Management can be defined as a process of getting things done with the aim of achieving goals effectively andefficiently.

Process means the primary functions of management. These functions are planning, organising, staffing, directing and controlling. Effectiveness is concerned
with doing the right task, completing activities and achieving goals. Efficiency means doing the task correctly and with minimum cost.
Characteristics of Management: 6Mgnt is a dynamic function as it adapts itself to the Importance of Management:
changing environment. In order to be successful, an
1Mgnt is a goal-oriented process: An org must change itself and its goals according to the 1Mgnt helps in achieving group goals: The
organisation has a set of basic goals. Mgnt needs of the environment. task of a manager is to give a common
unites the efforts of different individuals in the 7Mgnt is an intangible force: Mgnt is an direction to the individual effort in achieving
organisation towards achieving these goals. intangible force that cannot be seen but its the overall goal of the organisation.
2Mgnt is all pervasive: Managing activities presence can be felt in the way the organisation 2Mgnt increases efficiency: The aim of a
of an enterprise are common to all manager is to reduce costs and increase
Ch-1 Nature & Significance of Management

functions.
organisations whether economic, social or productivity through better planning,
political. Objectives of Management: organising, directing, staffing and
3Mgnt is multidimensional: Mgnt is a 1 Organisational Objectives: Mgnt is responsible for controlling the activities of the organisation.
complex activity that has three main setting and achieving objectives for the organisation. 3 Mgnt creates a dynamic organisation:
dimensions. a.Survival: In order to survive, an org must earn Mgnt helps people adapt to these changes so
a.Mgnt of work: Mgnt translates thiswork in enough revenues to cover costs. that the organisation is able to maintain its
terms of goals to be achieved and assigns the b.Profit: Mere survival is not enough. Mgnthas to competitive edge.
means to achieve it. ensure that the org makes a profit. Profit is imp for 4 Mgnt helps in achievingpersonal
b.Mgnt of people: (i) it implies dealing with objectives: A manager motivates and leads his
covering costs & risks of the business.
employees as individuals with diverse needs and team in such a manner that individual
c.Growth: It is imp for the business to grow.To remain
behaviour;
in the industry, Mgnt must exploit fully the growth members are able to achieve personal goals while
(ii) It also means dealing with individuals as a
potential of the org. Growth of a business can be contributing to the overall organisational
group of people.
measured in terms of sales volume, increase in the no. objective.
c. Mgnt of operations: it ensures the
of employees, etc. 5Mgnt helps in the development of society:
conversion of inputs into desired outputs.
2 Social objectives: It involves the creation of it helps in the development of society by
4 Mgnt is a continuous process: The
benefit for society. For Eg. Using environmental a.provide good quality products and
process of mgnt is a series of continuous,
friendly methods of production, giving employment services,
composite, but separate functions. These
opportunities, providing basic amenities like schools b. creates employment opportunities,
functions are simultaneously performed by all
3Personal objectives: It is concerned with satisfying c.adopts new technology for the greater good
managers all the time.
needs of employees. Financial needs such as of the people and
5Mgnt is a group activity: An org. is a
collection of diverse individuals with competitive salaries and perks, social needs such as d.leads the path towards growth and
peer recognition and higher level needs such as development.
different needs but as members of the
personal growth and development.
organisation they work towards fulfilling
the common organisational goal.
Levels of Management: b.they interact with the actual work force and pass on Importance of Coordination:
1 Top Management: They consists of the senior- instructions of the middle mgnt to the workers.
most executives of the org. Ex. CEO, COO, c.Through their efforts quality of output is 1Growth in size: When anorganisation
President, Vice-President, MD, Chairman etc. maintained, wastage of materials is minimised and expands or grows in size, the number of
Functions: safety standards are maintained. people and departments working in the
a.responsible for the welfare and survival of the org. d.They represent customer problems before mgnt and organisation rises. This requires more
b. formulate organisational goals and strategies. maintain discipline. coordination.
c.responsible for all the activities of the business and for 2Functional differentiation:. An organisation
its impact on society. Coordination has several departments or divisions. All these
d.analyse the BE and its implications for the Co-ordination is the process by which a manager divisions or departments work differently. So
survival. synchronises the activities of different there is a great possibility that conflicts may
e. coordinate the activities of different departments towards the achievement of a common goal. arise between these departments. Coordination
departments according to the overall objectives of the helps in focussing the efforts and activities of
org. Features of co-ordination:
various departments on attainment of common
organisational goals.
2 Middle Management: It is the link between top and 1Coordination integrates group efforts: It
3Specialisation: Due to their expertise, the
lower level managers .Ex. division heads, operations integrates group efforts by unifying diverse
specialists do not like taking advice or
manager or plant superintendent. interests into purposeful work activity.
suggestions from others especially in matters
Functions: 2Coordination ensures unity of action: It ensures unity of
relating to their field. Therefore, an
a.To interpret the policies framed by the top action by acting as a binding force between departments
organisation needs coordination for the purpose
management. and ensuring that all action is aimed at achieving the
of reconciling the different approaches and
b.To ensure that their department has the goals of the organisation. interests of the specialists.
necessary personnel. 3Coordination is a continuous process: It is a continuous
c.To assign necessary duties and responsibilities to process as it starts at the planning stage and continues
them. till controlling.
d.To motivate employees of their respective 4Coordination is an all pervasive function: It isa
departments to achieve the desired objectives. pervasive function as it is required in all types of
e.To co-operate with other departments for smooth organisations, in all the departments and at all
functioning of the organisation. levels.
5Coordination is the responsibility of all managers: It is
3 Supervisory or Operational Management: It is the the responsibility of all managers at the top, middle and
lower level in the hierarchy of the org. Ex. lower level.
Foremen and supervisors etc. 6 Coordination is a deliberate function: It isa
Functions: deliberate function as every manager has to co-
a. Supervisors directly oversee the effortsof the ordinate the efforts of different people in a conscious
workforce. and deliberate manner.
Nature of Management: 2 Management as an Art: Art is the skilful and 3 Management as a Profession: Profession means
personal application of existing knowledge to occupation that requires specialised knowledge and
1 Management as a Science: Science is a achieve desired results. a practice of formal education, which is acquired
systematised body of knowledge that explains Features that establish it as an art are: from the respective professional body.
a.Existence of theoretical knowledge: As in art, a.Systematised body of knowledge: A profession is
certain general truths or the operation of general
in mgnt too, there is a lot of literature based on a systematised body of knowledge. Like
laws.
availablein various areas of mgnt which the profession, management has well defined body of
Features that establish it as an science are: knowledge. It has its own principles, which are
manager has to specialise in.
a. Systematised body of knowledge: Science is a b.Personalised application: Like in any art, in based on experiments.
systematised body of knowledge, mgnt too, a manager applies his acquired b.Restricted entry into a profession: In Profession,
consisting of principles and theories based on cause knowledge in a personalised and unique entry is restricted through an examination or degree.
and effect relationship. Like science, there is a manner. This gives rise to different styles of In management, no such restriction is there for
mgnt. managers to clear an examination or hold a degree.
systematised body of knowledge in management,
c.Based on practice and creativity: Mgnt c.Professional association: All professionals are
consisting of theories, principles and concepts.
satisfies this criteria as a manager gains bound to be a part of a professional association.
b.Principles based on experimentation: Scientific Membership to a professional association like
experience through regular practice and becomes
principles are formed on the basis of observation more effective. AIMA, is not mandatory for managers.
and experimentation. Principles of management d.Code of conduct: All professionals are subject to
are evolved after continuous observations and Conclusion: Thus, management is afull- an ethical code of conduct. In management, no
experimentation. fledged art. such rules and regulations are framed to guide the
c. Universal validity: Scientific principlesare valid managers.
e.Service motive: The basic motive of each
and applicable universally. Like science, some of
professional is to render committed service to the
the principles of management have universal
society. All managers, directly or indirectly
validity, but they are not as exact as work for the development of society.
principles of pure science.
Conclusion: Thus, management does notpossess all
Conclusion: Management is a social science or soft the essential attributes of a profession. No doubt,
sciences, as it involves the study of human management though not a full-fledged profession, is
emerging as a profession.
behaviour. Management cannot be as- perfect as
natural sciences. Therefore it is an inexact science.
 Meaning: The principles of management serve as broad and general guidelines for the managerial decision making and action.

Principles of management Vs Nature of Principles of Management: Significance of Management Principles:

Principles of Pure Science
Management principles are not as 1Universal applicability: The PoM are intended 1Providing manager with useful insights into
rigid as principles of pure science. to apply to all types of organisations, business as reality: Mgnt principles help the managers in
They deal with human behaviour and, well as non-business, small as well large, public better understanding of the prevailing
thus, are to be applied creatively sector as well as private sector, manufacturing as business situations.
given the demands of the situation. well as the services sectors. 2 Optimum utilisation of resources and
2General guidelines: The principles are effective administration: Mgnt principles are
Principles of Management Vs guidelines to action but do not provide based on cause and effect so they allow
Techniques of Management readymade, straitjacket solutions to all managers to avoid wastages that are
Techniques are procedures or managerial problems as the real business associated with hit and trial approach.
methods, which involve a series of situations are very complex and dynamic and are a 3Scientific decisions: Mgnt principles help
steps to be taken to accomplish result of many factors. managers in thoughtful, logical and unbiased
desired goals. 3Formed by practice and experimentation: The decision making.
Principles are guidelines to take PoM are formed by experience and collective 4Meeting changing environment: The
Ch-2 Principles of

decisions or actions while practicing wisdom of managers as well as experimentation. organisations have been able to adjust with
techniques. 4Flexibile: The PoM are not rigid prescriptions, the changing times because of the adaptable
which have to be followed absolutely. They are nature of principles of Mgnt. Many
Principles Vs Values flexible and can be modified by the manager when organisations have left several of their
Management

Values are something, which are the situation activities and techniques due to changing times
acceptable or desirable. They have 5Behavioural: Management principles aim at and adopted new ones.
moral connotations. Principles are influencing behaviour of human beings. Therefore, 5Fulfilling social responsibility: Due to
basic truths or guidelines for PoM are mainly behavioural in nature. increasing public and consumer awareness,
behaviour. 6Cause and effect relationships: The PoM seek Mgnts of various organisations make sure that
Values are general rules for to establish relationship between cause and they are able to fulfill their social obligations.
behaviour of individuals in society effect so that they can be used in similar Mgnt principles help the managers in fulfilling
formed through common practice situations in a large number of cases. their social responsibilities, thus, contributing
whereas principles of management 7Contingent: The application of PoM is to the development of society.
are formed after research in work contingent or dependent upon the prevailing 6Mgnt training, education and research:
situations, which are technical in situation at a particular point of time. The Principles of Mgnt are used as the basis for
nature. application of principles has to be changed as per Mgnt training, education and research. Mgnt
requirements. principles help in the development of Mgnt as a
discipline.
Fayol’s Principles of Management: 7 Remuneration of employees: It states that the 11Equity: It emphasizes kindliness and
remuneration of employees should be just and justice in the behaviour of managers towards
1Division of work: The principle of Division of work states equitable. Employees should be paid fair wages, workers. No discrimination should be made by
that work is divided into small tasks/ jobs. A trained which should give them at least a reasonable them on the basis of caste, creed, gender or
specialist who is competent is required to perform each job. standard of living. At the same time it should be otherwise caste, creed.
Thus, division of work leads to specialisation. within the paying capacity of the company.
12Stability of Personnel: The employee turnover
2Authority and Responsibility: There should always be a 8Centralisation and Decentralisation: should be minimized to maintain
balance between the authority given and responsibility The concentration of decision-making authority is organizational efficiency. Personnel should be
entrusted to an employee. This is because if authority is called centralisation whereas its dispersal selected and appointed after due and rigorous
more than responsibility, the employees are likely to among more than one person is known as procedure. After placement, they should be kept
misuse it whereas if authority is less than responsibility, decentralisation. Organisation should have at their post for a minimum fixed tenure so that
he/she will be unable to do the desired work. abalance between centralisation and they get time to show results. Any adhocism in
decentralisation. this regard will create instability/insecurity
3Discipline: Discipline involves obedience to all the among employees. They would tend to leave the
agreements in the employment contract and rules of the 9Scalar Chain: It refers to chain ofauthority and organisation.
organisation. Good superiors and penalties, which are communication that runs from top to bottom and
judicious are vital components for the successful following should be followed by the managers and the 13Initiative: Initiative means taking the first
of this principle. subordinates. step with self-motivation. The workers should be
For example- There is one head A who has two lines encouraged to develop and carry out their plans
4Unity of command: There should be one and only one for improvement. Suggestion system should be
of authority under him, B-C-D and L-M-N. If C has
boss for every individual employee from whom he should adopted in the organization.
to communicate with M who is at the same level of
receive orders and be responsible to. Dual subordination
authority, then he has to transverse the route D-C-B-
should be avoided. 14 Esprit de Corps: It means ‘Unity is
A- L-M-N due to the principle of scalar chain.
However, if there is an emergency, then C can Strength’. It states that management should
5Unity of Direction: All the units of an organisation promote a team spirit of unity and harmony
directly contact M through gang plank.
should be moving towards the same objectives through among employees to realise organisational
coordinated and focused efforts. Each group of objectives. The manager should replace ‘I’ with
10Order: It states that there should be a place for
activities having the same objective must have one head ‘We’ to foster team spirit. This will give rise to a
everything and everyone in an organization and
and one plan. spirit of mutual trust and belongingness among
that thing or person should be found in its allotted
place. People and materials must be in suitable team members. It will also minimise the need for
6Subordination of Individual Interest to General Interest:
places at appropriate time for maximum efficiency. using penalties.
In all the situations, the interests of an organisation
should take priority over the interests of any one
individual employee.
Scientific Management by F.W. Taylor: 4 Development of each and every person to his greatest
efficiency and prosperity: This principle is concerned 4 Fatigue Study: A person is bound to feel tired
1 Science not rule of thumb: It states that there with efficiency of employees which could be built in physically and mentally if she/he does not rest while
was only one best method to maximise efficiency. right from the process of employee selection. The work working. Fatigue study seeks to determine the amount
This method can be developed through scientific assigned to employees should suit their capabilities. and frequency of rest intervals in completing a task.
study and analysis of each They should be given the required training to increase
element of a job and should substitute ‘Rule of their Efficiency. Efficient employees would produce
Thumb’. This standard method then should be more and earn more. 5 Standardisation and Simplification of work:
followed throughout the organisation. This will ensure their greatest efficiency and Standardisation brings uniformity in the org right
prosperity for both the company and the workers. from the procurement of raw material to the delivery of
2 Harmony, Not Discord: Taylor emphasised that the final product. Thus standardisation brings
there should be complete harmony between the uniformity in all business activities.
management and workers. Taylor introduced the Simplification deals with reduction of extra varieties,
concept of mental revolution. According to Taylor, Techniques of Scientific management: dimensions, sizes which are not required. It brings more
both management and workers should bring a efficiency in the organisation.
change in their thinking towards each other. 1 Method Study: It is a study to find out one best
Workers should perform to the best of their ability way of doing the job. It helps to minimize the cost of 6 Differential Piece Wage System: The main objective
and at the same time Management should share the production, improve the quality and maximize of this technique is to differentiate between efficient
gains of the company with the workers. satisfaction of the customer. It includes all activities and inefficient workers. The efficient workers are paid
from procurement of raw materials till the final more in comparison to inefficient workers. The idea is
product is delivered to the customer. to promote efficiency.
3 Cooperation, Not Individualism: This principle is
an extension of principle of ‘Harmony Not Discord’
There should be complete cooperation between the 2 Motion Study: It is a technique to study the 7 Functional foremanship is an extension of the principle
labour and the management instead of movements that are necessary for doing a well- of division of work and specialisation. Each worker is
individualism. defined job. It seeks to eliminate unnecessary and supposed to take orders from 8 foremen. Instruction Card
Competition should be replaced by cooperation wasteful movements so that it takes less time to Clerk: Draft instructions for the workers.
and there should be an almost equal division of complete a job efficiently. Route Clerk: Specify route ofproduction.
work and responsibility between workers and Time and Cost Clerk: Prepare time and cost sheet.
management. 3 Time Study: It is a technique to determine the Disciplinarian: EnsuringDiscipline
Also, management should reward workers for their standard time taken by a worker of reasonable Speed boss: Timely & Accurately completion of job. Gang
suggestions which results in substantial skill and efficiency to perform a well-defined job. It Boss: Keeping tools & Machines ready for operations
reduction in costs. helps in deciding the number of workers to be Repair Boss: Whenever some repair is involved in any
At the same time workers should desist from employed, frame work, the work is done properly.
going on strike and making unreasonable suitable incentive schemes and determine labour Inspector: Checking the quality ofwork.
demands on the management. costs.
 Meaning: The term ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a
business enterprise but that may affect its performance.

Features of BE Importance of BE Dimensions of BE

1 Totality of external forces: 1It enables the firm to identify 1Political Environment: PE includes
Business environment is the sum total opportunities and getting the first political conditions such as general
of all things external to business firms. mover advantage: Early identification of stability and peace in the country and
2 Specific and general forces: opportunities helps an enterprise to be specific attitudes that elected
Business environment includes both the first to exploit them instead of losing government representatives hold towards
specific and general forces. Specific them to competitors. business.
forces (such as investors, customers) 2It helps the firm to identify threats 2Economic Environment: EE includes
affect directly. General forces (such as and early warning signals: Environmental economic factors that can affect mgnt
political, legal) have impact on all awareness can help managers to identify practices in a business enterprise. It
business enterprises and affect various threats on time and serve as an includes interest rate, inflation rate,
indirectly. early warning signal. stock market, value of rupee.
3Inter-relatedness: Different 3It helps in assisting in planning and 3Social Environment: The SE of business
elements of business environment are policy formulation: Since BE is a source includes the social forces like customs and
Ch-3 Business

closely interrelated. of both opportunities and threats for an traditions, values, social trends, society’s
4Dynamic nature: BE is dynamic in enterprise, its understanding and analysis
Environment

expectations from business, etc. E.g.

nature that it keeps on changing can be the basis for deciding the future health and fitness, greeting cards on
whether in terms of technology, course of action (planning) or training festivals.
consumer preferences or competition in guidelines for decision making (policy). 4 Technological Environment: TE includes
the market. 4It helps in tapping useful resources: forces relating to scientific improvements
5Uncertainty: BE is uncertain as it is A business firm converts inputs like and innovations which provide new ways of
very difficult to predict future capital, labour etc. into finished goods of producing goods and services and new
happenings because BE keeps on public utility. methods and techniques of operating a
changing. 5It helps in coping with rapid changes business. E.g. Paytm, Online tickets
6Complexity: BE is a complex as managers must understand and booking.
phenomenon that is relatively easier to examine the environment and develop 5Legal Environment: LE includes various
understand in parts but difficult to suitable courses of action. legislations passed by the Government
understand in its totality. 6It helps in improving performance: administrative orders issued by
7Relativity: Business environment is a continuously monitoring of the government authorities, court judgments
relative concept since it differs from environment and adopt suitable business as well as the decisions rendered by various
country to country and even region to commissions and agencies at every level of
practices are the ones which improve
region. the government - centre, state or local.
their present and future performance.
Economic Reforms in India (1991) Impact of Government Policy Changes on Managerial Responses to Meaning of Demonetization: Demonetisation
Business and Industry changes in BE is defined as an economic policy or the
1 Liberalisation: It means -
1Diversification Spree: The process through which the central
”freeing the Indian Business and 1Increasing competition: As a result of
Corporate sector has seen a government cancels the legal tender status of
Industry from all unnecessary changes in the rules of industrial licensing and
entry of foreign firms, competition for Indian spate of diversification. E.g. a currency unit in circulation. After
controls and restrictions.”
firms has increased. Reliance has diversified into demonetisation, that currency unit cannot be
Liberalisation of Indian Industry
2More demanding customers: Customers today textiles, petrochemicals, IT, used as money.
wrt.: have become more demanding because communications etc.
a.abolishing licensing requirement in they are well-informed. Market gives the Features Of Demonetization:
2Joint Venture/Consolidation of
most of the industries customers wider choice in purchasing better
Multi-nationals: Many 1.As tax administration measure: People
b.freedom in deciding the scale of quality of goods and services.
3Rapidly changing technological environment: multinationals enter India through having cash falling under declared income
business
Increased competition forces the firms to new JV. E.g. Fords with Mahindra deposited their cash in banks immediately to
c. freedom in fixing prices
develop new ways to survive and grow in the and Mahindra. be exchanged for new notes but those with
d. reduction in taxes market. The rapidly changing TE creates tough 3Brand Building: Expenditures black money (their unaccounted wealth) had
e.Simplifying Import/Export challenges before smaller firms. were increased and huge to pay taxes at a penalty rate.
procedures 4 Necessity for change: After 1991, the investments are made in building 2.As a shift on the part of the
2 Privatisation: It means – “giving market forces have become turbulent as a
brands by the companies. government: Demonetization is being
greater role to the private sector in result of which the enterprises have to
continuously modify their operations. 4 Use of Latest Technology: considered as a strict measure by the
the nation building process and
5 Need for developing human resource: Use of Latest Technology has government against tax evasion which will not
reducing the role of the public
Indian enterprises have suffered for long become slogan of the successful be tolerated or accepted.
sector. with inadequately trained personnel. The new companies. E.g. Smart phones 3.Channelizing savings into the formal
To achieve this, the govt. adopted the market conditions require people with higher
5Sharply Improved financial system: Though, much of the cash
policy of planned ‘disinvestments’, competence and greater commitment. 6 Market
compensation levels: Sharply deposited in the banking system is likely to
which means transferring the public orientations: Earlier firms used to produce first
and go to the market for sale later, now the Improved compensation levels be withdrawn but some of the new deposits
sector enterprises to the private
firms have to study and analyse the market first for managerial and technical schemes introduced by the banks will be
sector. 3 Globalisation: It means the
and produce goods accordingly. services. Salaries have risen and used as loans, at lower interest rates.
integration of our economy with the
7 Loss of budgetary support to the public incentive schemes are becoming
world economy. It aims at: 4.Creation of a less-cash or cash-lite
sector: Budgetary support to public sector common.
a. Import liberalisation economy: Another feature of
companies has declined. Post 1991 these
6 Customer Focus: Increasing demonetization is to help in channelling
b. Export promotion companies have to manage on their own to
attention to customer needs and
c. Foreign exchange reforms grow and survive. more savings through the formal
satisfaction. Nature and Quality of
It involves increasing interaction financial system and improving tax
products have improved.
among various nations.
Meaning: Planning is deciding in advance what to do, how to do and who is going to do it. Planning seeks to bridge the gap between where we are and
where we want to go.

Planning Process: Features of Planning: Importance of Planning:

1Setting Objectives: The first and 1Planning focuses on achieving 1Planning provides directions: By stating
foremost step is setting objectives. objectives: Specific goals are set out in in advance how work is to be done planning
Every organisation must have certain the plans along with the activities to be provides direction for action.
objectives. undertaken to achieve the goals. 2Planning reduces the risks of
2 Developing Premises: Planning is 2 Planning is a primary function of uncertainty: A good plan cannot eliminate
concerned with the future which is mgnt: Planning lays down the base for uncertainties of future. However it can
uncertain. Therefore, the manager is other functions of mgnt. All other reduce unnecessary risks.
required to make certain assumptions managerial functions are performed 3Planning reduces overlapping and
about the future. These assumptions within the framework of the plans drawn. wasteful activities: Since planning
are called premises. Thus, planning precedes other functions. ensures clarity in thought and action, work
3Identifying alternative courses of 3 Planning is pervasive: Planning is is carried on smoothly without
action: There may be many ways to act required at all levels of mgnt as well as in interruptions. Useless and redundant
and achieve objectives. All the all departments of the organisation. activities are minimised or eliminated.
Planning

alternative courses of action should be 4Planning is continuous: Plans are 4Planning promotes innovative ideas:
identified. prepared for a specific period of time. At Since planning is the first function of
Ch-4

4Evaluating alternative courses: The the end of that period there is need for a management, new ideas can take the shape
positive and negative aspects of each new plan to be drawn on the basis of new of concrete plans.
proposal need to be evaluated in the requirements and future conditions. 5Planning facilitates decision making:
light of the objective to be achieved. 5Planning is futuristic: The purpose of Planning involves setting targets and
5 Selecting an alternative: The best planning is to meet future events predicting future conditions, thus helping
plan has to be adopted and effectively to the best advantage of an in taking rational decisions.
implemented. The ideal plan, of course, organisation. 6Planning establishes standards for
would be the most feasible, profitable 6Planning involve decision making: controlling: Planning involves setting of
and with least negative consequences. Planning, thus, involves thorough goals. Planning provides the goals or
6 Implement the plan: The step is examination and evaluation of each standards against which actual
concerned with putting the plan into alternative and choosing the most performance is measured.
action i.e., doing what is required. appropriate one.
7 Follow-up action: To see whether 7Planning is a mental exercise: Planning
plans are being implemented and requires application of the mind involving
activities are performed according to foresight, intelligent imagination and
schedule. sound judgment.
Limitations of Planning: Types of Plans: A policy is the general response to a particular
problem or situation. Policies define the broad
1Planning leads to rigidity: a well- defined Single use plans are the ones that are parameters within which a manager may function.
plan is drawn up with specific goals to be formulated to deal with new or non-repetitive 4 Procedure: Procedures are routine steps on how
situations that may arise in an organisation from to carry out activities. They detail the exact
achieved within a specific time frame. These
time-to-time. For example- programmes, budgets manner in which any work is to be performed.
plans then decide the future course of action
and projects. They are specified in a chronological order. They
and managers may not be in a position to change
are generally meant for insiders to follow. Eg.
it.
Standing plans refer to the type of plans which Procedure for selection of employees.
2 Planning may not work in a dynamic once formulated may be used for a long period of
environment: The BEt is dynamic, nothing is time in similar or repetitive situations that may 5Method: Methods provide the prescribed ways
constant. Planning cannot foresee everything and prevail in an organisation. For example objectives, or manner in which a task has to be performed
thus, there may be obstacles to effective strategies, policies, methods, procedures and considering the objective. It deals with a task
planning. rules. comprising one step of a procedure and specifies
3Planning reduces creativity: Planning is done how this step is to be performed. Selection of
by the top mgnt. Middle mgnt and other decision 1Objectives: Objectives can be defined as ends proper method saves time, money and effort and
makers are neither allowed to deviate from plans which the management seeks to achieve by its increases efficiency.
nor are they permitted to act on their own. operations. They are usually set by top 6Rule: Rules are specific statements that inform
Thus, much of the initiative or creativity get management of the organisation. They define the what is to be done. They do not allow for any
reduced. future state of affairs which the organisation flexibility or discretion. Eg. No Smoking in Office.
4Planning involves huge costs: When plans are strives to realise. They serve as a guide for They are usually the simplest type of plans
drawn up huge costs are involved in their overall business planning. For example increasing because there is no compromise or change unless a
formulation. These may be in terms of time and sales by 10% or earning return on investment of policy decision is taken.
money. 20%. Objectives provide direction for all
managerial decisions and actions. 7Budget: A budget is a statement of expected
5 Planning is a time-consuming process:
2Strategy: strategy is a comprehensive plan for results expressed in numerical terms for a
Sometimes plans to be drawn up take so muchof
accomplishing organisation objectives. This plan specified time period. It may expressed in time,
time that there is not much time left for their
will include three dimensions, money, units. For ex. Sales Budget, Cash Budget
implementation.
(i) determining long term objectives, etc. It is an instrument for both planning and
6Planning does not guarantee success: The
(ii)adopting a particular course of action, and (iii) controlling.
success of an enterprise is possible only when
allocating resources necessary to achieve the 8 Programme: Programmes are detailed
plans are properly drawn up and implemented. It
objective. statements about a project which outlines the
is not always true that just because a plan has
It also refers to future decisions defining the objectives, policies, procedures, rules, tasks,
worked before it will work again. It provides a organisations direction and scope in the long run. human and physical resources required and the
base for analysing future courses of action. But, 3 Policy: Policies are general statements that budget to implement any course of action. The
it is not a solution to all problems. guide thinking or channelize energies towards a minutest details are worked out within the broad
particular direction. Policies provide a basis for policy framework.
interpreting strategy.
 Meaning: Organising is the process of identifying and grouping the work to be performed, assigning duties to job positions and establishing relationships for
the purpose of accomplishing objectives.

Organising Process: Importance of Organising: Organisational Structure: An organisation

structure provides the framework which
1Identification and division of work: It 1Benefits of specialisation: Organising offers enables the enterprise to function as an
involves identifying and dividing the work benefits of specialisation as it leads to a integrated unit by regulating and
that has to be done in accordance with systematic allocation of jobs amongst the coordinating the responsibilities of
previously determined plans. The work is workforce as the specific employees are assigned individuals and departments.
divided into manageable activities so that specific job on a regular basis. Functional structure and Divisional structure
duplication can be avoided and the burden 2Clarity in working relationships: The Span of Management. Span of management
of work can be shared among the establishment of working relationships clarifies means the number of employees who are
employees. lines of communication and specifies who is to effectively managed by a superior or
2Departmentalisation: Once work has report to whom. It helps in enabling the fixation manager.
been divided into small and manageable of responsibility.
Organising

activities then those activities which are 3Optimum utilization of resources: The proper Functional Structure: It is an OS formedby
similar in nature are grouped together. assignment of jobs avoids duplication of work, grouping of jobs of similar nature under
Such sets facilitate specialisation. This which helps in preventing confusion and minimising major functions and organising these major
grouping process is called the wastage of resources and efforts. functions as separate departments.
Ch-5

departmentalisation. 4Adaptation to change: The process of Functional structure is an organisational

3Assignment of duties: Once organising allows business enterprise to design that groups similar or related jobs
departments have been formed, each of accommodate changes in the business together.
them is placed under the charge of an environment. It also provides much needed
individual. Jobs are then allocated to the stability to survive and grow inspite of changes.
members of each department in 5 Effective administration: Clarity in working
accordance to their skills and relationships enables proper execution of work.
competencies. Thus Management becomes easy and this brings
4Establishing reporting relationships: effectiveness in administration.
Merely allocating work is not enough. Each 6 Development of personnel: Effective
individual should also know who he has to delegation allows the managers to reduce their Suitability: It is most suitable
take orders from and to whom he is 1 When the size of the organisation is large,
workload by assigning routine jobs to their
accountable. The establishment of such 2 Has a diversified activities and
subordinates. It gives them the time to explore
clear relationships helps to create a 3Operations require a high degree of
areas for growth and the opportunity to innovate.
hierarchal structure and helps in specialisation.
7 Expansion and growth: Organising helps in the
coordination.
growth and diversification of an enterprise.
Advantages of Functional Structure: Divisional Structure: In a divisional structure, Disadvantages of Divisional Structure:
the organisation structure comprises of
1It leads to occupational specialisation since separate business units or divisions. Each unit 1Conflict may arise among different divisions
emphasis is placed on specific functions. has a divisional manager responsible for with reference to allocation of funds and
2It promotes control and coordination within performance and who has authority over the further a particular division may seek to
a department because of similarity in the unit. Each division is multifunctional because maximise its profits at the cost of other
tasks being performed. within each division functions like production, divisions.
3It helps in increasing managerial and marketing, finance, purchase etc. are performed. 2It may lead to increase in costs since there
operational efficiency and this result in may be a duplication of activities across
increased profit. Suitability: Divisional structure is suitable for products.
4It leads to minimal duplication of effort those business enterprises where a large variety 3It provides the managers with the authority
which results in economies of scale and this of products are manufactured using different to supervise all activities related to a particular
lowers cost. productive resources. division. In course of time, such a manager may
5It makes training of employees easier as the gain power and in a bid to assert his
focus is only on a limited range of skills. Advantages of Divisional Structure: independence may ignore organisational
6It ensures that different functions get due interests.
1Product specialisation helps a divisional
attention.
manager to gain experience in all functions
Disadvantages of Functional Structure: related to a particular product and this prepares
him for higher positions.
1It places less emphasis on overall enterprise 2It provides a proper basis for performance
objectives than the objectives of a function. measurement and also helps in fixation of
This may lead to functional empires. responsibility in cases of poor performance of
2 It may lead to problems in coordination as the division as revenues and costs related to
information has to be exchanged across different departments can be easily identified.
functionally differentiated departments. 3 It leads to faster decision making, promotes
3A conflict of interests may arise when the flexibility and initiative because each division
interests of two or more departments are not functions as an autonomous unit.
compatible. 4 It facilitates expansion and growth as new
4It may lead to inflexibility as people with divisions can be added just by adding another
same skills and knowledge base may develop a divisional head and staff for the new product
narrow perspective and thus, have difficulty in line without interrupting the existing operations
appreciating any other point of view.
Formal Organisation: Formal organisation Advantages of Formal Organisation: Informal Organisation:
refers to the organisation structure which is Interaction among people at work gives rise to a
designed by the management to accomplish a 1It is easier to fix responsibility since ‘network of social relationships among employees’
particular task. It specifies clearly the mutual relationships are clearly defined. called the informal organisation.
boundaries of authority and responsibility and 2It avoids duplication of effort since there
there is a systematic coordination among the is no ambiguity in the role that each member Features:
various activities to achieve organisational has to play. 1It originates from within the formal
goals. 3It maintains unity of command through an organisation.
established chain of command 2It emerges spontaneously and is not
Features: 4 It leads to accomplishment of goals by deliberately created by the management.
providing a framework for the operations to 3The standards of behaviour evolve from group
1It specifies the relationships among various be performed. norms.
job positions and the nature of their 5It provides stability to the organisation 4Independent channels of communication are
interrelationship. because there are specific rules to guide developed by group members
This clarifies who has to report to whom. behaviour of employees. 5 It has no definite structure orform.
2It is a means to achieve the objectives
specified in the plans, as it lays down rules and Disadvantages of Formal Organisation: Advantages of Informal Organisation:
procedures essential for their achievement.
3Efforts of various departments are 1It may lead to procedural delays as the 1It leads to faster spread of information as well
coordinated, interlinked and integrated chain of command is followed which a quick feedback.
through the formal org. increases the time taken for decision 2It fulfils the social needs of the members.
4It is deliberately designed by the top making. 3 It contributes towards fulfilment of
management to facilitate the smooth 2 Poor organisation practices may not organisational objectives by compensating for
functioning of the org. provide adequate recognition to creative inadequacies in the formal organisation.
5It places more emphasis on work to be talent.
performed than interpersonal relationships 3It is difficult to understand all human Disadvantages of Informal Organisation:
relationships in an enterprise as it places
more emphasis on structure and work. 1 It leads to spread of rumours.
2 It may lead to resistance to change.
3 It pressurizes members to conform to group
expectations which may be against organisational
interest.
Delegation: Delegation refers to the 2Employee development: As a result of Importance of Decentralisation:
downward transfer of authority from a delegation, employees get more opportunities to
superior to a subordinate. utilise their talent and this may give rise to 1Relief to top management:
latent abilities in them. Delegation helps by Decentralisation also leaves the top
Elements of Delegation: preparing better future managers. management with more time which they can
3Motivation of employees: Responsibility for devote to important policy decisions.
1Authority: Authority refers to the right of work builds the self-esteem of an employee and 2 Develops initiative among subordinates:
an individual to command his subordinates and improves his confidence. He feels encouraged Decentralisation helps to promote self-
to take action within the scope of his position. and tries to improve his performance further. reliance and confidence amongst the
Authority arises from the established scalar 4 Facilitation of growth: Delegation helps in subordinates. This is because when lower
chain. Authority flows from top to bottom, the expansion of an organisation by providing managerial levels are given freedom to take
Trained and experienced employees, a ready their own decisions they learn to depend on
2Responsibility: Responsibility is the their own judgment..
workforce to take up leading positions in new
obligation of a subordinate to properly 3Develops managerial talent for the
ventures.
perform the assigned duty. It arises from a future: Decentralisation gives them a chance
5 Basis of management hierarchy: Delegation
superior–subordinate relationship because the to prove their abilities and creates a
of authority establishes superior-subordinate
subordinate is bound to perform the duty reservoir of qualified manpower who can be
relationships, which are the basis of hierarchy
assigned to him by his superior. Thus, considered to fill up more challenging
of management.
responsibility flows upwards. positions through promotions.
6Better coordination: authority,
responsibility and accountability help to define 4Quick decision making: In a decentralised
3Accountability: Accountability implies being organisation, however, since decisions are
the powers, duties and answerability related to
answerable for the final outcome. Once taken at levels which are nearest to the
the various positions in an organisation. Such
authority has been delegated and points of action and there is no requirement
clarity in reporting relationships help in
responsibility accepted, one cannot deny for approval from many levels, the process is
developing and maintaining effective
accountability. It cannot be delegated and much faster.
coordination amongst the departments, levels
flows upwards. 5Better control: Decentralisation makes it
and functions of management.
possible to evaluate performance at each
Importance of Delegation: level and the departments can be individually
Decentralisation: decentralisation refers to held accountable for their results.
1 Effective management: By empowering the systematic delegation of authority throughout 6Facilitates growth: It fosters a sense of
all the levels of the organisation. Decision competition amongst the departments.
employees, the managers are able to function
making authority is pushed down the chain of Leading to increase in productivity and the
more efficiently as they get more time to
command. organisation is able to generate more returns
concentrate on important matters.
which can be used for expansion purposes.
 Meaning: In the simplest terms, staffing is ‘putting the right persons in the right positions. Staffing has been described as the managerial function of
filling and keeping filled the positions in the organisation structure.

Staffing Process: Orientation or Induction refers to Selection Process:

1Estimating the Manpower Requirements: familiarising the selected candidate with 1Preliminary screening or short listing: This step is
Understanding manpower Requirements is not other employees as well as with the rules and taken by a manager to eliminate the most unqualified
merely a matter of knowing how many persons regulations of the and unsuitable candidates on the basis of information
we need but also of what type. It includes organisation. provided through application forms.
Workload Analysis: number and types of 2Selection tests: Selection tests aim at measuring
human resources required 5Training and Development: Training refers certain characteristics of individuals. Important
Workforce Analysis: number and type to the process of imparting necessary skills tests are: at end of Chapter
available. and knowledge to the employees to enhance 3Employment interview: Interview is conducted to
their level of performance. have a detailed conversation with the applicant for
2Recruitment: It is the process of Development is a continuous processof measuring his suitability for the job.
searching for prospective employees and building competencies in employees and 4Reference and background checks: More
stimulating them to apply for the jobs in facilitating growth in them in order to information about the candidate is gathered from
Staffing

the organisation. An organisation may use increase their capabilities for handling indirect personal sources. Employers ask for
both internal as well as external sources higher/ bigger jobs in future.
references with names, addresses and contact
for the purpose of recruitment.
Ch-6

numbers of people to verify information provided by

6Performance Appraisal: Performance
the applicant.
3Selection: It is the process of selecting appraisal is a systematic evaluation of the
5 Selection decision: The employer then
and appointing the right candidates for individual with respect to his performance on
chooses the best candidates out of those who
various job positions in the organisation. It the job and his potential for development.
clear the tests, interviews and reference checks.
has two important purposes:
7Promotion and Career planning: Promotion 6Medical examination: After selection a
a it ensures that the organisation gets the
means shifting of an employee to a higher candidate undergoes a medical fitness test. 7
best among the available,
position carrying higher responsibilities, Job Offer: Appointment letter is given to
b it enhances the self-esteem and prestige
status and pay. Managers should undertake the candidate confirming the place and date of
of those selected
activities that enhance Job satisfaction of starting his job.
4Placement and Orientation: Placement the employees. 8 Employment Contract: This includes the
terms and conditions applicable to both—the
refers to putting a selected candidate at a
8Compensation: Compensation can be divided employer as well as the employee. The contract
particular job position. It simply means
into two categories — includes detailed information about remuneration,
placing the selected person on the job for
Time bound: Salaries and wages. duty hours, rules and regulations, allowances, etc.
which he has been selected.
Performance based: Incentives given in the
form of profit sharing, bonus, etc.
Sources of Recruitments 2The employees may become lethargic if they 5Placement Agencies and Management
are sure of time bound promotions. Consultants: PA compile bio-data ofa large
Internal Sources: 3A new enterprise cannot use internal sources number of candidates and recommend suitable
Transfers: It involves shifting of an employee of recruitment. No organisation can fill all its names to their clients. Such agencies charge fee
from one job to another, one department to vacancies from internal sources; for their services.
another or from one shift to another, without a 4The spirit of competition among the employees MC firms help the organisations to recruit
substantive change in the responsibilities and may be hampered. technical, professional and managerial personnel.
status of the employee. 5Frequent transfers of employees may often It maintain data bank of persons with different
Promotions: Business enterprises generally reduce the productivity of the organisation. qualifications and skills to recruit right type of
follow the practice of filling higher jobs by personnel.
promoting employees from lower jobs.
Promotion leads to shifting an employee to a External Sources: 6Campus Recruitment: Companies visit
higher position, carrying higher 1Direct Recruitment: Under this a notice is campuses of various colleges and universities to
responsibilities, facilities, status and pay. placed on the notice-board of the enterprise hire young and fresh talented qualified
specifying the details of the jobs available. personnel for various jobs.
Merits of Internal Sources: Jobseekers assemble outside the premises of
1 Employees are motivated as promotion at a the organisation on the specified date and 7Recommendations of Employees: Employees
higher level may lead to a chain of promotions selection is done on the spot. Such workers are working within an organisation also recommend
at lower levels in the organisation. known as casual or ‘badli’ workers. people they know such as their friends or
2Internal sources simplify the process of relatives.
selection as the candidates are already known 2Casual Callers: Many reputed business org
to the organisation. keep a database of candidates’ data who applied 8Labour Contractors: LC maintains close
3People recruited from within the organisation and were not selected earlier sand can be contacts with labourers and they can provide
do not need induction training as screened to fill the vacancies as they arise. the required number of unskilled workers at
the employees are already familiar with the short notice.
organisation. 3Advertisement: It is generally used when a
wider choice is required. Most of the senior 9Advertising on Television: The detailed
4These sources help in adjustment of surplus
positions of industry as well as commerce are requirements of the job and the qualities
staff in those departments where there is
filled by this method. Advert. gives the required to do it are telecasted along with the
shortage of staff.
management a wider range of candidates from profile of the organisation where vacancy exists.
5Filling of jobs internally is economical as
compared to external sources of recruitment. which to choose. Advert. may be in newspapers.
10Web Publishing: There are certain websites
4Employment Exchange: EE help to match specifically designed and dedicated for the
Demerits of Internal Sources:
personnel demand and supply by serving as link purpose of providing information about both job
1 The scope for induction of fresh talent is
between job-seekers and employers. It is a good seekers and job opening. Eg.www.naukri.com,
reduced, stopping ‘infusion of new blood’ into
source of recruitment for unskilled and skilled www.jobstreet.com etc..
the organisation.
operative jobs.
Merits of External Sources: Education is the process of increasing the Types of Training:
1The management can attract qualified and
knowledge and understanding of employees.
trained people to apply for vacant jobs in the On The Job:
It is the understanding and interpretation
organisation. 1Apprenticeship Training: It is a method of
of knowledge. Education is broader in scope
2The management has a wider choice while training in which the trainee is kept under
than training. Training is tied to the goals of
selecting the right candidate. guidance of a master worker for a prescribed
organisations more than to the goals of the
3External sources bring fresh talent in the period of time. It is designed to acquire a higher
individual.
organisation. level of skill. People who want to enter skilled
4External sources encourage competitive trades e.g. plumbers & electricians are often
Importance to Organisation:
spirit among the existing staff. required to undergo such programme.
1It avoids wastage of efforts and money as
training is systematic learning, better than 2Internship Training: It is a joint programme of
Demerits of External Sources:
hit and trial methods. training between educational institutions and
1It may lead to dissatisfaction among existing
2It enhances employee productivity both in business firms. Besides carrying out regular
employees as they may feel that their
terms of quantity and quality leading to studies, the trainees also work in some factory or
chances of promotion are reduced.
higher profits. office to acquire practical knowledge and skills.
2It is a lengthy process as the vacancies have
3It equips the future manager to take over
to be notified and applications received before
in an emergency. 3Job Rotation: It involves shifting the trainee
selection.
4It reduces employees’ turnover as it from one department to another or from one job
3It is a costly process as a lot of money is
increases employee morale and reduces to another. This enables the trainee to gain a
spent on advertisement and processing of
absenteeism. broader understanding of all parts of the
applications.
5It helps in obtaining effective response in business and how the organisation as a whole
a fast changing environment. functions.
Training, Development and Education:

Training is any process by which the Importance to Employees: 4Coaching: In this method, the superior guides
aptitudes, skills and abilities of employees to 1Improved skills and knowledge due to and instructs the trainee as a coach. The coach
perform specific jobs are increased. It is a training lead to better career of the sets mutually agreed upon goals, suggests how to
process of learning new skills and application individual. achieve these goals, periodically reviews the
of knowledge. 2Increased performance by the individual trainees progress and suggests changes required
help him to earn more. in behavior and performance.
Development refers to the learning 3Training makes the employee more
opportunities designed to help employees grow. Off The Job:
efficient to handle machines. Thus, less
It covers not only those activities which 1 Films: They can provide information and
prone to accidents.
improve job performance but also those which explicitly demonstrate skills that are not easily
4Training increases the satisfaction and
bring about growth of the personality. represented by the other techniques.
morale of employees.
Development includes training.
2Vestibule Training: It is a method of 6 Programmed Instruction: This method Importance of Staffing:
training which is imparted with the help of incorporates a prearranged and proposed
equipments & machines identical to those at acquisition of some specific skills or general 1Helps in discovering and obtaining
the place of work.. The training is conducted knowledge. Information is broken into competent personnel for various jobs;
away from actual work floor and is generally meaningful units and these units are arranged in 2Makes for higher performance, by putting
used where the employees are required to a proper way to form a logical and sequential right person on the right job;
handle sophisticated machinery. Eg Aeroplane learning package. 3Ensures the continuous survival and growth
Simulator. of the enterprise through the succession
Staffing as part of HRM planning for managers;
3Case Study: Taken from actual experiences Human Resource Management includes many 4Helps to ensure optimum utilisation of the
of organisations, cases represent attempts to specialised activities and duties which the human resources. By avoiding over manning, it
describe, as accurately as possible real human resource personnel must perform. These prevents under-utilisation of personnel and
problems that managers have faced. Trainees duties are: high labour costs. At the same time it avoids
study the cases to determine problems, 1 Recruitment i.e., search for qualified people disruption of work by indicating in advance
analyse causes, develop alternative solutions, 2 Analysing jobs, collecting information about the shortages of personnel
select what they believe to be the best jobs to prepare job descriptions. 5Improves job satisfaction and morale of
solution, and implement it. 3 Developing compensation and incentive plans. employees through objective assessment and
4Training and development of employees for fair rewarding of their contribution.
4Class Room Lectures/Conferences: The efficient performance and career growth.
lecture or conference approach is well 5Maintaining labour relations and union
adapted to conveying specific information management relations. Types of Selection Tests:
rules, procedures or methods. 6 Handling grievances and complaints
The use of audio-visuals or demonstrations can 1 Intelligence tests: Intelligence test aims
7Providing for social security and welfare of
often make a formal classroom presentation at measuring the intelligence of an individual.
employees.
more interesting. 2 Aptitude test: It measures the ability and
8 Defending the company in law suits and
potential of an individual to learn new skills.
avoiding legal complications.
5Computer Modelling: It simulates the work 3 Personality tests: Value and belief system
environment by programming a computer to This shows that Human Resources Management of the employee is judged.
imitate some of the realities of the job and is a much broader concept and includes a wider 4Trade test: This test judges the
allows learning to take place without the risk gamut of activities. professional competence and job-related
or high costs that would be incurred if a knowledge of the candidates.
mistake were made in real life situation. 5Interest Tests: Interest tests help in
ascertaining the pattern of interests or
involvements of an individual.
 Meaning: Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives.

Characteristics of Directing: 4Directing facilitates introduction of needed

2Motivation can be either positive or negative.
1Directing flows from top to bottom: changes in the organisation as it helps to reduce
Positive motivation provides positive rewards like
Directing is first initiated at top level and employees’ resistance and develop an environment
promotion etc., Negative motivation uses negative
flows to the bottom. It means that every which is conducive to introducing changes in the
means like punishment.
manager can direct his immediate subordinate organisation.
3Motivation is a complex process as the
and take instructions from his immediate boss. 5 Effective directing helps to bring stability
individuals are heterogeneous in their
2Directing takes place at every level of and balance in the organisation since it
expectations, perceptions and reactions.
management: Every manager, from top encourages cooperation and commitment.
4Motivation produces goal directed behaviour. If
executive to supervisor performs the function
Elements of Directing: the employee is interested in promotion, it helps to
of directing. The directing takes place
produce a behaviour to improve performance.
wherever superior – subordinate relations (i) Supervision (ii) Motivation
exist. (iii) Leadership (iv) Communication
3Directing is a continuous process: It
1Supervision: Supervision means overseeing the
takes place throughout the life of the
employees at work to ensure optimum utilization of
organisation irrespective of people
resources and achievements of work targets.
Directing

occupying managerial positions.

4Directing initiates action: While other
2Motivation: Motivation is the processof
functions prepare a setting for action,
Ch-7

stimulating people to action to accomplish

directing initiates action in the organisation.
desired goals.
Motive: A motive is an inner state that
Importance of Directing:
energises, activates or moves and directs
1Directing helps to initiate action by
behaviour towards goals. Motives arise out of the
people in the organisation towards
needs of individuals.
attainment of desired objectives.
Motivators: Motivator is the technique used to
2Directing integrates employees’ efforts in
motivate people in an organisation.
the organisation in such a way that it
contributes to the organisational
Features of Motivation:
performance.
1 Motivation is an internal feeling as it relates to
3 Directing guides employees to fully the urge, drives, desires, or needs of human beings.
realise their potential through effective
communication, motivation and leadership.
Maslow’s Need Hierarchy Theory of
Financial and Non-Financial Incentives:
Motivation:
2Organisational climate: Characteristics which
Financial Incentives: The incentives which can differentiate one organisation from another are
1Basic Physiological Needs refer to the
be measured in monetary terms. These are: included in it. The psychology and behaviour of
needs that are most basic in the hierarchy like
hunger, thirst, shelter etc. which can be employees is connected with it. Examples of
1Pay and allowances: Basic salary, dearness
fulfilled by basic salary. these characteristics are degree of autonomy,
allowance, house allowance, etc. come under pay
2Safety/Security Needs refer to the needs incentive system, etc.
and allowances. This is the basic requirement of
to get security and protection from physical 3Career advancement opportunities: Some
any employee.
and emotional harm which can be fulfilled companies provide timely promotions to their
2 Productivity linked wage incentives: Higher employees. These career advancement
through job security, stability of income, productivity of a worker is recognised through
pension plans etc. opportunities motivate the employees to
higher rate of wages.
3Affiliation/Belonging Needs refer to the improve their performance.
3Retirement benefits: Pension, Provident Fund,
needs that relate to affection, sense of 4Job enrichment: It is concerned with
Gratuity are the retirement benefits which
belongingness, acceptance and friendship designing jobs that includes a greater variety of
provide financial security at the time of old age.
which can be fulfilled through team work, content, require higher level of knowledge and
4 Bonus: Bonus is given over and above salary or
kindness etc. skill, give more autonomy and opportunity for
wages. It is generally paid on annual basis.
4Esteem Needs include factors such as self- personal growth
5Co-Partnership/Stock option: Shares of the
respect, autonomy status, recognition and 5 Employee recognition: It means
company (in which the employees work) are
attention which can be fulfilled by giving acknowledgement with a show of appreciation.
offered to the employees at a price lower than
praise and recognition, offering promotions When such appreciation is given to the work
the market price as an incentive.
etc. performed by employees, they feel motivated 6
6Profit sharing: Employees are given share in
5Self-Actualisation Needs refer to the Job security: Employees want their job to be
the profit of the company in recognition to their
drive to become what one is capable of secure. They want certain stability about future
efforts in increasing the profit of the company. 7
becoming which can be fulfilled by providing income and work so that they do not feel worried
Perquisites: Perquisites are the fringe benefits
challenging work and giving them flexibility on these aspects and work with greater zeal.
like medical aid, education, house, etc. which are
and autonomy in their jobs . 7 Employee participation: Employees feel
given over and above salary. They are generally
good when they are made to feel important by
given to high ranked employees.
Assumptions: involving them in decision making. They can be
1 People’s behaviour is based on their needs. made members of committees like work
2People’s needs are in hierarchical order, Non-Financial Incentives: Incentives which committee, canteen committee, etc.
starting from basic needs to higher level needs. cannot be measured in monetary terms. These 8Employee empowerment: When employees are
3 A satisfied need can no longer motivate a are: empowered, they feel important. They can be
person; only next higher level need can motivate. 1 Status: Status indicates the rank of a person given more autonomy in their field of work.
4 A person moves to the next higher level of the in the organisation’s hierarchy. It has authority,
hierarchy only when the lower need is satisfied. fame, psychological satisfaction, etc. associated
with it.
3 Leadership: Leadership is the process of 2.Democratic or Participative Leadership: 4 Communication: Communication is defined as a
influencing the behaviour of people by making A democratic leader takes decisions after process of exchange of ideas, views, facts,
them strive voluntarily towards achievement consultation and encourages the feelings etc., between or among people to create
of organisational goals. participation of subordinates. common understanding.

Features of leadership: Communication Process:

1Leadership indicates ability of an individual 1Sender: Sender refers to a person whoconveys
to influence others. his thoughts or ideas to the receiver.
2 Leadership tries to bring change in the 2 Message: Message is the content of ideas,
behaviour of others. feelings, suggestions, order etc., intended to be
3Leadership indicates interpersonal relations communicated.
between leaders and followers. 3Encoding: Encoding refers to the process of
A democratic leader provides freedom of converting the message into communication
4Leadership is exercised to achieve common
thinking and listens to suggestions, symbols such as words, pictures, gestures etc.,
goals of the organisation.
grievances and opinions of the subordinates. 4 Media: Media is the path through which
5 Leadership is a continuous process.
This improves the attitude of the employees encoded message is transmitted to receiver
Leadership Styles: towards their jobs and the organisation, through a face to face interaction, phone call,
thereby increasing their morale. internet, etc.
1.Authoritarian or Autocratic Leadership: 5Decoding: Decoding is the process of
3.Free-rein or Laissez Faire Leadership:
An autocratic leader exercises complete converting encoded symbols of the sender.
It involves complete delegation of authority,
control over the subordinates. He gives orders 6Receiver: Receiver refers to the person who
so that subordinates themselves take
and expects his subordinates to follow them. receives communication of the sender.
decisions. The free-rein leader avoids
It follows one way communication, as the 7Feedback: Feedback includes all those actions
holding power and surrenders the authority
subordinate acts only according to the of receiver indicating that he has received and
to subordinates. He serves as a link who
command given by the manager. understood message of sender.
helps in bringing the information and
8Noise: Noise means some obstructionto
resources needed by the subordinates.
communication.
.
 5 Inverted V: A subordinate is allowed to
communicate with his immediate superior as well as
his superior’s superior.
Formal and Informal Communication:
Merits of Formal Communication:
1 Formal Communication: Formal communication
1Helps in exercising control and fixation of
flows through official channels designed in the
responsibility.
organisation i.e. scalar chain.
2 It is authentic.
It may be further classified as – Vertical and
3Chances of distortion of information are very few.
Horizontal.
4 It provides for close contact between
a Vertical Communication: It flows vertically i.e.,
members of org. Merits of Informal Communication: 1
upwards or downwards.
Upward Communication: Subordinate to Superior These are helpful as they carry
Demerits of Formal communication:
Downward Communication: Superior to Subordinate. information rapidly.
1 It is slow as it has to follow the scalar chain.
b Horizontal or lateral Communication: It takes 2 Quick Feedbacks.
2 It is rigid as deviations are not allowed.
place between one division and another. 3Helps in developing better relationships in
3 It is impersonal in nature.
the org.
4 Organisational distance and narrow routes.
Formal Communication Networks: 4 Satisfy social needs of employees.
1 Single chain: Communication flows from every 5 Fill gaps of formal communication.
2 Informal Communication: Communication that takes
superior to his subordinate through single chain. 2
place without following the formal lines of
Wheel: All subordinates under one superior Demerits of Informal Communication: 1
communication. It is generally referred to as the
communicate through him only. The subordinates are Informal discussion may hamper work
‘grapevine’ because it spreads throughout the
not allowed to talk among themselves. environment.
organisation with its branches going out in all
3Circular: In circular network, the communication 2 It generates gossips and rumours.
directions without following chain of command.
moves in a circle. Each person can communicate with 3It may result in leakage of confidential
his adjoining two persons. information.
Grapevine Communication Network:
Communication flow is slow. 4Nobody can be held responsible for false
1In single strand network, each person
4Free flow: Each person can communicate with information.
communicates to the other in sequence.
others freely. The flow of communication is fast. 5 It is not authentic and can be distorted.
2In gossip network, each person communicates with
all on no selective basis.
3In probability network, the individual
communicates randomly with other individual.
4In cluster, the individual communicates with only
people whom he trusts.
Barriers to Communication: Organisational barriers: Improving Communication Effectiveness:
1Organisational policy: If the organisational
Semantic barriers: 1Consult others before communicating:
policy is not supportive to free flow of
1Badly expressed message: It may be an account Before actually communicating the message, it
communication, it may hamper effectiveness of
of inadequate vocabulary, usage of wrong words,
communications. is better to involve others in developing a plan
omission of needed words etc. for communication.
2Rules and regulations: Communications
2Symbols with different meanings: A word may 2Be aware of languages, tone and content of
through prescribed channel may result in
have several meanings. Receiver has to understand message: The language used should be
delays.
one such meaning for the word used by understandable to the receiver and should not
3 Status: A status conscious manager also may
communicator. offend the sentiments of listeners.
not allow his subordinates to express their
3Faulty translations: If the translator is not 3Communicate according to the needs of
feelings freely.
proficient with different the languages, mistakes receiver: Sender should adjust his
4Complexity in organisational structure: If
may arise causing different meanings to the communication according to the education and
there are number of managerial levels,
communication.
communication gets delayed and distorted as understanding levels of receiver.
4Unclarified assumptions: Some communications 4Clarify the ideas before communication:
number of filtering points are more.
may have certain assumptions which are subject to
5Organisational facilities: If facilities for The problem to be communicated to
different interpretations.
smooth, clear and timely communications are not subordinates should be clear in all its
5 Technical jargon: Specialists use technical
provided communications may be hampered. perspective to the executive himself.
words while explaining to others who are not
5 Convey things of help and value to
specialists, they may not understand the actual
Personal barriers: listeners: While conveying message to others,
meaning of many such words. 1Fear of challenge to authority: If superior it is better to know the interests and needs of
thinks that a particular communication may the people with whom you are communicating. 6
Psychological barriers:
affect his authority, he or she may withhold Communicate for present as well as future:
1Premature evaluation: Sometimes people
communication Communication is needed to meet the existing
evaluate the meaning of message before the
2Lack of confidence of superior on his commitments, to maintain consistency, the
sender completes his message.
subordinates: If superiors do not have communication should aim at future goals of the
2Lack of attention: The preoccupied mind of
confidence on subordinates, they may not seek enterprise also.
receiver and the resultant non-listening of
their advice or opinions. 7 Be a good listener: Manager should be a
message acts as a major psychological barrier.
3Unwillingness to communicate: Subordinates good listener. Patient and attentive listening
3Loss by transmission and poor retention: When
may not be prepared to communicate with their solves half of the problems.
communication passes through various levels,
superiors, if they think that it may adversely 8Ensure proper feedback: The communicator
successive transmissions of the message results in
affect their interests. may ensure the success of communication by
loss of, inaccurate information. And usually people
5 Lack of proper incentives: If there is no asking questions regarding the message
cannot retain the information for a long time
motivation or incentive for communication, conveyed.
4Distrust: If the parties do not believe each
subordinates may not take initiative to 9 Follow up communications: There should be
other, they cannot understand each other’s
message in its original sense. communicate. regular follow up and review on the instructions
given to subordinates.
 Meaning: Controlling is the process of comparing actual performance with the standards, finding out deviations, if any and taking corrective actions to
prevent the recurrence of these deviations in future.

Controlling Process Importance of Controlling Relationship between Planning and

1Setting Performance Standards: Standards are Controlling
the criteria against which actual performance 1Accomplishing organisational goals: It
would be measured. Standards can be in both helps in accomplishing organisational goals by 1Controlling is blind without Planning
quantitative & qualitative terms. These should be bringing out deviations, if any and indicating because controlling take place on the basis
flexible.
corrective action. of standards made in planning. So when
2Judging accuracy of standards: It helps there is no plan, mgnt have no basis for
2Measurement of Actual Performance:
in judging accuracy of standards in the light controlling.
Performance should be measured in an objective
of changes taking place in the organisation 2Planning without Controlling is
and reliable manner. Performance should be
and in the environment. meaningless because controlling ensures
measured in the same units in which standards
3Making efficient use of resources: It that the work is performed according to
are set.
helps in making efficient use of resources by the plans to find out deviations & taking
3Comparing Actual Performance with ensuring that each activity is performed in corrective actions.
Standards: Such comparison will reveal the accordance with predetermined standards. 3Planning prescribe an appropriate course
deviation between actual and desired results. 4Ensuring order and discipline: It ensures of action for achieving objectives whereas
4 Analysing Deviations: The deviations from order and discipline among employees by controlling checks whether decisions have
standards are analysed to find their causes. keeping a close check on their activities.
Controlling

been translated into desired action.

Critical Point Control: Control should focus on 5Improving employee motivation: It
4Planning and Controlling both are
key result areas (KRAs) which are critical to the improves employee motivation as the
Forward-looking.
success of an organisation. employees’ know well in advance the
Planning is forward looking because Plans
Management by Exception: An attempt to control standards of performance on the basis of
Ch-8

are prepared for future and are based on

everything results in controlling nothing. Only which they will be appraised.
forecasts about future conditions.
significant deviations which go beyond the 6Facilitating coordination in action: It
Controlling is forward looking because the
permissible limit should be brought to the notice facilitates coordination in action as each
corrective action initiated by control
of management employee and department in governed by pre-
function aims to improve future
5Taking Corrective Action: No corrective determined standards which are well
action is required when the deviations are within performance.
coordinated with one another.
acceptable limits. But when the deviations go 5Planning and Controlling both are
beyond the acceptable range, it demands Backward-looking.
immediate managerial attention so that Planning is backward looking because
deviations do not occur again and standards are
planning is guided by past experiences.
Controlling is backward looking as it
accomplished.
compares the actual performance with
standards. It is evaluation of past
activities to find out deviations.
 Business Finance: Money required for carrying out business activities is called business finance.
Financial Management: Financial Management is concerned with optimal procurement as well as usage of finance.

Role of Financial Management: Investment Decision:

1The size as well as the composition Importance of Financial Planning: The investment decision relates to how the
of Fixed Assets of the business. 1It helps the company to prepare for firm’s funds are invested in different assets.
2The quantum of Current Assets as the future by forecasting what may Investment decision can be long-term or
well as its break-up into cash, happen in the future under different short- term. A long-term investment
inventories and business situations. decision is also called a Capital Budgeting
2It helps in avoiding business shocks decision. Short term investment decisions
receivables.
3The amount of long term and short and surprises. also called working capital decisions.
term financing to be used 3It helps in co-ordinating various
4Break-up of long term financing business functions by providing clear
policies and procedures. Factors affecting Capital Budgeting
into debt, equity etc
4It helps in reducing waste, duplication Decision: 1 Cash flows of the project:
5All items in the Profit and
of efforts, gaps in planning and When a company takes an investment
Loss Account e.g., Interest,
confusion. decision involving huge amount it expects to
Expense, Depreciation etc.
Ch-9 Financial

5 It links the present with the future. generate some cash flows over a period.
6It provides a link between investment 2The rate of return: The most important
Management

Objectives of Financial Management:

and financing decisions. criterion is the rate of return of the project.
Primary aim of financial management is
7 It serves as a control technique as Suppose, there are two projects A and B with
to maximise shareholder’s wealth, which
it makes evaluation of actual a rate of return of 10 %t and 12 % then
is referred to as the wealth
performance easier. project B will be selected.
maximisation. Sh’s Wealth = No. of
3The investment criteria involved: The
Shares * Share Price Financial Decisions: decision to invest in a particular project
Financial decisions are taken under involves a number of calculations regarding
Financial Planning:
financial management, and directly deal the amount of investment, interest rate, cash
The process of estimating the fund
with raising (financing decisions) and flows and rate of return.
requirements of a business and
investing of funds (investment decisions),
specifying the sources of funds is
and distribution of profit earned among Financing Decision:
called financial planning.
the stakeholders (dividend decisions). It relates to the quantum of finance to
be raised from various long-term
Twin Objectives of Financial Planning:
Financial decisions are of three types: sources.
1To ensure availability of funds as per
1 Investment decisions Shareholders’ funds refer to equity capital and
the requirements of business.
2 Financing decisions retained earnings.
2To see that the enterprise does not
3 Dividend decisions Borrowed funds refer to finance raised
raise resources needlessly.
as debentures or other forms of debt.
Factors Affecting Financing Decision: Factors Affecting Dividend Decision: Capital Structure:
1Cost: Cheapest source of finance should be Capital structure refers to the mix between
preferred. (Debt is generally cheaper than 1Earnings: Dividends are paid out of current owners and borrowed funds. It can be
Equity) and past earning. Therefore, earnings are a calculated as debt-equity ratio i.e.
2Risk: Source involving less risk should be major determinant of the decision about Debt/Equity or as the proportion of debt out
preferred. (Equity is less risky than Debt) dividend. of total capital i.e. Debt/Total Capital. Total
3 Floatation cost: If a source has high 2Stability of Earnings: A company having capital means Debt + Equity.
floatation cost it should be avoided. stable earning is in a position to declare higher The proportion of debt in the overall capital is
4 Cash Flow Position of the Business: A dividends. As against this, a company having also called financial leverage.
stronger cash flow position may make debt unstable earnings is likely to pay smaller
financing more viable than funding through dividend. Financial Risk:
equity. 3Stability of Dividends: Companies generally It refers to a situation when a company is
5Control Considerations: Issues of more follow a policy of stabilising dividend per share. unable to meet its fixed financial charges like
equity may lead to dilution of management’s The increase in dividends is made when earning payment of interest on debt capital.
control over the business. Debt financing has potential has gone up.
no such implication. 4 Growth Opportunities: Companies having good Trading on Equity:
6State of Capital Markets: when stock growth opportunities retain more money out of It refers to the increase in the earnings per
market is rising, more people are ready to their earnings so as to finance the required share by employing the sources of finance
invest in equity. However, depressed capital investment. carrying fixed financial charges like
market may make issue of equity shares 5Cash Flow Position: Dividends involve an debentures (interest is paid at a fixed rate)
difficult for any company. The company can outflow of cash. So, a company with good Cash or preference shares (dividend is paid at fixed
opt for Debt. flow position can declare good dividend. rate).
7Level of Fixed Operating Costs: If a 6Shareholder Preference: If the shareholders
business has high level of fixed operating in general desire that at least a certain amount Factors affecting the Choice of Capital
costs lower debt financing is better. Similarly, is paid as dividend, the companies are likely to Structure:
if fixed operating cost is less, more of debt declare the same.
financing may be preferred. 1Floatation Costs: The source of finance
7Taxation Policy: If tax on dividend is higher
with less floatation cost should be preferred.
it would be better to pay less by way of
Dividend Decision: Example Bank Loan.
dividends. As compared to this, higher dividends
Dividend is that portion of profit which is 2Cash flow Position: A company can use more
may be declared if tax rates are relatively
distributed to shareholders. debt if it can generate enough cash flows to
lower.
The decision involved here is how much of the pay interest on debt otherwise it should
8 Stock Market Reaction
profit earned by company (after paying tax) is prefer equity.
9Access to Capital Market
to be distributed to the shareholders and how 3Tax Rate: A higher tax rate makes debt
10 Legal Constraints
much of it should be retained in the business comparatively cheaper in comparison to equity.
11 Contractual Constraints
for meeting the investment requirements. So, more debt can be used.
 Trading on Equity: Example
4Interest Coverage Ratio (ICR): The
interest coverage ratio refers to the number 10Flexibility: If a firm uses its debt
of times earnings before interest and taxes of potential to the full, it loses flexibility to Particulars X Y Ltd.
a company covers the interest obligation. ICR issue further debt. To maintain flexibility, it Ltd. Share Capital (Rs10) 5,00,000
= EBIT/Interest. must maintain some borrowing power. 10,00, 5,00,000
If ICR is high, more debt can be used. 000 10% Debentures -
11Control: Debt does not cause a dilution Total Capital 10,00,000
5Debt Service Coverage Ratio (DSCR): It of control. A public issue of equity may 10,00,000
takes care of the deficiencies of ICR. reduce the managements holding in the
DSCR = PAT + Interest + Non-Cash Expense company and make it vulnerable to takeover.
Preference Dividend +Interest Tax Rate @ 40%
EBIT of each company
If DSCR is high, more debt can be used. 12Capital Structure of other Companies:
is Rs 2,50,000
The debt equity ratios of other companies in
6Return on Investment (RoI): If the RoI of X Ltd. Y Ltd.
the same industry are a useful guideline in
the company is higher interest on debt, it can EBIT 2,50,000 2,50,000
the capital structure planning.
use more debt to increase the profit earned Less: Interest - 50,000
by shareholders. This is called Trading on 13Stock Market Conditions: If the stock Profit before tax 2,50,000 2,00,000
Equity. markets are bullish, equity shares are more Less: Tax @ 40% 1,00,000 80,000
easily sold even at a higher price. During a Profit after tax 1,50,000 1,20,000
7Cost of debt: More debt can be used if bearish phase, a company may find raising of No. of Shares 1,00,000 50,000
debt can be raised at a lower rate. equity capital more difficult and it may opt EPS Rs 1.50 Rs 2.40
for debt.
8Cost of Equity: Use of more debt increases
the financial risk of shareholders. As a result, 14Regulatory Framework: Every company
their desired rate of return may increase. So, operates within a regulatory framework
debt should be raised beyond a point. provided by the law.

9Risk Consideration: The total risk of a

business depends upon both the business risk
and the financial risk. If a firm’s business risk
is lower, its capacity to use debt is higher and
vice-versa.
Fixed and Working Capital:
6Diversification: When a firm diversifies into 5Production Cycle as working capital
Fixed Capital:
new areas, its requirement of fixed capital requirement is higher in firms with longer
Those assets which remain in business for more
increases. processing cycle.
than a year constitute the Fixed capital of a
7Financing alternatives: When business firms 6Credit allowed to customers results in
business firm. The sources which finance Fixed
have an alternative of taking fixed assets on higher amount of debtors, increasing the
capital are known as Long-term sources of
lease, they do not have to purchase fixed assets. working capital requirement.
funds.
8 Level of collaboration: Fixed capital 7If Credit availed is more on the
Fixed capital refers to investment in long-term
requirement of a firm becomes less if it gets into purchases from suppliers, the working
assets.
collaboration with another firm, as both the capital requirement is reduced.
Fixed capital or investment or capital budgeting firms can share resources of each other. 8Free and continuous availability of raw
decisions are important for the following materials enables the firms to keep lesser
reasons: Working Capital: stock and hence work with smaller working
The funds needed to meet the day-today capital.
1 Long-term growth and effects
operations of the business are called working 9Level of competition as higher
2 Large amount of funds involved
capital. Net working capital may be defined as competition requires larger stocks to meet
3 Risk involved
the excess of current assets over current urgent orders from customers and thus
4 Irreversible decisions
liabilities. higher working capital.
Factors affecting the Requirement of Fixed NWC = CA – CL 10Higher Growth prospects will require
Capital: larger amounts of working capital so that
Factors Affecting Working the firm is able to meet higher production
1Nature of business: Manufacturing requires Capital Requirements: and sales targets.
more fixed capital than trading business. 11Inflation increases the working capital
1Nature of business: Manufacturing firms have requirements as larger amount of money is
2Scale of operations: A firm involving large
more Working capital requirements than trading required to maintain a constant volume of
scale business requires more fixed capital as
firms. production and sales.
compared to small organisation.
2Scale of operations: Higher the scale of 12Operating efficiency as firms managing
3Choice of Technique: Capital intensive
operations more is the Working capital their raw materials efficiently require
business requires more fixed capital than a
requirement. lesser working capital.
labour intensive business.
4Upgradation of technology: Business 3Business cycle as in case of boom, larger
requiring frequent upgradations of technology working capital is required as the sales and
requires more fixed capital. production are more.
5Growth prospects: Companies having higher 4 Seasonal factors as peak season require
growth prospects require more investment in higher working capital than lean season due to
fixed capital. higher level of activity.
 Financial Market: A financial market is a market for the creation and exchange of financial assets.

Financial Assets means those assets Classification of Financial Markets: d They are also known as zero-coupon-discount
which can be easily converted into money. 1 Money Market bonds.
Such as Shares, Debentures, bonds etc. 2 Capital Market e The minimum value of their purchase is Rs
Creation of FA means when company 25,000 and in multiples thereof.
issues new securities. Exchange of FA Money Market:
means sale & purchase of existing The money market is a market for short term 3 Commercial Bill:
securities. funds which deals in monetary assets whose a A commercial bill is a bill of exchange used to
period of maturity is upto one year. finance the working capital requirements of
Financial Intermediation: It refers to the These assets are close substitutes for money; business firms.
process through which allocation of funds less risky, unsecured and short term debt b It is a short-term, negotiable, self-liquidating
is done by the savers in the household instruments that are highly liquid. instrument which is used to finance the credit
sectors through two main mechanisms; The major participants in the market are the sales of firms.
banks and financial markets. RBI, Banks, NBFCs, State Govts, Large c When a trade bill is accepted by a commercial
Corporate Houses and Mutual Funds. bank it is known as a commercial bill.
Allocation Function: It refers to
Ch-10 Financial

allocating funds available for investments Money Market Instruments: 4 Commercial Paper:
into their most productive investment 1 Call Money: a Commercial Papers are the short term MMI
opportunity. a It is a short term MMI through which one issued by large and credit worthy companies.
bank may borrow money from another bank to b The instrument is in the form of an unsecured
Functions of Financial Market: maintain its cash reserve ratio as per the promissory note and is freely transferable by
Markets

1 It mobilises savings and channelizes guidelines of RBI. endorsement.

them into most productive uses by b Its maturity period may range from a single c Its maturity period may range from a
facilitating transfer of savings from day to a fortnight. fortnight to a year.
savers to investors. c The rate at which the interest is paid on d It is sold at discount and redeemed at par.
2It facilitates price discovery for call money is called call rate.
financial assets by interaction of forces 5 Certificate of Deposit:
of demand and supply. a Certificate of deposit is a short term money
2 Treasury Bill:
3It provides liquidity to financial assets market instrument issued by commercial banks
a Treasury bills are short term MMI which
as the securities can be easily converted and development financial institutions.
are issued by RBI on behalf of the
into cash. b It is an unsecured and negotiable instrument
Government of India.
4It helps to save time, effort and money in bearer form.
b They are issued in the form of promissory
that both buyers and sellers of a financial c It may be issued to individuals, corporations
notes and are very safe instruments.
asset would have to otherwise spend to and companies when banks need cash to meet
c They are sold at discount & redeemed at
try and find each other. credit needs.
par.
 3Private Placement: Private placement is the allotment Functions of a Stock Exchange:
Capital Market:
Capital Market refers to facilities and of securities by a company to institutional investors and
some selected individuals. It helps to raise capital more 1Providing liquidity and marketability to existing
institutional arrangements through which long-
quickly than a public issue. securities as it provides a platform for sale and
term funds; both debt and equity are raised
purchase of securities.
and invested. The capital market consists of
4Rights Issue: This is a privilege given to existing 2Helping in determination of prices of
development banks, commercial banks and
shareholders to subscribe to a new issue of shares securities through market driven by supply and
stock exchanges.
according to the terms and conditions of the company. demand.
The shareholders are offered the ‘right’ to buy new 3Contributing to economic growth through the
The Capital Market can be divided into 2
shares in proportion to the number of shares they allocative function.
parts:
already possess. 4 Ensuring safety of transactions as all
1 Primary Market these transactions are electronic and take
2 Secondary Market 5e-IPOs: A company proposing to issue capital to the place Under the knowledge of SEBI.
public through the on-line system of the stock 5Spreading of equity cult as the Stock
Primary Market: It is also known as the new
exchange has to enter into an agreement with the exchanges do whatever is possible to induce as
issues market. It deals with new securities being
stock exchange. This is called an Initial Public Offer many people as investors in stocks of companies.
issued for the first time.
(IPO). For example: education of investors,
A company can raise capital through the primary
transparency of transactions, etc. 6 Providing
market in the form of equity shares, preference
Secondary Market: scope for speculation but in a limited manner as
shares, debentures, loans and deposits. The secondary market is also known as the stock market limited dose of healthy speculation is good for
or stock exchange. It is a market for the purchase and activating the market.
Methods of Floatation:
sale of existing securities.
1Offer through Prospectus: This involves Depository:
inviting subscription from the public through Stock Exchange: Depository is an organisation which keeps the
issue of prospectus. A prospectus makes a A stock exchange is an institution which provides a reservoir of securities in electronic form
direct appeal to investors to raise capital, platform for buying and selling of existing securities. through depository participants (DPs). The
through an advertisement in newspapers and securities belong to the investors who use the
Meaning of Stock Exchange services of depository participants to get their
magazines.
According to Securities Contracts (Regulation) Act securities updated in their account with the
2Offer for Sale: Under this method securities 1956, stock exchange means any body of individuals, Depository in the demat form.
are not issued directly to the public but are whether incorporated or not, constituted for the
The two Depositories in India are
offered for sale through intermediaries like purpose of assisting, regulating or controlling the 1National Securities Depository Ltd.
issuing houses or stock brokers. In this case, a business of buying and selling or dealing in securities. (NSDL)
company sells securities at an agreed price to 2 Central Depository Service Ltd. (CDSL)
brokers who, in turn, resell them to the investing
public.
Trading Procedure on A Stock Exchange:
Step 4: Registrar confirms the request. Functions of SEBI:
Trading on stock exchange is done through an Step 5: Registrar dematerialises the
online screen based electronic trading system. certificates and documents. Regulatory Functions:
Step 6: Registrar after having done the 1It registers brokers and sub brokers and other
Step 1: Selecting the Broker updation of certificates informs the players in the market.
Step 2: Opening the demat account Depository. 2It registers collective investment schemes and
Step 3: Placing the Order Step 7: Depository does updation of its Mutual Funds.
Step 4: Connecting to the Stock Exchange accounts and informs DP. 3It Regulates Stock Bankers and portfolio
Step 5: Executing the Order Step 8: Finally demat account is updated by exchanges, and merchant bankers.
Step 6: Issuing of Contract note the DP. 4 It levies fee or other charges for carrying out
Step 7: Delivery of Cash/Securities —> Pay-in the purposes of the Act.
Securities and Exchange Board Of India 5It calls for information by undertaking
day
(SEBI) inspection, conducting enquiries and audits of
Step 8: Settlement before T+2
The Securities and Exchange Board of India stock exchanges and intermediaries.
Step 9: Delivery of security/cash —> Pay-out
was established by the Government of India on
day Protective Functions:
12 April 1988 as an interim administrative body
Step 10: Delivery of security in demat form.
to promote orderly and healthy growth of
1It prohibits fraudulent and unfair trade
securities market and for investor protection.
Dematerialisation: practices like misleading statements,
Conversion of physical form of securities into manipulations, price rigging etc.
Objectives of SEBI:
electronic form and saving them in the 2It controls insider trading and imposes
Depository in the form of demat account 1 To regulate stock exchanges and the penalties for such practices.
through the involvement of a depository securities industry to promote their orderly 3 It undertakes steps for investor protection.
participant (DP). functioning. 4It promotes fair practices and code of conduct in
2. To protect the rights and interests of securities market.
Dematerialisation Process: investors, particularly individual investors
and to guide and educate them. Development Functions:
Step 1: Filling of demat request form and 3To prevent trading malpractices like price
giving physical share certificates to the 1 Investor education
rigging, insider trading, making misleading
depository participant (DP). 2It trains intermediaries of the securities
statements in prospectus, etc.
market.
Step 2: DP contacts the Depository and 4To regulate and develop a code of conduct and
3Promotion of fair practices and code of
updates them about the request of the fair practices by intermediaries like brokers,
conduct.
investor. merchant bankers etc., with a view to making
4It conducts research and publishing information
Step 3: DP submits all these documents to the them competitive and professional.
useful to all market participants.
Registrar of the concerned issuer company.
 Market: Market is a place where the buyers & sellers meet and conduct buying & selling activities. The other ways in which this term is being used is in the
context of a product market, geographic market, type of buyers‘ market and the quantity of goods transacted.

Meaning of Marketing:
Customer: ―Customer‖ refers to the Functions of Marketing/Marketing Activities:
It is a social process by which individual
people or organisations who buy goods or groups obtain what they need and want
avail services for the satisfaction of their 1Gathering and analysing market information:
through creating offerings and freely
needs and wants. It is important for the marketer to gather
exchanging products and services of value
information from the market. SWOT analysis
with others.
Needs and Wants: should be done properly. This will help in
Phillip Kotler understanding the target market.
Needs are basic to human beings and do
not pertain to a particular product.
Features of Marketing: 2Marketing Planning: Another important of a
Example: food, shelter, clothing etc. 1Need and Want: Needs are basic to human
Wants, on the other hand, are culturally marketer is to develop appropriate marketing
beings and do not pertain to a particular
defined objects that are potential plans so that the marketing objectives of the
product. Wants, on the other hand, are
satisfiers of needs. Example: Burger, organisation can be achieved.
culturally defined objects that are potential
Bungalow, Denims etc. satisfiers of needs. Marketing focuses on 3Product Designing and Development: The
Ch-11 Marketing

satisfaction of the needs and wants of design of the product makes the product
Marketer: If customer is the seeker of
individuals and organisations. attractive to the target customers. A good
satisfaction, the marketer is the deliverer
2Creating a Market Offering: Market design can improve performance of a product
or provider of satisfaction.
offering refers to a complete offer for a
Management

and also give it a competitive advantage in the

product or service, having given features like market.
What can be marketed?
size, quality, taste, etc.; at a certain price;
Anything that is of value to others can be
available at a given outlet or location and so 4Standardisation and Grading:
marketed.
on. A good ‗market offer‘ is the one which is Standardisation refers to producing goods of
1 Goods – Mobile, Car, TV
developed after analysing the needs and predetermined specifications, which helps in
2 Services – Hotel, Insurance, Airline
preferences of the potential buyers. achieving uniformity and consistency in the
3 Events – World Cup, Asian Games
3Customer Value: The job of a marketer is output.
4Experiences – Thrill in amusement parks
to add to the value of the product so that the Grading is the process of classification of
5 Persons – Brand Ambassadors such as
customers prefer it in relation to the products into different groups, on the basis of
Amitabh Bachchan, Sachin Tendulkar
competing products and decide to purchase it. some of its important characteristics such as
6 Places – Tourism
4 Exchange Mechanism: The process of quality, size, etc.
7Ideas – Awareness such as Quit Smoking,
marketing involves exchange of products and
Jaago Re services for money or something considered 5 Packaging and Labelling:
valuable by the people. Discussed in
6 Branding: detail
7 Customer Support Services: CSS such as Marketing Management:
after sales services, handling customer Marketing management is ―the art and science of 2Product Concept: The emphasis of the firms
complaints, etc. These services aim at providing choosing target markets and getting, keeping, and shifted from quantity of production to quality of
maximum satisfaction to the customers. CSS growing customers through creating, delivering, and products. The focus of business activity changed to
prove very effective in bringing repeat sales communicating superior customer value‖. bringing continuous improvement in the quality,
from the customers and developing brand loyalty – Philip Kotler The incorporating new features etc. Thus, product
for a product. process of management of marketing involves: improvement became the key to profit maximisation
1 Choosing a target market:Readymade of a firm, under the concept of product orientation.
8 Pricing of Products: garments for children up to the age of 5 years. 2 3Selling Concept: customers would not buy, or not
Discussed in Getting, keeping as well as growing the customers: buy enough, unless they are adequately convinced
9 Promotion: detail Create demand for his products so and motivated to do so. The use of promotional
that the target customers purchase the product, keep techniques such as advertising, personal selling and
10 Physical Distribution: them satisfied with the firm‘s products and also attract sales promotion were considered essential for selling
more customers to the firm‘s products so that the firm of products. Therefore, firms must undertake
11Transportation: Transportation involves can grow. aggressive selling and promotional efforts to make
physical movement of goods from one place to 3 Creating, developing and communicating superior customers buy their products.
the other. A marketing firm has to analyse its values for the customers: the primary job of a 4Marketing Concept: Marketing concept means
transportation needs after taking into marketing manager is to create superior values and that focus on satisfaction of
consideration various factors such as nature of communicate these values to the prospective buyers customer‘s needs is the key to the success of any
the product, cost and location of target market and persuade them to buy these products. organisation in the market. It assumes that in the
and take decisions in respect of mode of long run an organisation can achieve its objective of
transportation to be chosen and other related MM Philosophies/Concepts/Orientations: maximisation of profit by identifying the needs of its
aspects. present and prospective buyers and satisfying them
1 Production Concept: The focus of businesses was, on
in an effective way.
12Storage or Warehousing: Usually there is a production of goods. It was believed that profits could
5Societal Marketing Concept: It holds that the task
time gap between the production and be maximised by producing at large scale, thereby
of any organisation is to identify the needs and wants
procurement of goods and their sale or use. It reducing the average cost of production. It was also
of the target market and deliver the desired
may be because of irregular demand for the assumed that consumers would favour those products
satisfaction in an effective and efficient manner so
products or there may be irregular supply which were widely available at an affordable price.
that the long-term wellbeing of the consumers and
because of seasonal production. Further, there is Thus, availability and affordability of the product were
the society is taken care of. It is the extension of
a need for storage of adequate stock of goods to considered to be the key to the success of a firm.
the marketing concept as it supplements the concern
protect against unavoidable delays in delivery or
for the long-term welfare of the society.
to meet out contingencies in the demand.
Marketing Mix: Advantages of Branding to the Marketers:
Marketing Mix is described as the set of 1 It helps in making product differentiation. Functions of packaging:
marketing tools that a firm uses to pursue its 2 Helps in advertising and display programmes. 1 It helps in product identification.
marketing objectives in a target market. 3 Facilitates differential pricing. 2It helps in protection of the product
4 Introduction of new products becomes easy. from spoilage, breakage, leakage damage
The marketing mix consists of various etc.
variables popularly known as four Ps of Characteristics of Good Brand Name: 3It facilitates use of the product to
marketing. These are: 1 The brand name should be short, easy to the consumers through appropriate
1 Product 2 Price pronounce, spell, recognise and remember e.g., sizes and shapes.
3 Place 4 Promotion Ponds. 4 It helps in promotion of the product as a
2A brand should suggest the good package attracts the attention of the
A Product: product‘s benefits and qualities. people at the time of purchase.
Product means goods or services or ‗anything of 3A brand name should be distinctive e.g. 5 It helps in product differentiation.
value‘, which is offered to the market for swift. 4 The brand name should be
exchange. sufficiently versatile to accommodate new 3 Labelling: Labelling refers to the process
products. Ex Nestle. of designing a label for a product which may
Components of Product Mix: 5 Capable of being registered and protected vary from a simple tag to a complex graphic.
legally.
1 Branding It is the process of giving a name or
Functions of Labelling:
a sign or a symbol to a product.
1It describes the Product and specifies
a Brand: A brand is a name, term, sign, 2 Packaging: It is the process of creating
its contents.
symbol, design or some combination of them, and producing container or wrapper for a
2It helps in identification of the Product
used to identify the products of one seller. b product. or Brand.
Brand Name: That part of a brand, which can
3It helps in grading the products
be spoken, is called a brand name. Levels of Packaging: into different categories.
c Brand Mark: It appears in the form of a
1 Primary Package: It refers to the product‘s 4 It helps in promotion of products.
symbol, design, distinct colour scheme or
immediate container.
lettering.
d Trade Mark: A brand or part of a brand 2 Secondary Packaging: It refers to
B Price Mix:
that is given legal protection is called additional layers of protection that are
Price can be defined as the amount of money
trademark. kept till the product is ready for use. paid by a buyer (or received by a seller) in
3Transportation Packaging: It refers to consideration of the purchase of a product or
Advantages of Branding to Customers: further packaging components necessary a service.
1 Helps in the identification of the product.
for storage, identification or
2 Helps in ensuring Quality.
transportation.
3 Status symbol.
Factors Affecting Price Determination: 6 Pricing Objectives: Elements of Components
a Obtaining Market Share Leadership: it will Physical Distribution:
1Product Cost: PC includes the cost of keep the price of its products at lower
producing, distributing and selling the product. levels so that greater number of people are 1Order Processing: Companies try their
The cost sets the minimum level or the floor attracted to purchase the products level best to decrease their order
price at which the product may be sold. So, it is b Surviving in a Competitive Market: If a firm processing time. Orders move from
imp that the price should recover total costs is facing difficulties in surviving in the market customers to company and products move
including a margin of profit. because of intense competition, it will charge from companies to customers.
lowest possible price and offer discounts also.
2Extent of Competition in the Market: When c Attaining Product Quality Leadership: In 2Transportation: It is the most
there is a lot of competition in the market among this case, normally higher prices are charged challenging aspect of physical distribution
the competitors, the companies try to keep to cover high quality and high c.ost of R & D. because long distances, fragility of
prices on the lower side, however, a company d Profit Maximisation: In short run, it will products, time constraints and difficult
having monopoly in the market has more freedom charge maximum possible price. In long run, geographical locations are the obstacles
to increase the prices. it will charge low price. that transportation has to overcome,
when products move from manufacturer
3The Utility and Demand: The utility and C Place Mix: to the consumers.
demand of the product sets the upper limit of It is concerned with making the goods and
price, which a buyer would be prepared to pay. services available at the right place, so 3Warehousing: Warehousing involves
In the case of inelastic demand, the total that people can purchase the same. systematic storing of goods and
revenue increases when the price is increased preparing them for delivery as and
and goes down when the price is reduced. If the Channels of Distribution: when required.
demand of a product is inelastic, the firm is in a
better position to fix higher prices. 1Direct Channel: It is also known as zero 4Inventory control: All the decisions
level. It is a direct channel between the regarding the upkeep and maintenance of
4Government and Legal Regulations: In order manufacturer and the consumer. inventory come under Inventory control.
to protect the interest of public against unfair High level of inventory generally provides a
practices in the field of price fixing, 2 Indirect Channels: firm advantage of providing goods as and
Government can intervene and regulate the price There are three types of Indirect Channels: when required. However, it also adds to
of commodities. a One level (Manufacturer—Retailer— the cost of the company.
5Marketing Methods Used: When companies Consumer)
use different marketing methods like b Two level (Manufacturer—Wholesaler— D Promotion Mix:
advertising, giving credit facilities, after sales Retailer-Consumer)
c Three level (Manufacturer—Agent— 1 Advertising: It is a paid form of
service, etc. they shift the costs towards the
Wholesaler—Retailer—Consumer) promotion method involving an identified
customers and the prices of their products
sponsor. It is impersonal in nature.
increase.
Features of Advertising:
1 Paid Form: the sponsor has to bear the cost.
2Impersonality: There is no direct face-to-face
contact between the prospect and the advertiser. 3
Identified Sponsor: Advertising is undertaken by
some identified individual or company.

2 Personal Selling: Personal selling involves oral

presentation of message in the form of
conversation with one or more prospective
customers for the purpose of making sales.

Features of Personal Selling:

1Personal Form: involves an interactive
relationship between the seller and the buyer.
2Development of Relationship: Personal selling
allows a salesperson to develop personal
relationships with the prospective customers.
3Flexible tool of promotion: It can be adjusted to
fit the specific needs of the individual customers.

3Sales Promotions: Sales promotion refers to

short-term incentives, which are designed to
encourage the buyers to make immediate purchase
of a product or service.

4Public Relations: All the different types of

activities and programmes undertaken by a business
firm to create a good image in the eyes of various
stakeholders is known as Public relations exercise.
 With growing competition and in an attempt to increase their sales and market share, manufacturers and service providers are engaged in
exploitative and unfair trade practices like defective products, adulteration, etc. So, there is a need for providing adequate protection to
consumers.
2Business uses Society’s Resources:
Business organisations use resources which b Any person who hires or avails of any
Importance Of Consumer Protection: belong to the society. So, they have a service, for a consideration which has been
responsibility to supply such products and paid or promised, or partly paid and partly
From Consumers’ point of view: 1 promised, or under any system of deferred
render such services which are in public
interest. payment. It includes any beneficiary of
Consumer Ignorance: In India, services when such services are availed of
3Moral Justification: It is the moral duty
consumers are ignorant about their rights of any business to take care of consumer’s with the approval of the person concerned,
and reliefs available to them, it becomes but does not include a person who avails of
interest and avoid any form of their
necessary to educate them about the same so such services for any commercial purpose.
exploitation. Thus, a business must avoid
as to achieve consumer awareness.
exploitative and unfair trade practices.
2Unorganised Consumers: Consumers need to Who can file a complaint? 1
4Government Intervention: A business
be organised in the form of consumer Any consumer;
engaging in any form of exploitative trade
organisations which would take care of their 2 Any registered consumers’ association; 3
practices would invite government
interests. In India, we do have consumer The Central Government or any State
Ch-12 Consumer

intervention or action. This can affect the

organisations which are working in this Government;
direction. image of the company.
4One or more consumers, on behalf of
3Widespread Exploitation of Consumers: 5Social Responsibility: Consumers form an
numerous consumers having the same
Consumers might be exploited by exploitative important group among the many
interest; and
and unfair trade practices like defective and stakeholders of business and like other
5A legal heir or representative of a
Protection

unsafe products, adulteration, false and stakeholders; their interest has to be well
deceased consumer.
misleading taken care of.
advertising, hoarding, black-marketing etc. Consumer Rights:
Consumers need protection against such Meaning of Consumer:
malpractices of the sellers. As per Consumer Protection Act, a consumer 1 Right to Safety: The consumer has a right
is defined as: to be protected against goods and services
From the point of view of Business: a Any person who buys any goods for a which are hazardous to life and health. For
consideration, which has been paid or ex., electrical appliances which are
1 Long-term Interest of Business: It is in
promised, or partly paid and partly manufactured with substandard products or
their long-term interest to satisfy their
promised, or under any scheme of deferred do not conform to the safety norms might
customers. Satisfied customers not only lead
payment. It includes any user of such goods, cause serious injury. Thus, consumers are
to repeat sales but also provide good feedback
when such use is made with the approval of educated that they should use electrical
to new customers and thus, help in increasing
the buyer, but does not include a person who appliances which are ISI marked.
the customer-base of business.
obtains goods for re-sale or any commercial
purpose.
2Right to be Informed: The consumer has 6 Right to Consumer Education: The consumer 10 File a complaint in an appropriate
a right to have complete information about has a right to acquire knowledge and to be a well- consumer forum in case of a shortcoming in
the product he intends to buy including its informed consumer throughout life. He should be the quality of goods purchased or services
ingredients, date of manufacture, price, aware about his rights and the reliefs available to availed.
quantity, directions for use, etc. him in case of a product or service falling short
It is because of this reason that the laws in of his expectations. Relief Available:
India require the manufactures to provide
1To remove the defect in goods or
such information on the package and label of Consumer Responsibilities:
deficiency in service.
the product.
1Buy only standardised goods as they provide 2To replace the defective product with a
quality assurance. Thus, look for ISI mark on new one, free from any defect.
3Right to Choose: The consumer has the
electrical goods, FPO mark on food products, 3To refund the price paid for the product,
freedom to choose from a variety of
Hallmark on jewellery etc. or the charges paid for the service.
products at competitive prices. This implies
2Read labels carefully so as to have information 4To pay a reasonable amount of
that the marketers should offer a wide
about prices, net weight, manufacturing and compensation for any loss or injury suffered
variety of products in terms of quality,
expiry dates, etc. by the consumer due to the negligence of the
brand, prices, size, etc. and allow the
3Learn about the risks associated with products opposite party.
consumer to make a choice from amongst
and services, follow manufacturer’s instructions 5To discontinue the unfair/ restrictive
these.
and use the products safely. trade practice and not to repeat it in the
4Right to be Heard: The consumer has a 4Ask for a cash memo on purchase of goods or future.
right to file a complaint and to be heard in services. This would serve as a proof of the 6Not to offer hazardous goods for sale.
case of dissatisfaction with a good or a purchase made. 7 To withdraw the hazardous goods from
service. 5 Be honest in your dealings. Choose only from sale.
It is because of this reason that many legal goods and services and discourage 8To cease manufacture of hazardous goods
enlightened business firms have set up their unscrupulous practices like black-marketing, and to desist from offering hazardous
own consumer service and grievance cells. hoarding etc. services.
6Respect the environment. Avoid waste, littering 9To pay any amount (not less than 5% of the
5Right to Seek Redressal: The consumer and contributing to pollution. value of the defective goods or Services), to
has a right to get relief in case the product 7Form consumer societies which would play an be credited to the Consumer Welfare Fund
or service falls short of his expectations. active part in educating consumers and or any other organisation/person, to be
The Consumer Protection Act, 1986 provides safeguarding their interests. utilised in the prescribed manner.
reliefs to consumers such as replacement of 8 Be aware about various goods and services 10To issue corrective advertisement to
product, removal of defect in the product, available in the market so that an intelligent and neutralise the effect of a misleading
compensation for any loss or injury suffered wise choice can be made. advertisement.
by the consumer. 9Assert yourself to ensure that you get a fair 11To pay adequate costs to the appropriate
deal. party.
Role of Consumer Organisations And District Forum State Commission National Commission
NGOs Composition President and two other President President and at
members, one of whom and not less than two least four other
1Educating the general public about consumer rights
should be a woman. other members, members, one of
by organising training programmes, seminars and
one of whom should
workshops. whom should be a
be a woman
2Encouraging consumers to strongly protest and woman
take an action against exploitative and Appointed by State Government State Government Central Government
unfair trade practices of sellers. Value of the Does not exceed Rs. 20 Exceeds Rs. 20 lakhs Exceeds Rs. 1
3Providing legal assistance to consumers by way of goods or lakhs. but does not exceed crore
providing aid, legal advice etc. in seeking legal remedy. services Rs. 1 crore.
4Filing complaints in appropriate consumer Where to Can appeal Can appeal before Can be taken to
courts on behalf of the consumers. Appeal if not before the State the the Supreme Court
5Publishing periodicals and other publications to
satisfied? Commission within 30 National Commission of India
spread knowledge about consumer problems, legal
days of the passing of within 30 days
reporting, reliefs available and other
matters of interest.
the order. of the passing of the
6Taking an initiative in filing cases in consumer order.
courts in the interest of the general public, not for
any individual.

Some of the important consumer organisations and

NGOs
1Consumer Coordination Council, Delhi
2 Common Cause, Delhi
3Consumer Protection Council (CPC),
Ahmedabad
4 Consumers’ Association, Kolkata