(For private circulation only)

MBA 2012
M G UNIVERSITY SYLLABUS (2010-12) SEMESTER I

CLASS NOTES IN CAPSULES

Prepared by MACFAST MBA Semester 1 students
Copyright material

MACFAST, TIRUVALLA February 2011

(No part of this manual shall be re-printed, copied or distributed by any one without the explicit [written] permission from the MBA Department. Fr. Dr. K. Cyriac, Director, MBA)

TABLE OF CONTENTS

SUBJECT CODE

NAME

PAGE NO.S

CC 1

PRINCIPLES OF MANAGEMENT 3 - 28 ENVIRONMENT MANAGEMENT 29 49 50 71

CC 2

CC 3

ECONOMICS FOR MANAGERS

CC 4

EXECUTIVE COMMUNICATION 72 88 89 123 124 149 150 174 175 204 205 244

CC 5

FINANCIAL ACCOUNTING

CC 6

BUSINESS MATHEMATICS

CC 7

STATISTICS FOR MANAGERS

CC 8

DATA PROCESSING

CC 9

INDIAN ETHOS AND VALUES

PRINCIPLES OF MANAGEMENT
MODULE 1 - MANAGEMENT Management means utilizing available resources in the best possible manner and also for achieving well defined objectives. The resources are: men, money, materials, machines, methods and markets. These are the six basic inputs in management process (six M's of management) and the output is in the form of achievement of objectives. It is the end result of inputs and is available through efficient management process. Definitions of Management According to Henry Fayol, "To manage is to forecast and to plan, to organize, to command, to coordinate and to control". According to Peter Drucker, "Management is a multi-purpose organ that manages business and manages managers and manages workers and work". Characteristics of Management 1. Management is a managerial process: Management is a process and not merely a body of individuals. Those who perform this process are called managers. The managers exercise leadership by assuming authority and direct others to act within the organisation. Management process involves all managerial functions. 2. Management is a social process- Management takes place through people. The importance of human factor in management cannot be ignored. A manager's job is to get the things done with the support and cooperation of subordinates 3. Management is action-based: Management is always for achieving certain objectives in terms of sales, profit, etc. It is a result-oriented concept and not merely an abstract philosophy. 4. Management involves achieving results through the efforts of others: Management is the art of getting the things done through others. Managers are expected to guide and motivate subordinates and get the expected performance from them. 5. Management is a group activity: Management is not an isolated individual activity but it is a collective activity or an activity of a group. It aims at using group efforts for achieving objectives. 6. Management is intangible: Management is not directly visible but its presence is noticed in the form of concrete results. 7. Management is all pervasive: Management is comprehensive and covers all departments, activities and employees. Managers operate at different levels but their functions are identical 8. Management is an art, science as well as a profession: Management is an art because certain skills, essential for good management, are unique to individuals. Management is a science because it has an organised body of knowledge. Management is also a profession because it is based on advanced and cultivated knowledge. 9. Management aims at coordination of activities: Coordination is the essence of management. 10. Management is innovative: Management techniques are dynamic and innovative. They need to be adjusted as per the requirements of the situations. 11. Management has vast scope: The scope of management is quite comprehensive. It covers all aspects of business. The principles of management guide managers while managing various business activities. 12. Management is dynamic: Business is influenced by changes in economic, social, political technological and human resource. Management adjusts itself to the changing atmosphere making suitable forecasts and changes in the policies.

13. Management aims at achieving predetermined objectives: Management is a meaningful activity. All organizations are essentially groups of individuals formed for achieving common objectives. An Organization exists for the attainment of specific objectives. Need of Management Direction, coordination and control of group efforts: In business, many persons work together. They need proper direction and guidance for raising their efficiency. 1. Orderly achievement of business objectives 2. Performance of basic managerial functions 3. Effective communication at all levels 4. Motivating Employees MANAGEMENT THOUGHT SCIENTIFIC MANAGEMENT THEORY Frederick Winslow Taylor (1856-1915) is considered to be the father of scientific management. Taylor was supported in his efforts by Henry Gantt, Frank and Lillian Gilberth and Harrington Emerson. Four basic parts of a series of ideas developed by Taylor are as follows: i) Each person's job should be broken down into elements and a scientific way to perform each element should be determined ii) Workers should be scientifically and trained to do the work in the designed and trained manner. iii) There should be good cooperation between management and workers so that tasks are performed in the designed manner iv) There should be a division of labor between managers and workers. Managers should take over the work of supervising and setting up instructions and designing the work and the workers should be free to perform the work themselves. ADMINISTRATIVE MANAGEMENT THEORY CLASSICAL MANAGEMENT THEORY (1880s-1920s) Classical management theory consists of a group of similar ideas on the management of organizations that evolved in the late 19thcentury and early 20 th century. This school, evolved as a result of the industrial revolution, in response to the growth of large organizations and in contrast to the handicraft system that existed till then Classical theorists recognised human emotions but felt that human emotions could be controlled by a logical and rational structuring of jobs and work (i) application of science to the practice of management (ii) development of the basic management functions and (iii) articulation and application of specific principles of management. THE THEORY OF BUREAUCRACY Max Weber (18641920) wrote at the turn of the twentieth century, when Germany was undergoing its industrial revolution.22 To help Germany manage its growing industrial enterprises at a time when it was striving to become a world power, Weber developed the principles of bureaucracya formal system of organization and administration designed to ensure efficiency and effectiveness. A bureaucratic system of administration is based on five principles Principle 1: In a bureaucracy, a managers formal authority derives from the position he or she holds in the organization. Authority is the power to hold people accountable for their actions and to make the right to direct and control their subordinates behaviour to achieve organizational goals Principle 2: In a bureaucracy, people should occupy positions because of their performance, not because of their social standing or personal contacts. Principle 3: The extent of each positions formal authority and task responsibilities, and 4

 Principle 4: So that authority can be exercised effectively in an organization, positions should be arranged hierarchically, so employees know whom to report to and who reports to them. Principle 5: Managers must create a well-defined system of rules, standard operating procedures, and norms so that they can effectively control behaviour within an organization. FAYOLS PRINCIPLES OF MANAGEMENT Working at the same time as Weber but independently of him, Henri Fayol (18411925), the CEO of Comambault Mining, identified 14 principles (summarized in Table 2.1) that he believed to be essential to increasing the efficiency of the management process.26 Some of the principles Fayols 14 Principles of Management Division of Labour Job specialization and the division of labour should increase efficiency, especially if managers take steps to lessen workers boredom. Authority and Responsibility Managers have the right to give orders and the power to exhort subordinates for obedience. Unity of Command An employee should receive orders from only one superior. Line of Authority The length of the chain of command that extends from the top to the bottom of an organization should be limited. Centralization Authority should not be concentrated at the top of the chain of command. Unity of Direction The organization should have a single plan of action to guide managers and workers. Equity All organizational members are entitled to be treated with justice and respect. Order The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities. Initiative Managers should allow employees to be innovative and creative. Discipline Managers need to create a workforce that strives to achieve organizational goals. Remuneration of Personnel The system that managers use to reward employees should be equitable for both employees and the organization. Stability of Tenure of Personnel Long-term employees develop skills that can improve organizational efficiency. Subordination of Individual Interests to the Common Interest Employees should understand how their performance affects the performance of the whole organization. Esprit de Corps Managers should encourage the development of shared feelings of comradeship, enthusiasm, or devotion to a common cause. BEHAVIOURAL MANAGEMENT THEORY Theory X and Theory Y: Several studies after the Second World War revealed how assumptions about workers attitudes and behaviour affect managers behaviour. Perhaps the most influential approach was developed by Douglas McGregor. He proposed that two different sets of assumptions about work attitudes and behaviour dominate the way managers think and affect how they behave in organizations. McGregor named these two contrasting sets of assumptions Theory X and Theory Y THEORY X According to the assumptions of Theory X, the average worker is lazy, dislikes work, and will try to do as little as possible. Moreover, workers have little ambition and wish to avoid responsibility. Thus, the managers task is to counteract workers natural tendencies to avoid work. To keep workers performance at a high level, the manager must supervise them closely and control their behaviour by means of the carrot and stickrewards and punishments. THEORY Y In contrast, Theory Y assumes that workers are not inherently lazy, do not naturally dislike work, and, if given the opportunity, will do what is good for the organization. According to Theory Y, the characteristics of the work setting determine whether workers consider work to be a source of satisfaction or punishment; and managers do not need to control workers behaviour closely inorder to make them perform at a high level, because workers will exercise self-control when they are committed to organizational goals 5

THE HAWTHORNE STUDIES AND HUMAN RELATIONS: This research, now known as the Hawthorne studies, began as an attempt to investigate how characteristics of the work setting specifically the level of lighting or illuminationaffect worker fatigue and performance. The researchers conducted an experiment in which measured worker various levels of illumination. The experiment produced some unexpected results. The researchers found of whether they raised or lowered the level of illumination, productivity increased. In fact, productivity began to fall only when the level of to the level of moonlight, a level at which presumably workers could no longer see well enough to do their work efficiently. Hawthorne effectseemed to suggest that toward their managers affect the level of workers performance. In particular, the significant finding was that a managers behaviour or leadership approach can affect performance. This finding led many researchers to turn their attention to managerial behaviour and leadership. If supervisors could be trained to behave in ways that would elicit cooperative behaviour from their subordinates, then productivity could be increased. From this view emerged the human relations movement, which advocates that supervisors be trained to manage subordinates in ways that elicit their cooperation and increase their productivity. CONTINGENCY THEORY: Another milestone in management theory was the development of in the 1960s by Tom Burns and G.M. Stalker in the United Kingdom Lawrence and Jay Lorsch in the United States.39 The crucial message of is that there is no one best way to organize: The organizational the control systems that depend onare characteristics of the external environment in which the organization operates. According to contingency theory, the characteristics of the environment affect ability to obtain resources. SCHOOLS OF MANAGEMENT 1) MANAGEMENT PROCESS SCHOOLS This school considers management as a process of getting things done by people who operate in the organization. Management can best be divided in five broad functions such as; planning, organizing, staffing, directing and controlling. Henry Fayol is the father of this school of thoughts. These principles are equally applicable to all types of organizations; business, government or any other organization. In this school recognizes management as a separate discipline. It integrates the knowledge of other disciplines to improve management. There is room for innovation, research and development. This school is criticized on the ground that under dynamic conditions it may not be worthwhile to find out principles of universal application. This school has provided a conceptual frame work which can be used for further research and development of management thought. 2) THE EMPIRICAL SCHOOL: The empirical or case approach analyses management by studying experiences of people actually managing business. This thinking is based on the belief that the study of actual situation, where success, will help the students and practitioners to know how to manage effectively in similar situations. This knowledge will help the managers in taking decisions in different situations. The basic assumption of this thought is that the actual business situation contributes to the development of managerial skills. By such observations managers develop problem solving abilities which are essential for the successful practice of management in actual life. 3) THE HUMAN BEHAVIOUR SCHOOL: This approach is based on the idea that managing involves getting things done through people so its study should concentrate on interpersonal relationship. This school concentrates on the human aspect of management and the belief that when people work together to accomplish common objectives people should understand people. These studies highlighted the relationship between social factors and productivity. The thinkers of human behavior approach are of the view that the effectiveness of any organization depends upon the quality of relationships among the people working in the organization 6

4) THE SOCIAL SCHOOL SYSTEM: In this approach an organization should be considered as a social system consisting of various groups of people. It is primarily concerned with the behaviour of people in groups. It thus tends to be based on sociology and social psychology rather than on individual psychology. 5) THE DECISION THEORY SCHOOL: This school of thought is based on the belief that managers make decisions, whatever managers do is the outcome of decisions made by them out of the alternatives available to them. The decision should be taken at right time, should be related to the situation and should be feasible in a given situation.

MANAGEMENT AS A PROCESS:Planning, organizing Input Controlling Man Material Processed Machinery Staffing, directing Money

Output Services Profit Productivity Customer Satisfaction

Meaning of Management Process Management process is a continuous one and is run by the managers functioning at different levels. Management is now recognised as a distinct process in which managers plan, organize, lead, motivate and control human efforts in order to achieve well defined goals. In fact, process means a series of activities/operations undertaken/conducted for achieving a specific objective. Process is a systematic way of doing things. Definition of Management Process According to D. E. McFarland, "Management is the distinct process by which the managers create, direct, maintain and operate purposive organization through systematic, co-coordinated and cooperative human efforts MANAGEMENT FUNCTION:Planning: - it is a process which begin with objectives define strategies, policies and detailed plan to achieve them, which establishes on organization to implement decision and conclude a review of performance and feedback a) Organizing: - once the objectives, strategies necessary plans carry them out are formulated the next phase in management process is that of organizing. b) Staffing: - it involves the process of filling position in the organization structure. This is done by identifying work forces requirement inventorying the people available and recruiting, selecting, placing, promoting, appraising, planning the career of compensation and training or otherwise developing both candidate and current job holders to accomplish their task effectively and efficiently. Finding right man at right time or right job. c) Directing: - directing is the managerial functions of guiding, supervision, motivating and leading people towards the attaining of plan target of performances. Directing is a continuous function and is performed at all level of management. The main activities involved in directing are leadership, communication, motivation and supervision. d) Controlling:- controlling can be defined as determining what is seeing accomplished evaluating the performances and if necessary applying correction measures so that performance takes places according to plans 7

MODULE 2

- GROUP BEHAVIOUR

Team effectiveness Team: A team is a small number of people with complementary skills who are committed to a common purpose, common preference goals and an approach for which they hold themselves mutually accountable. Team V/s groups: Work group: A group that interacts primarily to share information and to make decisions to help each other perform within his or her area of responsibility. Work team: A group whose individual efforts result in a performance that is greater than the sum of those individual inputs. Distinct features of Team: They are empowered to share various management and leadership functions. They plan, control and improve their own work processes. They set their own goals and inspect their own work. They are frequently responsible for acquiring any new training they might need. They usually order materials, keep inventories and deal with suppliers. Types of Teams Teams can be classified based on their objectives. The three common forms are problem-solving teams; self-managed teams and cross functional teams. Problem solving teams: Groups of 5 to 12 employees from the same department who meet for a few hours each week to discuss ways of improving quality, efficiency and the work environment. Self-managed work teams: Groups of 10 to 15 people who take on responsibilities of their former supervisor. Self-managed teams use clear boundaries to create the freedom and responsibility to accomplish tasks in an efficient manner. The main idea of the self-managed team is that the leader does not operate with positional authority. Cross functional teams: Employees from about the same hierarchical level, but from different work areas, who come together to accomplish a task. A cross-functional team is a group of people with different functional expertise working toward a common goal. It may include people from finance, marketing, operations, and human resources departments.

Benefits of teams Enhanced performance can come on many forms including increased productivity, improved quality and improved customer service. Employee benefits from teams include better quality of work life and reduced stress. Teams result in reduced scrap fewer errors, fewer remuneration claims and reduced turnover and absenteeism. Team benefits management through organizational enhancements. 8

Stages of Team Development (TUCKMANS MODEL) Most groups followed a specific sequence in their evolution and we thought that we knew what that sequence was. But we were wrong .Recent research indicates that there is no standardized pattern of group development. Let us review this by the Five Stage Model. It was believed that groups pass through a standard sequence of five stages. These five stages have been labeled as forming, storming, norming, performing and adjoining. Forming: The first stage in, group development characterized by much uncertainty. The individual's behavior is driven by a desire to be accepted by the others, and avoid controversy or conflict. Serious issues and feelings are avoided, and people focus on being busy with routines, such as team organization, who does what, when to meet, etc Storming: The stage in, group development characterized by intragroup conflict. The team addresses issues such as what problems they are really supposed to solve, how they will function independently and together and what leadership model they will accept. Team members open up to each other and confront each other's ideas and perspectives Norming: The third stage in, group development characterized by close relationships and cohesiveness. The team manages to have one goal and come to a mutual plan for the team at this stage. Some may have to give up their own ideas and agree with others in order to make the team function. In this stage, all team members take the responsibility and have the ambition to work for the success of the team's goals. Performing: The fourth stage in, group development when the group is fully functional. These highperforming teams are able to function as a unit as they find ways to get the job done smoothly and effectively without inappropriate conflict or the need for external supervision. Team members have become interdependent. By this time, they are motivated and knowledgeable. The team members are now competent, autonomous and able to handle the decision-making process without supervision. Adjourning: The final stage in, group development by temporary groups, characterized by concern with wrapping up activities rather than task performance. TEAM DECISION MAKING Effective decision making is especially important on teams of knowledge workers considering That decisions are often the product of these teams. Unfortunately, many problems can occur that reduce the quality of decisions and/or increase decision-making time. The purpose of this paper is to review the literature on team decision making and relate it to knowledge work. Subjects covered includes the benefits of effective decision making, potential problems of team decision making, possible solutions to those problems and implications for practitioners, and roles in team decision making. Issues and Solutions in Team Decision Making Conformity occurs when a team member fails to challenge a decision that he or she knows is incorrect. Although strong norms and systematic decision making processes can help achieve Coordination, they also tend to produce uniformity and conformity which leads to reduced creativity and decreased decision quality Conflict Since dealing with differences is an important part of individuals working together, the topic of conflict in teams is a huge area of research. In fact, many believe that conflict management is another major contributing factor of team effectiveness. The entire subject of conflict will not be broached here; instead, this section will address conflict as it relates to team decision making. The literature delineates two types of conflict: cognitive and affective. Cognitive conflict occurs with differences in perspectives and judgments, while affective conflict is emotional and personal. cognitive conflict was beneficial to team decision quality while affective conflict was destructive. Affective conflict led to poor decisions and low levels of decision cceptance. Polarization in teams refers to the finding that groups tend to make more extreme decisions than do individuals 9

Self-limiting behavior is the tendency of individuals in groups to either withdraw or limit their contributions to the groups decision-making Groupthink Groupthink is defined as a mode of thinking that people engage in when they are deeply involved in a cohesive in-group...members striving for unanimity override their motivation to realistically appraise alternative courses of action...a deterioration of mental efficiency, reality testing, and moral judgment that results from in-group pressures). Groupthink often occurs in cohesive groups (such as teams) when internal pressures towards conformity interfere with constructive critical analysis and ultimately leads to dysfunctional decisions. MODULE 3 - LEADERSHIP

"Leadership is the ability of a superior to influence the behavior of a subordinate or group and persuade them to follow a particular course of action." Chester Bernard Characteristics of Leadership 1. Authenticity "After years of studying leaders and their traits, I believe that leadership begins and ends with authenticity 2. Desire to Serve Others "Authentic leaders genuinely desire to serve others through their leadership." 3. Empowering People "They are more interested in empowering the people they lead to make a difference than they are in power, money, or prestige for themselves." 4. Guided by Heart, passion and compassion "They are as guided by qualities of the heart, by passion, and compassion, as they are by qualities of the mind." 5. Recognize their shortcomings "Authentic leaders use their natural abilities, but they also recognize their shortcomings and work hard to overcome them." 6. Lead with Purpose "They lead with purpose, meaning and values." 7. Build Enduring Relationships "They build enduring relationships with people." 8. Clear Where They Stand "Others follow them because they know where they stand." 9. Refuse to Compromise "When principles are tested, they refuse to compromise." 10. Develop Themselves "Authentic leaders are dedicated to developing themselves because they know that becoming a leader takes a lifetime of personal growth." Leadership Theories 1. Trait Theories: Similar in some ways to "Great Man" theories, trait theories assume that people inherit certain qualities and traits that make them better suited to leadership. Trait theories often identify particular personality or behavioral characteristics shared by leaders. If particular traits are key features of leadership, then how do we explain people who possess those qualities but are not leaders? This question is one of the difficulties in using trait theories to explain leadership. 2. Contingency Theories: Contingency theories of leadership focus on particular variables related to the environment that might determine which particular style of leadership is best suited for the situation. According to this theory, no leadership style is best in all situations. Success depends upon a number of variables, including the leadership style, qualities of the followers and aspects of the situation. 3. Situational Theories: Situational theories propose that leaders choose the best course of action based upon situational variables. Different styles of leadership may be more appropriate for certain types of decision-making.

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4. Behavioral Theories: Behavioral theories of leadership are based upon the belief that great leaders are made, not born. Rooted in behaviorism, this leadership theory focuses on the actions of leaders not on mental qualities or internal states. According to this theory, people can learn to become leaders through teaching and observation. 5. Participative Theories: Participative leadership theories suggest that the ideal leadership style is one that takes the input of others into account. These leaders encourage participation and contributions from group members and help group members feel more relevant and committed to the decision-making process. In participative theories, however, the leader retains the right to allow the input of others. LEADERSHIP STYLES Four of the most basic leadership styles are: --Autocratic,--Bureaucratic -Laissez-faire, Democratic Autocratic Leadership Style This is often considered the classical approach. It is one in which the manager retains as much power and decision-making authority as possible. The manager does not consult employees, no are they allowed to give any input. Employees are expected to obey orders without receiving any explanations. The motivation environment is produced by creating a structured set of rewards and punishments. Yet, autocratic leadership is not all bad. Sometimes it is the most effective style to use. These situations can include: -New, untrained employees who do not know which tasks to perform or which procedures to follow Bureaucratic Leadership Style Bureaucratic leadership is where the manager manages by the book Everything must be done according to procedure or policy. If it isnt covered by the book, the manager refers to the next level above him or her. This manager is really more of a police officer than a leader. He or she enforces the rules. Democratic Leadership Style The democratic leadership style is also called the participative style as it encourages employees to be a part of the decision making. The democratic manager keeps his or her employeinformed about everything that affects their work and shares decision making and problem solving responsibilities. This style requires the leader to be a coach who has the final say, but gathers information from staff members before making a decision. Democratic leadership can produce high quality and high quantity work for long periods of time. Many employees like the trust they receive and respond with cooperation, team spirit, and high morale Laissez-Faire Leadership Style The laissez-faire leadership style is also known as the hands-off style. It is one in which the manager provides little or no direction and gives employees as much freedom as possible. All authority or power is given to the employees and they must determine goals, make decisions, and resolve problems on their own. Functions of leadership The five important functions of leadership are as follows:1) To develop team work 2) To act as a representative of the work-group 3) To act as a counsellor of the people at work 4) Time management 5) Proper use of power Qualities of a Good Leader 1) A leader should be Commendable and Exemplary 2) Good leader is always enthusiastic about the cause of the people 3) A leader believes in discipline 4) A leader has excellent logical and analytical skills 11

5) A leader should always focus towards his goals, what he/she has envisioned for and promised to his people 6) A great leader is proactive and committed to excellence 7) A leader inspires his team to achieve target and lead them to success 8) A good leader is the one who can give people voice and direction. 9) A leader should be tolerant of uncertainty and should always remain tranquil, composed and persistent to his/her goals. Importance of Leadership Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points justify the importance of leadership in a concern. 1. Initiates action-Leader is a person who starts the work by communicating the policies and plans to the subordinates the work actually starts. 2. Motivation- A leader proves to be playing an incentive role in the concerns working. He motivates the employees with economic and non-economic rewards and thereby gets the work from the subordinates. 3. Providing guidance- A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they have to perform their work effectively and efficiently. 4. Creating confidence- Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems. 5. Building morale- Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals. 6. Builds work environment- Management is getting things done from people. An efficient work environment helps in sound and stable growth. Therefore, human relations should be kept into mind by a leader. He should have personal contacts with employees and should listen to their problems and solve them. He should treat employees on humanitarian terms. 7. Co-ordination- Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper and effective coordination which should be primary motive of a leader. MODULE 4 - MANAGEMENT FUNCTIONS Planning: Planning is concerned with the future impact of today's decisions. It is the fundamental function of management from which the other four stem. The need for planning isoften apparent after the fact. However, planning is easy to postpone in the short-run. Postponement of planning especially plagues labor oriented, hands on managers. Planning is important at all levels of management. However, its characteristics vary by level of management Planning TerminologyThe key terms are defined as follows: Mission An organization's reason for being. It is concerned with scope of the business and what distinguishes this business from similar businesses. Mission reflects the culture and values of top management. Objectives Objectives refine the mission and address key issues within the organization such as market standing, innovation, productivity, physical and financial resources, profitability, management and worker performance and efficiency. They are expected to be general, observable, challenging, and untime 12

Development of tactics is a fifth level of planning. Tactics, the most specific and narrow plans, describe who, what, when, where and how activities will take place to accomplish a goal. Strategic Planning Strategic planning is one specific type of planning. Strategies are the outcome of strategic planning. Strategies are major plans that commit large amounts of the organization's resources to proposed actions, designed to achieve its major objectives and goals. Strategic planning is the process by which the organization's strategies are determined In the process, three basic questions are answered: 1. Where are we now? 2. Where do we want to be? 3. How do we get there? The "where are we now?" question is answered through the first three steps of the strategy formulation process: (1) perform internal and external environmental analyses, (2)review vision, mission and objectives, and (3)determine SWOT: Strengths, Weaknesses, Opportunities and Threats. SWOT analysis requires managers to be honest, self-disciplined and thorough. Going on to strategy choices without a comprehensive SWOT analysis is risky. Strengths and weaknesses come from the internal environment of the firm. Strengths can be exploited, built upon and made key to accomplishment of mission and objectives. Strengths reflect past accomplishments in production, financial, marketing and human resource management. Weaknesses are internal characteristics that have the potential to limit accomplishment of mission and objectives Opportunities and threats are uncontrollable by management because they are external to the firm. Opportunities provide the firm the possibility of a major improvement. Threats may stand in the way of a firm reaching its mission and objectives. Organizing:Organizing is establishing the internal organizational structure of the business. The focus is on division, coordination, and control of tasks and the flow of information within the organization. Managers distribute responsibility and authority to job holders in this function of management. Organizational StructureEach organization has an organizational structure. By action and/or inaction, managers structure businesses. Specifically, they decide: 1. Division of labor 2. Delegation of authority 3. Departmentation 4.Span of control 5. Coordination Division of Labor Division of labor is captured in an organization chart, a pictorial representation of an organization's formal structure. An organization chart is concerned with relationships among tasks and the authority to do the tasks. Eight kinds of relationships can be captured in an organization chart: 1. The division/specialization of labor 2. Relative authority 3. Departmentation4. Span of control 5. The levels of management 6. Coordination centers 7. Formal communication channels8. Decision responsibility Organization charts have important weaknesses that should be of concern to managers developing and using them: 1. They may imply a formality that doesn't exist. 2. They may be inconsistent with reality. 3. Their usual top down perspective often minimizes the role of customers, front-line managers and employees without management responsibilities. 4. They fail to capture the informal structure and informal communication. 5. They often imply that a pyramidal structure is the best or only way to organize. 6. They fail to address the potential power and authority of staff positions compared with line positions. Delegation of Authority Authority is legitimized power. Power is the ability to influence others. Delegation is distribution of authority. Delegation frees the manager from the tyranny of urgency. Delegation frees the manager to use his or her time on high priority activities. Note that delegation of authority does not free the manager from accountability for the actions and decisions of subordinates. Delegation of authority is guided by several key principles and concepts: 13

Exception principle - Someone must be in charge. A person higher in the organization handles exceptions to the usual. The most exceptional, rare, or unusual decisions end up at the top management level because no one lower in the organization has the authority to handle them. Scalar chain of command - The exception principle functions in concert with the concept of scalar chain of command - formal distribution of organizational authority is in a hierarchial fashion. The higher one is in an organization, the more authority one has. Decentralization - Decisions are to be pushed down to the lowest feasible level in the organization. The organizational structure goal is to have working managers rather than managed workers. Parity principle - Delegated authority must equal responsibility. With responsibility for a job must go the authority to accomplish the job. Span of control - The span of control is the number of people a manager supervises. The organizational structure decision to be made is the number of subordinates a manager can effectively lead. The typical guideline is a span of control of no more than 5-6 people. However, a larger span of control is possible depending on the complexity, variety and proximity of jobs. Unity principle - Ideally, no one in an organization reports to more than one supervisor. Employees should not have to decide which of their supervisors to make unhappy because of the impossibility of following all the instructions given them. Line and staff authority - Line authority is authority within an organization's or unit's chain of command. Staff authority is advisory to line authority Departmentation Departmentation is the grouping of jobs under the authority of a single manager, according to some rational basis, for the purposes of planning, coordination and control. The number of departments in an organization depends on the number of different jobs, i.e., the size and complexity of the business. Informal Structure The formal structure in each organization that has been put in place by management has an accompanying informal structure. Management does not and cannot control the informal structure. The informal structure has no written rules, is fluid in form and scope, is not easy to identify, and has vague or unknown membership guidelines. Staffing Part I MEANING The term staffing is concerned with the recruitment, selection, placement, training, growth and development of all the members of the organization. It is defined as the process involved in identifying, assessing, placing, evaluating and developing individuals at work. In the words of Kontz and ODonnell staffing can be defined as filling positions in the organizational structure through identifying work force requirements, inventorying the work force, recruitment, section, placement, promotion, appraisal, compensation and training people. Heavy Investment Procurement of human resources involve investment in terms of selection, training and development costs. This investment has divers effects, varying with the quality of the persons, the functions performed, and the level of the organization structure at which they work. 1. Inter-related effort The usefulness of the person in an enterprise depends on the manager under whom they work and the facilities made available as well as other person or persons who assist him. For example, Sri Ramesh is a shop floor manager in a factory. His efficiency on work will depend on his own competencies as well as that of people under whom he is working as well as his subordinates. 2. Human resources as assets 14

The staffing function gains its importance when it is understood that people are the most valuable assets and resources of the organization. Competent people are required to operate all other physical assets which otherwise remain inactive. 3. Long term effect The investment in human resources is of long term effect. The man power produced are to be deployed continuously in the organization. As long as they continue to work, human force use resources and engage in transformation of the organization. 4. Loss may surpass investments While comparing material resources with human resources, a notable distinction is that costs of material resources used cannot be negative. This means loss may be up to the cost of such raw materials but this is not so in case of money invested in human resources. 1. Man Process Planning: Man power planning is concerned with forecasting the future man power needs of the organization for various categories of activities over a specified period. The process of manpower planning can be divided into two parts. One is an analysis for determining the quantitative needs of the organization and other is the qualitative analysis to determine what qualities and characteristics are required for performing a job. The former is called the quantitative aspect of manpower planning in which management tries to ensure a fair number of personnel in each department and at each level. The second aspect is known as a qualitative aspect to manpower planning where in management tries to get a proper fit between the job requirements and the requirements on the part of personnel in terms of qualification, experience and personality orientation. The qualitative aspects thus involves job analysis which has two outcomes (1) Job description and (ii) Job specification. Job analysis is the study of job content to determine human requirements. An organization had to undertake data entry operations as part of its documentation work. They require Data Entry Operators with proficiency in computers and adequate typing skills. Here the job to be undertaken was computerized data entry of letters, drafts and reports. The skills required would call for candidates with diploma in computer applications and proficiency in typing and documentation.. In our example job description statement would illustrate the computerized documentation work to be undertake its nature and implications and job specification would state the minimum requirements to do the job ie; diploma in computer applications, computerized data entry skills etc. 2. Recruitment Recruitment is concerned with the identification of sources from where the personnel can be employed and motivating men to offer themselves for employment. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. Recruitment of staff can be from within the organization as well as from outside. Recruitment process involves five elements viz (1) a recruitment policy (2) a recruitment organization (3) a forecast of man power requirements (4) the development of manpower resources and (5) different techniques for utilizing these resources and a method for assessing the recruitment programme. 3. Selection Selection is a deliberate effort of the organization to select a fixed number of personnel from a large number of applicants . Recruitment forms base for selection. Selection is essentially a negative process as it involves elimination from a lot in order to select the most suitable candidate. 4. Placement and Orientation

15

Once the process of selection is over, the selected candidates are directed to occupy their position in the organization. Placement refers to putting the right person on the right job. Orientation means introducing every selected employees to his fellow employees. RECRUITMENT Recruitment is the process of attracting qualified personnel, matching them with specific and suitable jobs, and assigning them to these jobs. Its aim is to develop and maintain adequate man power resources upon which an organization can depend, when it needs additional employees. It is an activity of getting interested applicants and providing a pool of prospective employees so that the management can select the right person for the right job from this pool. The process of recruitment involves identifying the sources from which recruits can be selected and encouraging them to apply for the job. Definition In the words of Edwin B Flippo recruitment is the process of searching for prospective employees and stimulating them to apply for job in the organization. Source of Recruitment There are mainly two sources of Recruitment. They are : i. Internal Sources ii. External Sources Different sources of resources is given in figure 6.1 Internal Sources of Recruitment Transfer is concerned with the shifting an employee from one job to another having similar status and responsibility Promotion When a position falls vacant, it is filled from among those who are working in the same line of activity at the lower level. Recalling the laid-off employees Lay off refers to the state where employees are temporarily terminated from work for want of inputs like raw material and power, shortage of such inputs forces the employers to stop work and terminate employees under a general condition that they will be recalled when work re External Sources of Recruitment i. Advertisement Advertisement is the most effective means to search potential employees from outside the organization. Employment advertisement in journals newspapers, bulletins etc. is quite common in our country. By means of advertisement contains brief statement of the nature of jobs, the types of people required and procedure for applying for these jobs. ii. Personnel consultants Some specialized agencies in the form of personnel consultancy services have developed in recent times. They undertake the work of recruiting personnel on behalf of the employers. The consultants are very helpful in procuring top and middle level executives. iii. Jobbers and Contractors This method is very popular in our country for hiring skilled and semi-skilled workers. Many industries in India secure their manpower requirements through jobbers and contractors. The jobbers and contractors keep themselves in touch with a large number of workers and bring them at the places where they are required. 16

iv. Factory gate The concept of gate hiring is to select people who approach on their own for employment in the organization. This happens mostly in the case of unskilled and semi-skilled workers. Gate hiring is quite useful and convenient method at the initial stage of the organization when large number of such people may be required by the organization. A large number of job seekers assemble everyday at the gate of the factory. Usually, the first line superiors or foreman is deputed to select suitable workers out of them. v. University or Colleges Many organizations conduct preliminary search of prospective employees by conducting interviews at the campus of various institutes, universities and colleges. This source is quite useful for selecting people to managerial posts, trainees, technical supervisor, scientist, and technicians. The organization hold preliminary interviews on the campus on predetermined date and candidates found suitable are called for further interviews at specified places. vi. Waiting list Most employers maintain a data base with details of applications received from causal applicants as well as applicants who were not considered earlier. Such applications may be treated as a source of recruitment, when vacancies arise in the organization. vii. Employment Exchanges There is a network of employment exchanges in the country which is run by the Government. It is an important source of recruitment of personnel. Job seekers get themselves registered with these exchanges. The names of these persons will be supplied to business concerns on the basis of their requisition. viii. Recommendations of the present employees Some employers treat the recommendations of their present employees as a useful source of recruitment. The present employees who knows the organization an the job is required to recommend a person closely known to him for consideration of appointment. This ensures reliability and suitability for the post. At the same time it helps in booting the morale of the existing employees for the faith reposed in them. ix. Labour Unions In many organizations, labour unions are used as source of manpower supply at the lower levels. Labour unions are asked to make recommendations for employment of people as a matter of goodwill and co-operation. TRAINING AND DEVELOPMENT Training Training means to impart information and skills through instructions. It is the method of increasing the knowledge , skills and aptitudes of an employee for performing a particular job. Its purpose is to enable them to do their jobs better. Training makes newly appointed worker fully productive with minimum time. A capable and competent person cannot do the best on his job unless he is systematically trained. Training is necessary for new as well as existing employees. Development 17

While training imparts specific skills to the trainee, development envisages the overall formation of an individual. It is undertaken for the wholistic improvement of an individual, both as a member of the organization and a responsible citizen of the society. The developmental initiates in an organization include personality development, motivation for growth, career planning etc. Need of Training Training is beneficial not only to the employers but also to the employees. The success or failure of an organization largely depends on the efficiency of the personnel in an organization. Training helps in sharpening and enhancing employees skills, which make them more effective on their job. It reduces wastages and thereby contributes ton profitability of the enterprise. The significance of training is discussed under the following heads. 1. Quick learning Training helps to reduce the learning time necessary to attain an acceptable level not learn by observing others or through a trial and error method if formal training programmes exist in the organization. The qualified instructions will help the new employees to acquire the skills and knowledge to so a particular job within a short span of time. 2. Higher Productivity Enhanced skills and competencies acquired through training usually helps in increasing both quantity and quality of the output. Training is also of great help to the existing employees. It helps them to increase their level of performance on their present job assignments. 3. Less Supervision If the employees are given adequate training, the need for supervision is minimum. Training does not eliminate the need for supervision, but it reduces the need for detailed and constant supervision. A well-trained employee is self-reliant in his work because he knows what to do and how to do. With reduced supervision, a manager can increase his span of management. 4. Higher Morale The morale of employee increases when they are given proper training. Morale is a mental condition of an individual or group, which determines their willingness to co-operate. A common objective of any training programmes is to mould employees attitudes to achieve support for organizational activities and to obtain better co-operation and greater loyalty. With the help of training, dissatisfactions, complaints, absenteeism and labour turnover can be reduced. 5. Better Management A manager can make use of training to manage in a better way. Training the employees can assist him in his managerial functions. For instance, maintaining higher standards of quality, building a satisfactory organization structure, delegating authority and stimulating employees are all made possible through an effective training plan. 6. Economical Operations Trained personnel will be able to make better and economical use of materials and equipments thereby reducing wastage. In addition, the rate of accidents and damage to machinery and equipment will be minimum. These factors will minimize the cost of production. 7. Benefits to employees themselves As employees acquire more knowledge and skills from training, this increases their market value and earning power. By securing such skills, they enhance their value to the employer and at the same time ensure job security for themselves. Training helps in securing promotion and career growth. 18

Training Methods Training methods are mainly classified into two viz.1. On the job training and 2.Off the job training. On the job training On the job training methods focuses on learning while and individual is actually engaged in work. Such training methods place the employees in actual work situations and give them hands on experience on the job. Here the employees learn by doing. It includes job rotation, apprenticeship, coaching, vestibule training, committee assignments etc. Off the job training In off the job training, a trainee has to leave his place of work and devote his entire time for training purpose. During this period, the trainee does not contribute anything to the organization. These methods can be followed wither in the organization itself or the trainee may be sent away for training courses organized by specialized institutions. These methods include conferences, role-playing, special courses, sensitivity training, internship etc. Following are the main types of training, which are adopted by organizations. 1. Apprenticeship programmes Apprenticeship training programmes are directed more towards education than merely on the vocational training. Under this, both knowledge and skills in doing a job or services of related jobs are imparted. Under apprenticeship training , a trainee is put under supervision of a person who may be quite experienced in his field. Such training becomes necessary when people enter a job, which involves skilled trades like electrical works, mining operations etc. 2. Vestibule training In vestibule training, employees taken through a short course under working conditions more or less same as that of actual shop floor, sales or office conditions. Under this method, people will develop and learn skills while working in situations similar to what they will face after they are put on actual jobs. Many organizations establish training centre to train people for skilled work particularly in the production department. Vestibules are training schools where complex work situations are created and trainees exposed to such conditions. 3. Job rotation Job rotation, a person is given job in various sections or departments of the organization. The major objective of job rotation training is to broaden the background of the trainee. He can learn the working of various sections and departments of the originations, which helps in developing integrated knowledge of the organizational functioning. 4. Internship training Internship training programmes have become popular these days because of co-operation between employers and vocational and professional institutes. Under this method, the vocational and professional institutes enter into an agreement with business enterprise for providing practical knowledge to its students. It is meant for such vocations where advanced theoretical knowledge is to be backed by practical experience on the job. COMPENSATION The term compensation denotes what the employees receive in return for their efforts contributed to the organization. Three types of rewards are offered to the employees for their services such as pay, 19

benefits and incentives. Pay refers to the wages and salaries that the employees receive periodically. Benefits are indirect type of rewards such as insurance, medical benefits, recreational facilities, etc. Incentives It is undoubtedly a fact that incentives are a motivating factor for employees to perform efficiently and effectively. To motivate employees to be more productive, companies follow a number of incentive plans. Incentives may be in the form of bonus of premium. Bonus means the extra payment to workers for their good performance such as reduction in cost and time, improvement in quality etc. Premium is the extra benefit to the workers or employees as a result of higher output and betterment in the overall performance of the organization. Usually, Rate of bonus and premium is fixed on an agreed basis between management and workers. Generally, there are two types of incentives such as monetary incentives and non monetary incentives. Monetary incentives Monetary incentives involve payment in cash or in kind or in both. Following are the various types of monetary incentives. 1. Profit sharing Now a days profit sharing has become a controversial issue in wages and incentive administration. Labour is the most import element among the factors of production. It is their skills, efforts, efficiency, and loyalty that bring profits to the organisation. So they believe that they have right to get a share of surplus profit. The sharing of surplus profit increases the efficiency and morale of the employees. Profit sharing here, implies sharing the profits carned beyond a particular limit fixed. 2. Co-partnership Co-partnership compensates employees in three distinct ways. They get their usual wages, a share in the profits of the company and also a share in the management of the company. The bonus, to which employees or workers are entitled, are given to them in the form of shares. Thus, in this system, employees share the capital as well as profits. This system in an improvement over all other system of wage payment because it offers both profit sharing and control sharing. 3. Bonus It is a reward that is offered on a one-time basis for high performance. The rate of bonus is not fixed. It varies from year to year depending on the performance level of employees, amount of profit earned etc. Bonus may be in cash or in some other form. 4. Suggestion from employees Employees are reward for their valuable suggestions, which relate to increase in profits or reduction in cost. It helps in creating greater employee involvement and commitment towards work. The value of the reward would depend on the monetary worth of the suggestion in terms of cost saved or profits enhanced. 5. Commission s Usually, sales people work under commission basis. They get incentive or reward according to the size of sales volume. Some sales people work on a straight commission basis whereby their pay is entirely determined by their sales volume. Non-monetary incentives :Managers and executives give more importance to social and esteem needs than to money. They value recognition, praise for good work and status more than monetary rewards. Some of the non-monetary incentives are discussed here. 20

1. Good relation with supervisors Cordial and friendly relationship with supervisors enhances commitment to work. It acts as a source of motivation, inspires and stimulates employees to work efficiently and effectively. 2. Making the job challenging Lack of jobs satisfaction may make the work unpleasant and results in loss of interest in the job. Making the job more challenging activates creatively in an individual and this is beneficial to him. 3. Recognition for good work Providing recognition for good work is an immediate reward that has a great value. praise acts as a more powerful incentive than blame. When the employer/ manager recognizes and praises the employees for their good performance, it acts as a strong non-monetary incentive. This recognition helps in improving attitudes of employees and motivates them to perform better. 4. Previous knowledge and experience Knowledge of prior work performance motivates the individuals to produce more. This prior knowledge also facilitates and promotes working as a team by effective communication and problem solving. Those individuals who have previous work experience perform better than those without such experience, acts as a good non-monetary incentive. 5. Participation in management decisionProviding adequate avenues for employees to participate he decision making process is a non-monetary reward to them. Employees participation in management enhances their willingness to work and thereby increases the overall efficiency of the organization. It is necessary to integrate individual and organizational goals to attain the objectives successfully. Directing : Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives. Motivation, the inner force that directs employee behavior, also plays an important role. Highly motivated people perform better than unmotivated people. Motivation covers up ability and skill deficiencies in employees Three ways of looking at motivation are: needs, rewards and effort. The most effective motivation for employees comes from within each employee, i.e., self-motivation. Possible indicators of self-motivation include: past accomplishments in school, sports, organizations and work; stated career goals and other kinds of goals; expertise in one or more areas that shows evidence of craftsmanship, pride in knowledge and abilities, and self-confidence; an evident desire to continue to learn; and a general enthusiasm for life. More effective employer action responds to employee needs, making their work useful to satisfying their needs, helping employees understand the relationship between their contribution to success of the farm and rewards received, and creating an atmosphere of equity and fairness. Performance AppraisaL:No employee escapes performance appraisal. As a minimum, each employee receives informal messages from his or her supervisor and co-workers. The messages may be carefully calculated or emotional outbursts, frequent or infrequent, helpful or hurtful, understood or misunderstood, consistent or inconsistent, fair or unfair. They may improve performance or cause additional performance problems. They may motivate an employee or leave the employee discouraged and disgruntled. Turning performance appraisal into a positive force challenges even the best farm personnel manager. Three steps are necessary: 1. Establish written standards for employee performance 2. Develop both supervisor and employee understanding of these standards 3. Regularly inform employees of how they are performing relative to the established standards 21

Effective performance appraisal moves beyond informal communication but does not exclude it. Planned and formal performance evaluation interviews complement spontaneous informal employer-employee interaction about performance. Performance evaluation is a complex activity. A formal performance evaluation system can be a realistic long-term goal to work toward. In the short-run, farm employers can take helpful steps toward the longrun ideal. In the short-run, the following statements and questions can guide performance evaluation, counseling and planning discussions with each employee: 1. I see the following three things as your most important strengths. 2. I see the following two things for us to work on improving during the next six months. 3. What do you see as your most important strengths? 4. What would you like to learn or work on improving? 5. How should I work on improving? Intermediate steps could include clear communication of expectations for employees, regular feedback to employees about their performance, providing employees opportunity to respond to their supervisor's comments and additional training for employees based on needs identified through performance appraisal. The notion of catching people doing things right should be an important part of employee evaluation and improving performance appraisal. Discipline:High quality farm worker performance requires implementation of carefully made tactical plans. Deviations from the plans by employees results in standards not being met and goals not being accomplished. Managers must deal with employees' deviation from rules, procedures and expected behaviors. Employees coming late to work, not following safety procedures when working alone, not properly cleaning equipment in their rush to get home, and using wrong or wrong amounts of medication are examples of unacceptable behavior that should be addressed rather than ignored. A cautionary note is in order.. This discussion of discipline applies to those cases in which the employee can reasonably be expected to perform or behave according to established standards, norms or rules, i.e., they have been carefully selected, well trained and are regularly evaluated. A disciplined person exhibits the self-control, dedication and orderly conduct consistent with successful performance of job responsibilities. This discipline may come through self-discipline, co-workers or the supervisor/employer. Self-discipline is best and most likely to come from well selected, trained, and motivated people who regularly have feedback on their performance. An employee not performing up to the agreed upon standards or not following the understood rules is subject to punishment, i.e., disciplinary action. Punishing or disciplining employees falls among the least pleasant activities in human resource management. In the short-run, doing nothing or ignoring errant actions and behavior almost always comes easier than taking the needed action. Controlling:Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary Characteristics of process Budget is a plan expressed in monetary terms, prepared and approved prior to a defined period time. It is a written statement containing strategies, polices and programmes to be followed in the future. Budgeting is an integral part of management functions. It is the process of designing, implementing and operating budgets. It also involves forecasting. It is done for the purpose of planning different phases of business operations, co-ordinating activities of different departments and to have effective control over it. The major purposes of budgeting are: 1. To express clearly the goals and expectations of the firm. 2. To communicate it to all concerned for the purpose of implementing it. 3. To provide a detailed plan of action for reducing uncertainty. 22

4. To co-ordinate the activities and efforts. 5. To provide a means of measuring and controlling the performance on the basis of which corrective action can be taken. Budgeting procedure involves there phases such as 1. Pre-planning, 2. Budget preparation, and 3. Control of operations. 1. Pre-planning : Pre-planning is the initial work for providing a initial work for providing a frame work for the preparation of budget. An analysis of the objectives and goals of the firm, previous experience and the current business environment are done at this stage. 2. Budget preparation : Budget preparation is done in accordance with the programmes of different departments meant for the accomplishment of the objectives and goals. 3. Control of operations : it involves the preparation of performance reports and the comparison of the performance against the budgets showing separately the variances or departure of actual and budgets. Meaning and importance of capital budgeting. Capital budgeting is a managerial technique of planning capital expenditure in accordance with the objectives of the firm. Capital budget involves large sum of funds and have long term implications. It estimates the expected cash flows spread over a long period which involve a great degree of uncertainty. Capital budgeting is probably the most important area of decision making for financial manager because it is in respect of planning the fund requirements, allocating the funds and controlling its uses. Special care should be made taken in making such decisions because of the following reasons: 1. Long term implications: Capital budgeting decisions have long term implications. If affect the future profitability and growth of the firm. A wrong decision may endanger the very survival of the firm. Both inadequate and excessive investments in fixed assets may create problems in the form of heavy operating costs and loss of market share. 2. Irreversible decisions: Capital budgeting decisions involve heavy investment in fixed assets and care irreversible. Once implemented, such decisions can be scrapped only at huge losses. It is very difficult to find market for the second hand capital goods and their conversion into other projects may not be possible. 3. Affect future cost structure: Through capital budgeting decisions a firm commits itself to a sizable amount of fixed costs in terms of wages, salary, rent of building and so on. If such decisions become unsuccessful or fetch a lesser profits, the form will have to bear the fixed costs. 4. Competitive position: These decisions have a bearing on the competitive position of the firm. They enable the firm to create value added products with lesser costs which lead to profit and ultimately with a competitive position in the market. MODULE 5 - ORGANIZATIONAL POLITICS What is organizational culture? A single definition of organizational culture has proven to be very elusive. No one definition of organizational culture has emerged in the literature. One of the issues involving culture is that it is defined both in terms of its causes and effect. For example, these are the two ways in which cultures often defined. 23

1. Outcomes- Defining culture as a manifest pattern of behavior 2. Process- Defining culture as a set of mechanisms creating cross individual behavioral consistency Functions of organizational culture 1. Behavioral control 2. Encourages stability 3. Provides source of identity Draw backs of culture 1. Barrier to change and improvement 2. Barrier to diversity 3. Barrier to cross departmental and cross organizational cooperation 4. Barrier to mergers and acquisitions There are four basic ways in which a culture, or more accurately members of a reference group representing a culture, creates high levels of cross individual behavioral consistency. There are: Social Norms:-Social norms are the most basic and most obvious of cultural control mechanisms. In its basic form, a social norm is simply a behavioral expectation that people will act in a certain way in certain situations. Norms (as opposed to rules) are enforced by other members of a reference group by the use of social sanctions. Norms have been categorized by level. A. Peripheral norms are general expectations that make interactions easier and more pleasant. B. Relevant norms encompass behaviors that are important to group functioning. Violation of these norms often results in non-inclusion in important group functions and activities C. Pivotal norms represent behaviors that are essential to effective group functioning What is a value? Any phenomenon that is some degree of worth to the members of giving groups: The conception of the desirable that establishes a general direction of action rather than a specific objective. 1. Organisational culture is same as organisationalclimate :In management literature there is often ambiguity about the two concepts organisational culture and organisational climate. As explained earlier, organisational culture is a macro phenomenon which refers to the patterns of beliefs, assumptions, values, and behaviours reflecting commonality in people working together. However, organisational climate is a micro phenomenon and reflects how employees in an organisation feel about the characteristics and quality of culture like morale, goodwill, employee relations, job satisfaction, commitmrnt at the organisational, department or unit level. It refers to the psychological enviornment in which behaviour of organisational members occurs. It is a relatively persistent set of perceptions held by organisational members about the organisational culture. Another viewpoint about climate is that various variables get subsumed under the concept of climate, whereas has unique indicators like symbols, rites, myths, and stories. 2. Culture is same as groupthink :Since culture refers to shared assumptions and beliefs, it is likely to cause confusion. Groupthink refers to group members hiding any differences in how they feel and think and behave in a certain way. The phenomenon of groupthink is mostly used in a face to face situation when dealing with small groups. Culture, on the other hand, is a much larger phenomenon characterised by historical myths, symbols, beliefs, and artifacts. 3. Culture is same as organisation :Culture is a result of sustained interaction among people in organisations and exists commonly in thoughts, feelings, and behaviour of people. Organisations on the other hand, consist of a set of expectations and a system of reward and punishment substained by rules, regulations, and norms of behaviour. 4. Culture is a social structure :Social structures in various collectives exhibit tangible and specific ways in which people relate to one another overtly. However, culture operates on a system of unseen, 24

abstract, and emotionally loaded forms which guide organisational members to deal with their physical and social needs. NATURE OF ORGANISATIONAL CULTURE The culture of an organisation may reflect in various forms adopted by the organisation. These could be : he physical infrastructure T outine behaviour, langauge, ceremonies R ender equality, equity in payment G ominant values such as quality, efficiency and so on D hilosophy that guides the organisations policies towards it employees and customers like customer P first and customer is king, and the manner in which employees deal with customers. Individually none of these connote organisational culture, however, together, they reflect organisational culture. Although organisational culture has common properties, it is found that large organisations have a dominant culture and a number of sub cultures. The core values shared by the majority of the organisational members constitute the dominant culture. Therefore, whenever one refers to the culture of an organisation one actually talks about the dominant culture of an organisation one actually talks about the dominant culture. Subcultures within an organisation are a set of shared understandings among members of one group/department/geographic operations. For example, the finance department of an organisation may have a sub culture which is unique to this department visavis other departments. This means that this department will not only have the core values of the organisations dominant culture but also some unique values. If an organisation does not have a dominant culture and is comprised only of various sub cultures, its effectiveness would be difficult to judge and there will be no consistency of behaviour among departments. Hence, the aspect of common or shared understanding is an essential component of organisational culture. Also, organisational culture exists at various levels. LEVELS OF ORGANISATIONAL CULTURE 1. At Level One the organisational culture can be observed in the form of physical objects, technology and other visible forms of behaviour like ceremonies and rituals. Though the culture would be visible in various forms, it would be only at the superficial level. For example, people may interact with one another but what the underlying feelings are or whether there is understanding among them would require probing. 2. At Level Two there is greater awareness and internalisation of cultural values. People in the organisation try solutions of a problem in ways which have been tried and tested earlier. If the group is successful there will be shared perception of that success, leading to cognitive changes turning perception into values and beliefs. 3. Level Threerepresents a process of conversion. When the group repeatedly observes that the method that was tried earlier works most of the time, it becomes the preferred solution and gets converted into underlying assumptions or dominant value orientation. The conversion process has both advantages. The advantages are that the dominant value orientation guides behaviour, however at the same time it may influence objective and rational thinking. These three levels range on a scale of superficial to deeply embedded. As cultural symbols get converted to shared assumptions, they move from a superficial level to a real internationalised level

PATTERNS OF ORGANISATIONAL CULTURE Types of Organizational Culture 25

Organisational culture can vary in a number of ways. It is these variances that differentiate one organisation from the others. Some of the bases of the differentiation are presented below : 1. Strong vs weak culture :Organisational culture can be labelled as strong or weak based on sharedness of the core values among organisational members and the degree of commitment the members have to these core values. The higher the sharedness and commitment, the stronger the culture increases the possibility of behaviour consistency amongst its members, while a weak culture opens avenues for each one of the members showing concerns unique to themselves. 2. Soft vs hard culture :Soft work culture can emerge in an organisation where the organisation pursues multiple and conflicting goals. In a soft culture the employees choose to pursue a few objectives which serve personal or sectional interests. A typical example of soft culture can be found in a number of public sector organisations in India where the management feels constrained to take action against employees to maintain high productivity. The culture is welfare oriented; people are held accountable for their mistakes but are not rewarded for good performance. Consequently, the employees consider work to be less important than personal and social obligations. Sinha (1990) has presented a case study of a public sector fertilizer company which was established in an industrially backward rural area to promote employment generation and industrial activity. Under pressure from local communities and the government, the company succumbed to overstaffing, converting mechanised operations into manual operations, payment of overtime, and poor discipline. This resulted in huge financial losses (up to 60 percent of the capital) to the company. 3. Formal vs informal culture :The work culture of an organisation, to a large extent, is influenced by the formal components of organisational culture. Roles, responsibilities, accountability, rules and regulations are components of formal culture. They set the expectations that the organisation has from every member and indicates the consequences if these expectations are not fulfilled CORPORATE CULTURE DEFINITION: Corporate culture is the total sum of the values, customs, traditions, and meanings that make a company unique. Corporate culture is often called "the character of an organization", since it embodies the vision of the companys founders. The values of a corporate culture influence the ethical standards within a corporation, as well as managerial behaviour. Senior management may try to determine a corporate culture. They may wish to impose corporate values and standards of behaviour that specifically reflect the objectives of the organization. In addition, there will also be an internal culture within the workforce. Work-groups within the organization have their own behavioural quirks and interactions which, to an extent, affect the whole system. Corporate culture is a term used to describe the collective beliefs, value systems, and processes that provide a company with its own unique flavour and attitude. Businesses of all sizes possess some type of corporate culture, in that every company has a set of values and goals that help to define what the business is all about. Here are some examples of elements that go into creating and defining a corporate culture. According to Deal and Kennedy corporate culture is based on an interlocking of six elements: history, values and beliefs, rituals and ceremonies, stories, heroic figures and the informal cultural network of storytellers, gossipers, whisperers, spies and priests. Their Culture Types model distinguishes four corporate culture types, based on two elements: Feedback Speed: How quickly are feedback and rewards provided (through which the people are told they are doing a good or a bad job) Degree of Risk: The level of risk taking (degree of uncertainty). The combination of these two elements results in four types of corporate cultures: 26

Tough-Guy Macho Culture (Fast feedback and reward, high risk): Stress results from the high risk and the high potential decrease or increase of the reward. Focus on now, individualism prevails over teamwork. Typical examples: advertising, brokerage, sports. Work-Hard, Play-Hard Culture (Fast feedback and reward, low risk): Stress results from quantity of work rather than uncertainty. Focus on high-speed action, high levels of energy. Typical examples: sales, restaurants, software companies. Process Culture (Slow feedback and reward, low risk): Stress is generally low, but may come from internal politics and stupidity of the system. Focus on details and process excellence. Typical examples: bureaucracies, banks, insurance companies, public services. Bet-Your-Company Culture (Slow feedback and reward, high risk): Stress results from high risk and delay before knowing if actions have paid off. Focus on long-term, preparation and planning. Typical examples: pharmaceutical companies, aircraft manufacturers, oil prospecting companies Types of Corporate Culture: Any large organization that involves a large amount of people working at different tasks will develop a certain culture. The most successful corporations thrive because they have created a culture ideally suited to the tasks they perform. Not every culture would work in every industry. There are several key types of corporate cultures. Aggressive Culture The play culture is most concerned with creativity and finding innovative ways to accomplish tasks. The quickest way to advance within this type of organization is by displaying the most intelligence and coming up with the most useful ideas. This sort of culture works best in fields such as design where large rewards are to be had for the company with the newest approaches. This culture would not work in a more aggressive field. Process Culture The process culture is less concerned with results and more concerned with a regular routine. Rather than feedback on accomplishments most managers will be concerned with the proper way of doing tasks. The quickest way to advance in this culture is by being especially conscientious in following protocol. This sort of culture works poorly in most fields but may be useful in very conservative industries where consistency is most highly valued. How to build corporate culture. To build corporate culture you need a clear vision of how you want your clinic to look and feel and what values you want reflected in your clinic. This vision must be communicated to your team; your team members need to see the connection between this vision and what they do. I would even suggest that you formulate your business and practice vision jointly with your team, so that the vision is a part of them and their daily practice.

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To build corporate culture you, as the practice owner, need to believe in and offer praise and a positive attitude, at all the times. When we praise someone, they want to repeat the experience. When we fail to reinforce employees for doing the right things, they unconsciously say, "There's no benefit to doing this, so why bother". Human beings crave feedback and will avoid situations where they don't get it. Building corporate culture means that you are transparent with information, you explain things to your team, you seek input, and you build trust by doing what you say you are going to do. Consistent, frequent and meaningful communication is fundamental to building positive corporate culture. Recruit and select the right people who embrace the type of culture you are creating. It is important to make this a part of your hiring process by asking questions related to practice values, team values, and personal aspirations. Ask for examples or experiences the person has had in these areas to demonstrate what she/he is saying or espousing. Creating social traditions and bonding opportunities for your team also builds your corporate culture. For example, holding annual staff recognition events. How Important is Culture to a Company? The culture of a company is the quintessential representation of its style. An organizations body and life blood is its most important asset, its people. Any groups culture can be characterized by a selection of the following traits they share: inherent rules of engagementaccepted priorities and methods of interacting both internally and externally founding and binding principles of the corporation socially defined language dress and clothing style Without a well developed corporate culture a business is little more than a managed group of mercenaries. Without culture, a business is likely to blend into the background and fail to stand out to potential customers, collaborative business partners, and to potential leaders/employees. It is clear that having a legendary (or at least reputable) corporate culture is extremely beneficial to any organization. CONCLUSION Many other issues of ethics and organizational communication not explicitly discussed her, illustrate the fact that ethics are integrated into all aspects of organizational life. These include topics such as human resources, whistle blowing, leadership, privacy, diversity, voice, persuasion and coercion, change, power, outcomes, recruitment and socialization, management style, advertising. As noted in the NCA Credo, Questions of right and wrong occur whenever people communicate. This includes the rich communicative context of organizational communication. These efforts to place ethics at the center of the field recognize the link between communication and ethics and implicitly argue for a conceptualization of organization that includes at its core value dimensions.

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ENVIRONMENT MANAGEMENT
MODULE 1 CONCEPT OF SUSTAINABLE GLOBAL DEVELOPMENT Sustainable development is the development that needs of the present without jeopardizing the needs of the future generations. In other words, every generations should leave air, water & soil resources pure &unpolluted. Although it is a difficult propositions, it can be achieved through proper environmental mgt. Sustainable development has three interdependent components, which are as follows: i. Economic development: Utilization of natural resources for cultivation, industrialization, creating job opportunities & raising quality of life. ii. Social development: Providing basic needs like food, clothes, shelter, health, education etc. iii. Environment protection: Providing clean water, air, soil, i.e, safe environment to the present as well as the future generations. To meet the basic requirements of ever increasing population, industrialization is a must,but it results in pollution,environmental degradation &causes ecological imbalances.At the same time ,industrial development cannot be sacrificed as it creates job opportunities,raises the standard of living &solves unemployment problems.So,sustainable development is the only answer. Development can take place if the following concepts are taken care of Control of population growth Reduction in excessive usage of resources &enhancing resource conservation,i.e,continuous use of renewable resources &protection of non renewable resources from wasteage &rapid depletion ECOLOGIAL EQUILIBRIUM Ecology is a branch of science that deals with the interrelationship between biotic &abiotic components of nature as well as with the relationship among the individuals,population & community of the biotic components.The term ecology is derived from the greek words oikos(meaning house)&logos(meaning study of)& is used to denote the relationship between the organisms &their environment. Ecological balance or stability ecosystem of the impiles a balance between the production and consumption of each components of ecosystem. Issues Affecting Ecological Equilibrium Ecological factors In an ecosystem,a living organism is influenced by a large number of environmental facTors are known as eco factors.The ecological factors can be classified into the following : Climatic factors:light,temperature,nature,rainfall,wind,humidity,athmospheric gases,pH. A variation in these factors affects the distribution & life styles of organisims. Topographic factors:altitude,slope&direction of mountain chain &valleys. Edaphic factors: structure,formation&characteristics of different types of soils. Biotic factors: Biotic factors are derived from the interactions between different species of life. The different species mentioned here are plants,micro organisms &animals. Limiting factors:Denote the amount of substances that is either least abundant or over abundant in relation to the need of the living organisms. Population Growth Population growth is the change in a population over time, and can be quantified as the change in the number of individuals of any species in a population using "per unit time" for measurement. In biology, the term population growth is likely to refer to any known organism, but this article deals mostly with the application of the term to human populations in demography. Population exceeding the carrying capacity of an area or environment is called overpopulation. It may be caused by growth in population or by reduction in capacity. Spikes in human population can cause 29

problems such as pollution and traffic congestion, these might be resolved or worsened by technological and economic changes. Conversely, such areas may be considered "underpopulated" if the population is not large enough to maintain an economic system. Between these two extremes sits the notion of the optimum population. Carrying Capacity The term "carrying capacity," long known to ecologists, It "refers to the limit to the number of humans the earth can support in the long term without damage to the environment." ( Giampietro, et. al. 1992 ) Resource depletion is an economic term referring to the exhaustion of raw materials within a region. Resources are commonly divided between renewable resources and non-renewable resources. (See also Mineral resource classification.) Use of either of these forms of resources beyond their rate of replacement is considered to be resource depletion.Resource depletion is most commonly used in reference to the farming, fishing, mining, and fossil fuels. Over-consumption/excessive or unnecessary use of resources Non-equitable distribution of resources Overpopulation Slash and burn agricultural practices, currently occurring in many developing countries Technological and industrial development Erosion Irrigation Mining for oil and minerals Aquifier depletion Forestry Pollution or contamination of resources Global Warming Global warming is the warming near the earth's surface that results when the earth's atmosphere traps the sun's heat. The earth is getting warmer. The changes are small, so far, but they are expected to grow and speed up. Within the next fifty to one hundred years, the earth may be hotter than it has been in the past million years. As oceans warm and glaciers melt, land and cities along coasts may be flooded. Heat and drought may cause forests to die and food crops to fail. Global warming will affect weather everywhere, plants and animals everywhere, people everywhere; humans are warming the earth's atmosphere by burning fuels, cutting down forest, and by taking part in other activities that release certain heat trapping gases into the air. One major cause of global warming is the use of fossil fuels. Fossil fuels like coal, oil, and natural gas that were formed from the remains of plant material deposited during the earth's carboniferous period. We have known for only a few thousand years that coal, oil, and natural gas can be burned to provide energy. It was not until the mid-1800s, however, that we began to burn very large quantities of these fossil fuels. The worldwide consumption of fossil fuel has increased dramatically. Unfortunately, burning fossil fuels is not the only thing that we humans are doing to increase the amount of carbon dioxide in the atmosphere. In many parts of the world today, forests are being destroyed at an alarming rate. Enormous numbers of trees are being cut down, both to provide timber and to clear the land for farming or ranching. This destructive process is called deforestation. In order to clear forests for agriculture, people cut down and burn all the trees in area. When the flames die down, nothing is left but acres of blackened, lifeless countryside. The fire destroys all the plants and kills or drives off the animals. Because there has been little attempt to replant trees in deforested areas, the world's forests are disappearing very quickly. Module 2 - What is the meaning of non renewable resources Non-renewable resources are natural resources which cannot be produced, grown, generated, or used on a scale which can sustain its consumption rate. 30

 These resources often exist in a fixed amount, or are consumed much faster than nature can create them. Fossil fuels (such as coal, petroleum and natural gas) and nuclear power (uranium) are examples. Fossil fuels Fossil fuels, as its name suggests, were formed from the organic remains of prehistoric plants and animals. They are responsible for much of the worlds electric power and total energy demands. These three were formed millions of years ago beneath the earths surface from the decomposed bodies of dead plants and animals. Origin of fossil fuels Fossil fuels are formed by the anaerobic decomposition of remains of organisms including phytoplankton that settled to the sea (or lake) bottom in large quantities under the sea, millions of years ago. Advantages of fossil fuels It has capacity to generate huge amounts of electricity. Fossil fuels are very easy to find. Fossil fuels is used in power plants as they are very cost effective and is also in abundant supply. Power plants that utilize these fuel are very efficient. Power stations that make use of fossil fuel can be constructed in almost any location as large quantities of fuel can be easily brought to the power plants. Disadvantages of fossil fuels Pollution is a major disadvantage of fossil fuels because they give off carbon dioxide when burned causing a greenhouse effect and is responsible for global warming. Some components of fossil fuel produces carbon dioxide when burned compared to other components and also it gives off sulphur dioxide that creates acid rain. Environmentally, the mining of fossils results in the destruction of wide areas of land. Mining this fossil fuel is also difficult and may endanger the lives of miners. Use of these fossils can cause unpleasant odors and some problems especially with transportation. Use of crude oil causes pollution and poses environmental hazards such as oil spills when oil tankers, for instance, experience leaks or drown deep under the sea. Crude oil contains toxic chemicals which cause air pollutants when combusted. Coal Coal is a fossil fuel like oil and gas. These are all formed out of organic matter deposited, decomposed and compressed, storing all the carbon involved under the earth's surface for millions of years Advantages of coal Easily combustible and combustion helping in locomotion and in the generation of electricity and various other forms of energy; Widely and easily distributed all over the world. Good availability Inexpensive Very large amounts of electricity can be generated in one place using coal, fairly cheaply. Disadvantages of coal It is Nonrenewable and fast depleting; high coal transportation costs, especially for countries with no coal resources . It leaves behind harmful byproducts upon combustion, thereby causing a lot of pollution; Mining of coal leads to irreversible damage to the adjoining environment; Nuclear fuel Nuclear fuel is a material that can be consumed to derive nuclear energy. Nuclear fuels are the most dense sources of energy available. 31

 Most nuclear fuels contain heavy fissile elements that can be made to undergo a nuclear fission chain reaction in a nuclear reactor. The most common fissile nuclear fuels are 235U and 239Pu. The actions of mining, refining, purifying, using, and ultimately disposing of these elements together make up the nuclear fuel cycle. Not all nuclear fuels are used in fission reactors. Plutonium-238 and some other elements are used to produce small amounts of nuclear power by radioactive decay in radioisotope thermoelectric generators.

Advantages of nuclear fuel Almost 0 emission (doesn't emit green house gases). It produces electricity without pollution . They can be sited almost anywhere unlike oil which is mostly imported. Does not consume fossil fuels which are getting scarcer and more expensive. A lot of energy from a single power plant can be produced.

Disadvantages of nuclear fuel The problem of how to store the dangerous radioactive waste safely. The risks of a dangerous accident or terrorist attack at the nuclear power plant. risks in mining and transporting the radioactive fuel. the safety risks in transporting the radioactive waste the risks of theft of material, possibly for a nuclear bomb. . Conservation of non renewable resources Use less of them by developing renewable fuels like wind power, sunlight, hydrogen gas (fuel cells), and ethanol. By consumption of petrol or diesel can be minimised by using mass transport modes like buses , trains, bicycles etc.. Four wheelers can be shared with other car owners on a rotational basis. Renewable energy Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable (naturally replenished). In 2008, about 19% of global final energy consumption came from renewables, with 13% coming from traditional biomass, which is mainly used for heating, and 3.2% from hydroelectricity. The share of renewables in electricity generation is around 18%, with 15% of global electricity coming from hydroelectricity and 3% from new renewables. Mainstream forms of Renewable Energy Hydro Power Wind Power Solar Power Biomass Biofuel Geothermal Energy Tidal Energy Hydroelectricity It is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy. Once a hydroelectric complex is constructed, the project produces no direct waste, and has a considerably lower output level of the greenhouse gas carbon dioxide (CO2) than fossil fuel powered energy plants. 32

Wind power Airflows can be used to run wind turbines. Modern wind turbines range from around 600 kW to 5 MW of rated power, although turbines with rated output of 1.53 MW have become the most common for commercial use; the power output of a turbine is a function of the cube of the wind speed, so as wind speed increases, power output increases dramatically. Areas where winds are stronger and more constant, such as offshore and high altitude sites, are preferred locations for wind farms. Typical capacity factors are 20-40%, with values at the upper end of the range in particularly favourable sites. Wind power is renewable and produces no greenhouse gases during operation, such as carbon dioxide and methane. Solar energy Solar energy is the energy derived from the sun through the form of solar radiation. Solar powered electrical generation relies on photovoltaics and heat engines. A partial list of other solar applications includes space heating and cooling through solar architecture, daylighting, solar hot water, solar cooking, and high temperature process heat for industrial purposes. Solar technologies are broadly characterized as either passive solar or active solar depending on the way they capture, convert and distribute solar energy. Active solar techniques include the use of photovoltaic panels and solar thermal collectors to harness the energy. Passive solar techniques include orienting a building to the Sun, selecting materials with favorable thermal mass or light dispersing properties, and designing spaces that naturally circulate air. Biomass Biomass (plant material) is a renewable energy source because the energy it contains comes from the sun. Through the process of photosynthesis, plants capture the sun's energy. When the plants are burned, they release the sun's energy they contain. In this way, biomass functions as a sort of natural battery for storing solar energy. As long as biomass is produced sustainably, with only as much used as is grown, the battery will last indefinitely. Geothermal energy Geothermal energy is energy obtained by tapping the heat of the earth itself, both from kilometers deep into the Earth's crust in some places of the globe or from some meters in geothermal heat pump in all the places of the planet . It is expensive to build a power station but operating costs are low resulting in low energy costs for suitable sites. Ultimately, this energy derives from heat in the Earth's core. The geothermal energy from the core of the Earth is closer to the surface in some areas than in others. Where hot underground steam or water can be tapped and brought to the surface it may be used to generate electricity. Such geothermal power sources exist in certain geologically unstable parts of the world such as Chile, Iceland, New Zealand, United States, the Philippines and Italy Tidal power Tidal power, also called tidal energy, is a form of hydropower that converts the energy of tides into electricity or other useful forms of power. The first large-scale tidal power plant (the Rance Tidal Power Station) started operation in 1966.

Module- 3 - Environmental Ethics

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Environmental ethics is a branch of environmental philosophy, that studies the ethical relationship between human beings and the environment. Environmental ethics has given a new dimension to the conservation of natural resources. Environmental ethics believes in the ethical relationship between human beings and the natural environment. Human beings are a part of the society and so are the other living beings. When we talk about the philosophical principle that guides our life, we often ignore the fact that even plants and animals are a part of our lives. They are an integral part of the environment and hence have a right to be considered a part of the human life. On these lines, it is clear that they should also be associated with our guiding principles as well as our moral and ethical values. Environmental ethics is the discipline in philosophy that studies the moral relationship of human beings to, and also the value and moral status of, the environment and its nonhuman contents. This entry covers: the challenge of environmental ethics to the anthropocentrism (i.e., human-centeredness) embedded in traditional western ethical thinking (2) the early development of the discipline in the 1960s and 1970s; (3) the connection of deep ecology, feminist environmental ethics, and social ecology to politics; (4) the attempt to apply traditional ethical theories, including consequentialism, deontology, and virtue ethics, to support contemporary environmental concerns (5) the focus of environmental literature on wilderness, and possible future developments of the discipline six theoretical approaches to environmental ethics: (1) Anthropocentrism ("nature for man"), (2) Animal Liberation, (3) the attempt to base an environmental ethic on alleged "Rights of Nature", (4) GaiaCentrism which bases environmental values in life communities, and (5) "Biophilia" which attempts to link responsibility to nature with natural-evolutionary facts of "human nature." Anthropocentrism The view that humanity's needs and interests are of supreme and exclusive value and importance in nature, so dominates the thinking of most people in our culture that it is virtually pre-conscious -- an unexamined presupposition of most popular reflections, feelings, and utilization policies regarding wild nature. Anthropocentrism has both a religious and a secular foundation. The rationale and justification of the secular approach to anthropocentrism are somewhat different, yet they lead to essentially the same conclusion as the religious. By this account, life has recently evolved to include a self-conscious, rational, deliberative, personal species -- homo sapiens. Some species have sentient lives; that is, they are capable of feeling and, most significantly morally speaking, of feeling pain. Most species, however, are neither sentient nor conscious. That it is alive or not "matters" not a bit, say, to an insect or to a tree, and perhaps very little to a hummingbird. These species haven't the mental (which is to say the neural) capacity to "care." Life matters most, if not exclusively, to the one species we know of that can contemplate the past, present and future of its own life, and act rationally and deliberatively to affect the condition of that life ANIMAL LIBERATION "animal liberation" is an inappropriate approach to environmental ethics, since it disregards the holistic and ecosystemic view of the natural environment, and of mankind's responsibility toward this environment . GAIA-CENTRISM -- THE LAND ETHIC The word "Gaia," the ancient Greek name of the "Earth Goddess," has been adopted by the British biologist, James Lovelock, to designate his hypothesis that the Earth itself -- its global ecosystem, along with the physical-chemical mechanisms of soil, atmosphere and oceans -- is an integrated, self-regulating system. Hence, "Gaia-Centrism" -- the view that the whole Earth itself, and not any of its component organisms or species or regions in isolation, is the focus of fundamental ethical concern Conservation is getting nowhere because it is incompatible with our Abrahamic concept of Land. We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect. There is no other way for land to survive the impact of 34

mechanized man, nor for us to reap from it the esthetic harvest it is capable, under science, of contributing to culture... HOLISM AND CONTEXTUALISM IN ETHICS Among the essential messages that the biologist and the ecologist offer the moral philosopher is that man evolved from, and remains a member of, the natural community. Man is a natural being and thus remains subject to nature's laws. This is so whether or not we are aware of this dependence or desire it. We have long believed that this was not so; that mankind was of a special and separate order from nature. Recently, while we have acknowledged our natural origins, we have allowed ourselves to believe that with our remarkable growth in scientific knowledge and technical power we could declare our independence from the life community. The hard facts seem to indicate that we can not, and that we will continue to believe otherwise at our great peril MORAL PSYCHOLOGY AND THE ENVIRONMENT After a remarkably extended period of neglect, moral philosophers are once again adopting a psychological perspective and examining the perennial issues of good and bad, right and wrong, obligations and rights, etc., in such psychological terms as needs, fulfillments, moral sentiments, motives, habits, capacities to comprehend and obey moral maxims, problem-solving abilities, moral educability, etc Green Marketing(module-III) Green marketing refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in it or produced and/or packaged in an environmentally friendly way. The obvious assumption of green marketing is that potential consumers will view a product or service's "greenness" as a benefit and base their buying decision accordingly. The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative product an assumption that, in my opinion, has not been proven conclusively. Green marketing involves developing and promoting products and services that satisfy customers want and need for Quality, Performance, Affordable Pricing and Convenience without having a detrimental input on the environment Green marketing is a golden goose. As per Mr. J. Polonsky, green marketing can be defined as, "All activities designed to generate and facilitate any exchange intended to satisfy human needs or wants such that satisfying of these needs and wants occur with minimal detrimental input on the national environment." Green marketing must satisfy two objectives: improved environmental qualityand customer satisfaction. Misjudging either or overemphasizing the former at the expense of the latter can be termed green marketing myopia. According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing. Three keys to successful green marketing Green Marketing isn't just a catchphrase; it's a marketing strategy that can help you get more customers and make more money. But only if you do it right .For green marketing to be effective, you have to do three things; be genuine, educate your customers, and give them the opportunity to participate.

Benefits of Green Marketing 35

Companies that develop new and improved products and services with environment inputs in mind give themselves access to new markets, increase their profit sustainability, and enjoy a competitive advantage over the companies which are not concerned for the environment. Adoption of Green Marketing There are basically five reasons for which a marketer should go for the adoption of green marketing. They are Opportunities or competitive advantage Corporate social responsibilities (CSR) Government pressure Competitive pressure Cost or profit issues Green Marketing Mix

Conclusion Green marketing should not neglect the economic aspect of marketing. Marketers need to understand the implications of green marketing. If you think customers are not concerned about environmental issues or will not pay a premium for products that are more eco-responsible, think again. You must find an opportunity to enhance you product's performance and strengthen your customer's loyalty and command a higher price. Green marketing is still in its infancy and a lot of research is to be done on green marketing to fully explore its potential. (Module; 3)Concerns for environment in; product development, production process. The magnitude of problems has expanded considerably over the past several decades, from pollution and solid waste issues to deforestat-ion, soil erosion and other forms of natural resource depletion and degradation.it is important to understand this shift since not only government actions, but but also the individual acts of several decision-makers in the industrial sector will, in large part,determine wheather or not society is capable of taking effective actions in environmental matters. Product development Development of products in an environment-friendly way is a major concern of people these days, where to get started is the most difficult steps in the initiation of green product development strategy. Several alternatives are available to bring this knowledge into the company. Grooming the individuals within an organization, hiring experienced green professionals, or engaging consulting services are some of the alternatives that help in advancing the knowledge. each alternative has its own benefits and drawbacks. Internal green competency development takes time and choice of the individual is very important.there are two elements to the green competency. (1)The knowledge of the regulation (2)The knowledge of the process steps ,the chemistry and analysis tools required to evaluate the material properties for hazardous material and their proposed green replacements. Larger companies need individuals that would have two set of skills, knowledge about rules and regulations and coordination with the appropriate agencies and material and chemical knowledge. any individuals with these skills is required in an organization. Cleaner production Cleaner production is the continuous application of an integrated,preventive environmental strategy to processes and products to reduce risks to humans and the environment.for the production processes ,cleaner production includes conserving raw material water and energy,eliminating toxic raw materials and reducing the quatity and toxicity of all emissionsand wastes before they leave a process.for product,from stratergy focuses on reducing impacts along the entire life cycle of the product.organisation achieve cleaner production by applying know-how,improving technology and changing attitudes. Strategies for ensuring environmental friendly business operations 36

1. Keep the travel minimum 2. Use web based technology 3. Run a paper- less office 4. When printing is unavoidable ensure a printer is compatible with refillable ink cartridge and has a duplex printing function. 5. Online marketing 6. Turn off equipments. 7. Energy saving light-bulbs. Packaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports, informs, and sells. In many countries it is fully integrated into government, business, institutional, industrial, and personal use. Package labeling or labeling is any written, electronic, or graphic communications on the packaging or on a separate but associated label. The purposes of packaging and package labels,Symbols used on packages and labels,Shipping container labelling, Package development considerations, Environmental considerations5 Packaging machines6 References. The first packages used the natural materials available at the time: Baskets of reeds, wineskins (Bota bags), wooden boxes, pottery vases, ceramic amphorae, wooden barrels, woven bags, etc. Processed materials were used to form packages as they were developed: for example, early glass and bronze vessels. The study of old packages is an important aspect of archaeology. Iron and tin plated steel were used to make cans in the early 19th century. Paperboard cartons and corrugated fiberboard boxes were first introduced in the late 19th century. Packaging advancements in the early 20th century included Bakelite closures on bottles, transparent cellophane overwraps and panels on cartons, increased processing efficiency and improved food safety. As additional materials such as aluminum and several types of plastic were developed, they were incorporated into packages to improve performance and functionality. In-plant recycling has long been common for production of packaging materials. Post-consumer recycling of aluminum and paper based products has been economical for many years: since the 1980s, postconsumer recycling has increased due to curbside recycling, consumer awareness, and regulatory pressure. As of 2003, the packaging sector accounted for about two percent of the gross national product in developed countries. About half of this market was related to food packaging. The purposes of packaging and package labels Label indicates net weight, composition, preparation, etc. The Union Flag, British Farm Standard tractor logo, and British Meat Quality Standard logo are also present Packaging and package labeling have several objectives Physical protection - The objects enclosed in the package may require protection from, among other things, mechanical shock, vibration, electrostatic discharge, compression, temperature, etc. Barrier protection - A barrier from oxygen, water vapor, dust, etc., is often required. Permeation is a critical factor in design. Some packages contain desiccants or Oxygen absorbers to help extend shelf life. Modified atmospheres or controlled atmospheres are also maintained in some food packages. Keeping the contents clean, fresh, sterile and safe for the intended shelf life is a primary function. Containment or agglomeration - Small objects are typically grouped together in one package for reasons of efficiency. For example, a single box of 1000 pencils requires less physical handling than 1000 single pencils. Liquids, powders, and granular materials need containment.

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Information transmission - Packages and labels communicate how to use, transport, recycle, or dispose of the package or product. With pharmaceuticals, food, medical, and chemical products, some types of information are required by governments. Some packages and labels also are used for track and trace purposes. Marketing - The packaging and labels can be used by marketers to encourage potential buyers to purchase the product. Package graphic design and physical design have been important and constantly evolving phenomenon for several decades. Marketing communications and graphic design are applied to the surface of the package and (in many cases) the point of sale display. Security - Packaging can play an important role in reducing the security risks of shipment. Packages can be made with improved tamper resistance to deter tampering and also can have tamperevident[8] features to help indicate tampering. Packages can be engineered to help reduce the risks of package pilferage: Some package constructions are more resistant to pilferage and some have pilfer indicating seals. Packages may include authentication seals and use security printing to help indicate that the package and contents are not counterfeit. Packages also can include anti-theft devices, such as dyepacks, RFID tags, or electronic article surveillance[9] tags that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a means of loss prevention. Convenience - Packages can have features that add convenience in distribution, handling, stacking, display, sale, opening, reclosing, use, dispensing, and reuse. Portion control - Single serving or single dosage packaging has a precise amount of contents to control usage. Bulk commodities (such as salt) can be divided into packages that are a more suitable size for individual households. It is also aids the control of inventory: selling sealed one-liter-bottles of milk, rather than having people bring their own bottles to fill themselves. Symbols used on packages and labels Many types of symbols for package labeling are nationally and internationally standardized. For consumer packaging, symbols exist for product certifications, trademarks, proof of purchase, etc. Some requirements and symbols exist to communicate aspects of consumer use and safety. Examples of environmental and recycling symbols include the recycling symbol, the resin identification code and the "Green Dot". Bar codes , Universal Product Codes, and RFID labels are common to allow automated information management in logistics and retailing. Country of Origin Labeling is often use Package development considerations Package design and development are often thought of as an integral part of the new product development process. Alternatively, development of a package (or component) can be a separate process, but must be linked closely with the product to be packaged. Package design starts with the identification of all the requirements: structural design, marketing, shelf life, quality assurance, logistics, legal, regulatory, graphic design, end-use, environmental, etc. The design criteria, performance (specified by package testing), completion time targets, resources, and cost constraints need to be established and agreed upon. Transport packaging needs to be matched to its logistics system. Packages designed for controlled shipments of uniform pallet loads may not be suited to mixed shipments with express carriers. An example of how package design is affected by other factors is the relationship to logistics. When the distribution system includes individual shipments by a small parcel carrier, the sortation, handling, and mixed stacking make severe demands on the strength and protective ability of the transport package. If the logistics system consists of uniform palletized unit loads, the structural design of the package can be designed to those specific needs: vertical stacking, perhaps for a longer time frame. A package designed for one mode of shipment may not be suited for another. With some types of products, the design process involves detailed regulatory requirements for the package. For example with packaging foods, any package components that may contact the food are food contact materials.[11] Toxicologists and food scientists need to verify that the packaging materials are 38

allowed by applicable regulations. Packaging engineers need to verify that the completed package will keep the product safe for its intended shelf life with normal usage. Packaging processes, labeling, distribution, and sale need to be validated to comply with regulations and have the well being of the consumer in mind. Sometimes the objectives of package development seem contradictory. For example, regulations for an over-the-counter drug might require the package to be tamper-evident and child resistant[12]: These intentionally make the package difficult to open.[13] The intended consumer, however, might be handicapped or elderly and be unable to readily open the package. Meeting all goals is a challenge. Package design may take place within a company or with various degrees of external packaging engineering: independent contractors, consultants, vendor evaluations, independent laboratories, contract packagers, total outsourcing, etc. Some sort of formal Project planning and Project management methodology is required for all but the simplest package design and development programs. An effective quality management system and Verification and Validation protocols are mandatory for some types of packaging and recommended for all. Environmental consideration sustainable packaging Package development involves considerations for sustainability, environmental responsibility, and applicable environmental and recycling regulations. It may involve a life cycle assessment which considers the material and energy inputs and outputs to the package, the packaged product (contents), the packaging process, the logistics system waste management, etc. It is necessary to know the relevant regulatory requirements for point of manufacture, sale, and use. The traditional three Rs of reduce, reuse, and recycle are part of a waste hierarchy which may be considered in product and package development. The waste hierarchy Prevention Waste prevention is a primary goal. Packaging should be used only where needed. Proper packaging can also help prevent waste. Packaging plays an important part in preventing loss or damage to the packaged-product (contents). Usually, the energy content and material usage of the product being packaged are much greater than that of the package. A vital function of the package is to protect the product for its intended use: if the product is damaged or degraded, its entire energy and material content may be lost. Minimization (also "source reduction") The mass and volume of packaging (per unit of contents) can be measured and used as one of the criteria to minimize during the package design process. Usually reduced packaging also helps minimize costs. Packaging engineers continue to work toward reduced packaging. Reuse The reuse of a package or component for other purposes is encouraged. Returnable packaging has long been useful (and economically viable) for closed loop logistics systems. Inspection, cleaning, repair and recouperage are often needed. Some manufacturers re-use the packaging of the incoming parts for a product, either as packaging for the outgoing product or as part of the product itself Recycling Recycling is the reprocessing of materials (pre- and post-consumer) into new products. Emphasis is focused on recycling the largest primary components of a package: steel, aluminum, papers, plastics, etc. Small components can be chosen which are not difficult to separate and do not contaminate recycling operations. Energy recovery Waste-to-energy and Refuse-derived fuel in approved facilities are able to make use of the heat available from the packaging components. Disposal Incineration, and placement in a sanitary landfill are needed for some materials. Certain states within the US regulate packages for toxic contents, which have the potential to contaminate emissions and ash from incineration and leachate from landfill.[22] Packages should not be littered.

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MODULE 4 POLLUTION can be defined as any undesirable change,in the physical,chemical or biological charactertistics of air,water and soil that may cause harmful effects,on various forms of life and property. POLLUTANT: When the substances which cause pollution in the atmosphere increases to undesirable proportion they are called pollutants.The main classifications are: NONDEGRADABLE POLLUTANTS:examples are DDT,aluminium,mercury salts etc BIODEGRADABLE POLLUTANTS:examples are domestic sewage,cow dung etc EFFECTS OF SOLID WASTE Creation of unhygienic condition Foul smell and breeds various types of insects Changes in physiochemical & biological characteristics Affects productivity of soil Affects ground water MANAGING INDUSTRIAL POLLUTION INDUSTRIAL POLLUTION is pollution which can be directly linked with industry,in contrast to other pollution sources.this form of pollution is one of the leading causes of pollution. The following are some of techniques of managing industrial pollution Vacuum filtration of the carbon slurry has resulted in almost complete recovery of carbon fertilizer unit. The chalk obtained afterremoving impurities by proper treatment can be utilised in the initial stages so that the large amounts of byproduct of ammonium sulphate can be fruitfully utilised. The method of dehydrate hemi-hydrate process makes it possible to get pure grades of gypsum containing low quantities of gypsum containing low quantities of p-20 and fluorine from phosphate plant. Physical,biological and chemical treatment of liquid waste before disposal will minimize the pollution by petrochemical unit. MANAGING INDUSTRIAL WASTE INDUSTRIAL WASTE is a type of waste produced by industrial activity,such as that of factories,mills and mines. 3 common type of industrial waste Industrial waste that exhibits hazardous characteristics (ignitable, Corrosive, Reactive and toxic) Clinical waste Municipal waste MAIN CLASSIFICATION INDUSTRIAL WASTE MAY BE AS FOLLOWS: >LIQUID WASTE >SOLID WASTE >GASEOUS WASTE MEASURES WHICH ARE TAKEN: New laws have been brought into effect by many countries into place to heavily tax companies that produce excess amounts of waste. Many lacal govt provide counselling,consulting and recommendations to organizations Disciplinary actions need to be taken against cos that do nottake waste management seriously. Citizens need to support Environmental protection acts encourage and rewards to companies will also help. 40

EFFECTIVE WASTE MANAGANENT

DEVELOPING RECYCLING TECHNOLOGIES RECYCLING involves processing used,unwanted materials into new products to prevent waste of potentially useful materials,reduce the consumption of fresh raw materials,reduce energy usage,reduce air pollution and water pollutionby reducing the need for conventional waste disposal,and lower green house gas emissions as compared to virgin production. GOVT MANDATED DEMAND Four methods of legislation exists Minimum recycled content mandates Utilization rates Procurement policies Recycled product labelling COMMON RECYCLABLES Aggregates and concrete Batteries Biodegradable waste Clothing Electronics disassembly and reclamation Ferrous metals Non-ferrous metals Glass Paint Paper Plastic Textiles Timber Other techniques tire recycling etc 41

MAINTAINING BIODIVERSITY Biodiversity refers to the variety and variability among living organisms and the ecosystem complexes in which they occur. It means the variety and variability of all organisms. Biodiversity constitutes the biological wealth. LEVELS OF BIODIVERSITY GENETIC BIODIVERSITY Genetic Biodiversity means the variation of genes within a species. In a species, each variety has its own genes or genetic make-up. For example, there are various races of human beings such as Mongoloid, Negrito and Nordic, etc. Diversity of genes within a species increases its ability to adapt to disease, pollution and other changes in environment. When a variety of a species is destroyed, genetic diversity gets diminished. SPECIES BIODIVERSITY Species Biodiversity means a variety of species within a region. Such diversity can be measured on the basis of species of a region. For example Panthera Leopersica (lion), Panthera Tigris (big cat), Panthera Uncial ((snow leopard), all belong to the same genus (Panthera) but they all differ at the species level. Till now, only about 1.5 million living and 300000 fossil species have been actually described and given scientific names. More the species biodiversity means more the biological wealth. ECOSYSTEM BIODIVERSITY Ecosystem Biodiversity refers to the variety of ecosystem in a particular region or zone, for example, various ecosystems include forests, wetlands, arid zones and deserts. E.g.:- terrestrial (forests, grassland, desert, etc) ecosystems and aquatic (fresh water and marine) ecosystems. All these have their own fauna and flora (biodiversity).

I. BIOGEOGRAPHICAL CLASSIFICATION OF INDIA India has a rich heritage of biological diversity and occupies the tenth position among the plant rich nations of the world. There are ten different bio-geographic habitats in India. They are as follows: 1. Trans-Himalayan 2. Himalayan 3. Desert 4. Semi-Arid 5. Western Ghats 6. Deccan Peninsula 7. Gangetic Plain 8. North-East India 9. Islands 10. Coasts II. VALUE OF BIODIVERSITY Biodiversity is the source of food, medicine, fibers, rubber and timber. Several micro organisms are used in industries to obtain valuable products. Diversity of organisms provides many ecological services free of cost. Its importance can be grouped into different categories: A. Biodiversity as a resource a. Food b. Pharmaceutical c. Fuel d. Products e. Unknown Benefits B. Non- Resource Value of Biodiversity a. Ethic Value b. Aesthetic Value c. Cultural Value d. Optional Value

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III. 1. 2. 3.

BIODIVERSITY AT DIFFERENT LEVELS Biodiversity at Global Level Biodiversity at National Level Biodiversity at Local Level

IV. THREAT TO BIODIVERSITY Extinction is the complete elimination of a wild species. Extinction in biology refers to disappearance of a species from earth when its last member dies. A number of species are under threat of extinction due to both natural and manmade factors. Natural Factors- Natural Calamities, competition between species, biological imparity of a species, etc Man Made Factors- Deforestation, mining, urbanization, industrialization, grazing, etc The numbers of causes for extinction of biodiversity are as follows: 1. Over Hunting 2. Habitat Destruction 3. Invasion of Exotic Species 4. Climate Change 5. Natural Catastrophe 6. Over Exploitation 7. Pollution. V. CONSERVATION OF BIODIVERSITY

1. In-Situ Conservation In-Situ Conservation deals with conservation of species in their natural habitat i.e. the place where the species is actually found. This approach includes the protection of ecosystem. E.g.: a. National Parks b. Wild Life Sanctuary c. Biosphere Reserves. At present in India, we have 80 National Parks, 14 Biosphere Reserves and 420 Wildlife Sanctuaries. India has an elaborate network of protected areas covering approximately 4.66% of its total geographical area. 2. Ex-Situ Conservation It refers to the conservation of species outside their natural habitat. Here, individuals of species are maintained in artificial conditions under human supervision. It involves cultivation of rare plants and rearing of threatened animal species in Botanical and Zoological gardens. The rare plants are preserved in the form of seeds in seed banks by means of tissue culture techniques. E.g.: a. Seed Banks b. Cryo Preservation c. Botanical Garden d. Gene Banks e. Aquaria f. Pollen Storage g. Tissue Culture. GOVERNMENTAL AND INSTITUTIONAL SUPPORT MAINTAINING ENVIRONMENT-FRIENDLY BUSINESS FOR ESTABLISHING AND

I. THE ROLE OF NGOS IN BUSINESS ACTIVITIES It has been seen that the services rendered by the environmental NGOs are commendable. They exert all sorts of pressure on the National Government, the international agencies and the business corporations for furthering the cause of environment related issues. They become the mediators between the government and the citizens. They work at the grassroots level as the also with the poor or socially disadvantaged people and provide them the necessary support. THE INDIAN SCENARIO a. Safe and hygienic human waste disposal b. Narmada Valley Project ROLE OF GOVERNMENTAL SUPPORT 43

 Environmental Policies Environmental Policy Instruments Voluntary measures such as bilateral agreements negotiated between the government and private firms & greener public purchasing programs.

MODULE 5 EMS standards An environmental management standard or system attempts to reduce environmental impact as measured by some objective criteria/14001 standard is the most widely used/ISO 14001:2004 and ISO 14004:2004 deal wih EMS/The other standards in the family address specific environmental aspects including : labeling,performance evaluation,life cycle analysis etc. ISO 14000 The ISO 14000 series of standards are the first international standards on EMS/The major objective of the series is to promote more effective and efficient management in the organization and to provide useful and usable tools which are effective ,system based and flexible/Various requirements under ISO 14000 includes environmental policy,planning,implementation and operation checking and corrective measures,management review. INTERNATIONAL INITIATIVES FOR ENVIRONMENT MANAGEMENT International treaties on environment ANTARTIC TREATY It was signed in 1959-Different parts of Antartica were claimed by seven countries/The treaty came into force in June 1961 granted that the continent would only be used for peaceful purposes/The later treaties such as Madrid agreement in 1991 and the protocol on environment protection in 1998 strengthened the Antartic treaty and preserved it only for non military scientific research for all the countries in the world and declared the continent as a natural reserve. THE BASEL CONVENTION ON MINIMISING HAZARDOUS WASTES Industrial production results in hundreds of wastes every year/ These wastes are shipped off illegally to far away places/The cross border transportation of hazardous wastes caught the public attention in late 1980s-Recogonising the gravity of problem govts and forward looking companies started exploring solution /By 1980s the international community launched treaty negotiations under the auspices of the United Nations Environment Programme/In March 1989 they adopted Basel convention on the control of transboundary movements of hazardous wastes and their disposal/The treaty entered into force in 1992/The 3 steps strategy of the convention are 1. Minimize the generation of wastes 2. Treat waste as near as possible to where they are generated 3. Reduce international movements of hazardous wastes. CONVENTION ON BIOLOGICAL DIVERSITY CBD is an international treaty adopted in Rio de Janeiro Brazil in June 1992 by 154 countries/Its objectives are 1. Conservation of biodiversity 2. Sustainable use of the components arising from it 3. Sharing of benefits of genetic resources in a fair and equitable way/It entered into force on 29 December 1993. THE CARTAGENA PROTOCOL The cartagena protocol on biosafety was adopted in January 2000/It entered into force on 11 Sepember 2003/The main aim of the protocol was to protect biodiversity from potential risks posed by living modified organisms which is the gift of modern biotechnology. 44

GLOBAL STRATEGY FOR PLANT CONSERVATION It was adopted by United Nations Convention On Biological Diversity and a sixteen point plan with an aim to slow down the rate of plant extinction by 2010 around the world was implemented /The main organ of this international body are Secretariat and Subsidiary Body on Scientific Technical and Technological Advice(SBSTTA). CONVENTION ON FISHING AND CONSERVATION OF LIVING RESOURCES OF THE HIGH SEAS The convention on fishing and conservation of living resources of high seas is an agreement designed to solve the problems involved in the conservation of living resources of high seas through international cooperation/The agreement was signed on 29 April 1958 and came into force on 20 March 1966/There are 38 countries that have signed agreement and ratified/The agreement that was signed is in the form of Articles. GREEN PEACE INTERNATIONAL Green peace international originated from formation of the Dont make a wave committee by a group of Canadian and American expatriate peace activists in Vancouver in 1971/The committee came together with the objective of stopping a second underground nuclear bomb test code named Cannikin by the United states military beneath the island of Amchitka in Alaska/The test could not be stopped but the organization of committee laid the groundwork for green peace international internationals later activities/The mission of this independent global non governmental organization is to change attitudes and behaviour to protect and conserve the environment and to promote peace. WTO PROVISIONS WTO provisions directly relevant to trade related environmental issues are 1. Agreement on trade in services-It takes place between producer and consumer that are in legal terms/2. Agreement on technical barriers to trade-It tries to ensure that regulations, standards, testing and certification procedures do not create unnecessary obstacles/3. Agreement on agriculture-It has three concepts A). Domestic support-It has three categories a)green box-fixed payments to producers for environmental programmes. b)amber box-contains domestic subsidies that govt have to reduce.c) blue box-contains subsidies which can be increased without limit,so long as payments are linked to production limiting programs.B) Market accessrefers to reduction tariff or non tariff barriers to trade by WTO member states.C)Export subsidies-The 1995 AOA required developed countries to reduce export subsidies atleast 35%(by value)or by atleast 21%(by volume) over the five years to 2000/4.Agreement On TRIPS(Trade Related Aspects of Intellectual Property Righs)-Patent law protecting inventions and processes/5.Agreement on sanitary measures-It concerns the application of food safety and animal and plant health regulations. ISSUES AND CHALLENGES FOR ENVIRONMENT MANAGEMENT IN THE GLOBALISED WORLD GLOBALISATION Globalisation is a set of economic process in which production, marketing and investment are integrated across the borders of nations /Globalisation trends creates challenges on scale and scope and speed unprecendented in world history. Environmental challenges under globalization Protect urban people against urban environmental hazards like global warming,ozone depletion etc/The environmental services for urban people are to provide cleaner air,cleaner water and healthier cities/Address the sources of environmental degradation .

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Urban environmental issues Localized Environmental health problems like inadequate portable water ,indoor air pollution etc/Extra urban impacts of urban activities like ecological disruption and resource depletion and emission of green house gases-Inadequate waste disposal management,pollution of water bodies and green house gases. Urban environmental challenges Providing basic environmental services in a way that most effectively protects health/Identification and implementing integrated approaches to urban environment to prevent and abate the impacts of pollution and degradation/Proper dealing with accidents and environmental disasters deriving from both natural and man made efforts/Urban poverty/Urban environmental factors affecting human health/Influence of urbanization on food system etc. URBAN GOVERNANCE AND MANAGEMENT Good urban governance and management is one of the main pillars of sustainable cities/Good governance is primarly through community participation,private sector involvement and the actions of NGOs/Good governance in the back drop of the effects of globalization on urban environment involves 1. Provision for basic environmental services like sanitation, solid waste collection and disposal management 2. Provision for better environmental management like preventing ecosystem degradation, ozone depletion. 3. Improving environmental quality by imposing emission charges on pollution 4. Provision for environmental justice like clean water etc. Environmental impact studies and assessment An environmental impact assessment is an assessment of the possible impact ,positive or negative-that a proposed project may have on the environment ,consisting of the natural ,social and economical aspects. The impact of anthropogenic activities on the use of environmental resourses or the natural environment is termed as environmental impact. The assessment or evaluation of this impact are collectively called environmental impact assessment {EIA}. The ultimate objective of eia is to provide information to the decision makers so that proper programs and plans can be implemented. The steps involved in EIA study are as follows; Screening of the project I. Impact identification of the project II. Impact prediction III. Impact evaluation IV. Participation of stake holders V. Specification of monitoring and auditing measures VI. Documentation of EIA study VII. Review of report VIII. Decision making Environmental accounting and auditing Environmental accounting Environmental accounting is an important tool for understanding the role played by the natural environment in the economy. Environmental accounting provides data which highlight both contribution of natural resources to economic well being and the cost imposed by pollution or resource degradation. Environmental accounting is sometimes referred to as green accounting or integrated economic and environmental accounting or resources accounting What is environmental accounting? Environmental accounting is a set of aggregate national data linking the environment to the economy, which will have a long run impact on economic and environmental policy making. It is not a valuation of 46

environmental goods or services , social cost benefit analysis of projects affecting the environment, or disaggregated regional or local data about the environment. Environmental accounting includes: Valuation of environmental assets, goods or services; valuation refers to the process of deriving a monetary value for things which are not sold in a market. Social cost benefit analysis: social cost-benefit analysis tallies up all of the cost and benefits of a proposed project ,including its impacts on environmental quality or on the availability of environmental goods and services. Disaggregated regional or local data about the environment: it is sometimes linked to a geographic information system. Question often arise about the scale of environmental data; do they pertain to a village , a province ,a watershed, or the whole country? Because system of national accounts is national, and most countries maintain their economic data at the national level, environmental accounts are primarily national accounts.

Environmental audit Environmental audit is a review of activities affecting the environment to determine the status of a corporations compliance with central, state and local environmental law and regulations. It also provides the corporation with data and other information on which environmental decision and planning could be based. An environmental audit is a management tool for taking inventory of companys environmental asset and liabilities. As such , the audit provides information on a companys compliance status at a given point in time, analysis of the perceived implications of the information gathered and, if management so chooses , options that arises from this information and analysis. In short , an audit provides a snapshot of one segment of management responsibility. Reasons to undertake an environmental audit: There could be a number of reasons for undertaking an audit and the benefit process are described below: Determining compliance status: A fundamental reason for undertaking an environmental audit is to determine the status of a companys compliance with central , state , and local environmental laws and regulations. More than a decade of major environmental legislation regulating air and water pollution, chemicals, hazardous substances and waste disposal has imposed a complete scheme of obligations on business, industry and local bodies. Environment compliance represents a significant aspect of doing business both, in terms of the effort and cost, necessary to achieve, compliance and in terms of the fines, penalties and liabilities that may be incurred as a result of noncompliance. An environmental audit can also help in maintain corporations Compliance status in an effective manner. Frequently, facilities can be control technologies including equipment, and management practices may be available to control a particular waste or discharge. An audit can also help management recognize if there is a need for change in operating of administrative procedures to improve the companys system for compliance assurance and internal reporting. Crisis management Information obtained in an audit can be enormous value in crisis situations. Such information can help a company respond quickly to a spill or other pollution incidents the impacts of which may have been exaggerated by the press or others. Conversely , such information can help companies avoid making claims or assertion that , upon further investigation , prove to be understatements by saying nothing,but this course may subject it to significant negative publicity. Planning and conducting the audit The basic elements of a success full audit are the same. The element includes the following: 47

Defining the purpose and scope of the audit,resolving policy issues and establishing priorities Assigning department responsibility for the audit function and ensuring in-house cooperation. Choosing the audit team Reviewing central , state and local laws and regulations to identify regulatory programmes applicable to company operations Selecting elements of analysis on which to base data collection Beginning the audit Preparing compliance profiles Conducting a site visit Analyzing and presenting the results of the audit Evaluating the audit Conducting the audit Once the regulatory programmes , potentially applicable to company operations , have been identified and the elements on which to base data collection and analyais have been selected the auidit may be begin. Collection of audit data should be organasied into two stages; preliminary data collection prior to the site visit , and data collection at the site Environment managing systems Environmental impact is an important issue across the globe , with pressure to minimize that impact coming from many sources, including governments, trade association , supply chains and financial stakeholders. Environment management system (ems)provides with a frame work for managing environmental responsibilities efficiently in a way that is intergrated into your overall operations. An environmental management system is relevant to all organizations, from single site to large multinational and from high risk companies to low risk services organization . managing environmental impacts is relevant to manufacturing , process and service industries , including local and central governments, equipment manufacturers and suppliers. Environmental management system refers to the management of an organizations environmental programs in a comprehensive, systematic, planned and documented manner.it include the organizational structure,planning and resources for developing , implementing and maintaining policy for environmental protection. The features of an enviornmental management system (ems) are as follows: It serve as a tool to improve environmental performance It provides a systematic way of managing an organizations environmental affairs. It is the aspect of the organizations overall management structure that addresses Immediate and long term impacts of its products,services and process on environment It focus on continual improvement of the system.

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Ems model

This is a model that can be used by a wide range of organizations from manufacturing facilities to service industries to government agencies . the key element of an ems are as follows: Policy statement: a statement of the organizations commitment to the environment . Identification of significant environmental impacts: environmental attributes of products,activities and services and their effects on the environment. Development of objective and targets : environmental goals for the organization Implementation: plans to meet objective and targets Training: instruction to ensure employees are aware and capable of fulfilling their environment responsibility Management review Ems standards As with all management fuctions ,effective management tool ,standars and systems are required . an environmental management standards or system or protocol attempts to reduce environmental impact as measured by some objective criteria. ISO 14000 The ISO 14000 is a standard used by organizations for designing and implementing an effective environmental management system. Objective of ISO 14000 to promote more effective and efficient environmental management in organizations to provide useful and usable tools which are cost effective, system-based, flexible reflect the best organizations and the best organizational practices available for gathering, interpreting and communicating environmentally relevant information various iso numbers
Iso number range Iso 14000- 14009 IsO 14010-14019 ISO 14020 - 14029 ISO 14030 - 14039 ISO 14040 - 14049 ISO 14050 - 14059 ISO 14060 Subject matter Environmental management system Environmental auditing Environmental labeling Environmental performance evaluation Life cycle assessment Terms and definition Environmental aspects in product standards

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ECONOMICS FOR BUSINESS

Module-1 Micro economics: The word micro means a millionth part. Microeconomics is the study of the small part or component of the whole economy that we are analyzing. For example we may be studying an individual firm or in any particular industry. In Microeconomics we study of the price of the particular product or particular factor of the production Microeconomics - The study of the decisions of people and businesses and the interaction of those decisions in markets. The goal of microeconomics is to explain the prices and quantities of individual goods and services-Because we cant have everything, we need to make trade-offs and microeconomics helps us make those tradeoffs.-A society faces 3 key tradeoffs:1,Which goods and services to produce2 How to produce them- How much labor and inputs should a firm use to produce a car. 3Who gets the good and services (allocation)-Examples: Workers need to choose how to allocate their time between labor and leisure.-Firms need to choose how to allocate their investment between human capital and machines.-Households need to choose how to allocate their incomes between savings and expenditure. Micro economics-uses 1.Helpful in understanding the working of free market economy. The micro economics helps us to understand the working of free market economy. It tells us as to how the prices of the products and the factors of production are determined. It throws light as to how the goods and services produced are distributed among the various people for consumption through market mechanism. 2. Helps in knowing the conditions of efficiency. Microeconomics helps in explaining the conditions of efficiency in consumption, production and in distribution of the rewards of factors of production. It highlights the factors which are responsible for the departure from achieving the optimum efficiency. It suggests policies also which help in the promotion of economic efficiency of the people Working of the economy without central control. The microeconomics reveals how a free enterprise economy functions without any central control. 3. Study of welfare economy. Microeconomic involves the study of welfare economics Limitations of Microeconomics 1) Assumption of full employment in the economy which is unrealistic (2) Assumption of lasses fair policy which is no longer in practice in any country of the world (3) It studies part of the economy and not the whole. What is the difference between micro and macro economics? Microeconomics :behavior of individual economic units like consumers, producers, landowners, families, etc. How and why do they make the decisions they make?

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Macroeconomics: analyzes how the entire national economy performs. It analyzes unemployment, inflation, price levels, interest rates (many things we take as given in microeconomics). Macro economics is the study of behavior of the economy as a whole. It examines the overall level of nations out put, employment, price and foreign trade. Macroeconomics is concerned with aggregate and average of entire economy. e.g. In Macro economics we study about forest not about tree Macroeconomics The study of the national economy and the global economy and the way that economic aggregates grow and fluctuate. The goal of macroeconomics is to explain average prices and the total employment, income, and production While microeconomics stresses on the individual firms and consumer, macroeconomics deals with the whole economy as a single unit. the former takes into consideration the demand and supply of the individual goods and services, while the later takes into consideration the aggregate of demand and supply of all goods and services In microeconomics, the equilibrium occurs when the quantity demanded equals the quantity supplied .In macroeconomics, on the other hand, equilibrium occurs when the aggregate demand equals aggregate Business Environment refers to the totality of all the relevant forces external, to and beyond the control of ,an individual business enterprise and its management. The ideological beliefs of the ruling class-Value systems of the society-Rules & regulations laid down by the govt.-The monetary policies of the Central Bank There is a direct relationship between successful management and the influence and impact of environmental change Change is a process of constant renewal and regeneration in every conceivable sphere of society Business organisation as the central component of the business environment are naturally also subject to change The interaction between the environment and a business organisation is an ongoing process that results in new problems and new opportunities Technological innovation ,Globalisation ,Growth of poverty, Collapse of emerging markets ,Shift from manufacturing jobs to service jobs, New ways of doing work Business environment: major types 1 Micro Environment, Mission and objectives of the organisation ,The organisation and its management , e.g. marketing , financial and purchasing management, Resources human resources , capital and know how 2 Market environment, Consumers needs , purchasing power and behavior, Suppliers, Intermediaries ,Competitors ,Opportunities & threats 3 Macro environment-Technological environment, Economic environment, Social environment , Physical environment, Institutional political environment, International environment 51

Business environment Advantage India: we have a young population/task force well versed in English language and are also major contributors to world economy, India is expected to benefit further from the demographic dividend emanating from a higher proportion of the young population. the IT enabled services (ITES) have provided job opportunities and will continue to do so ,the services sector in the country has benefited from the availability of vast skilled labour at competitive rates , growth has also been fueled by increased local demand, backed by rising urban and rural incomes. The top mobile operators continue to rope in millions of subscribers every month with innovative approaches and offers, The role of the private sector and foreign investment in the Indian economy is increasing. The rupee is now convertible on the current account, and exchange rates are marketdetermined. There has been rapid progress in implementing government commitment to the deregulation process. Industrial policy emphasizes boosting economic growth through encouraging the generation of income and wealth. The vast and growing middle-class population provides a large domestic market. Skilled manpower and professional managers are available at moderate cost. Capital markets, the banking infrastructure and the financial services sector are well developed BUSINESS Ethics -The word ethics is derived from the Greek word ethos meaning character and Latin word mores meaning customs-To better understand ethics let us understand and contrast the definition of ethics and la-Law is a consistent set of universal rules that are widely published, generally accepted and usually enforced. These rules describe the ways in which people are required to act in society. Ethics defines what is good for the individual and for society and establishes the nature of duties that people owe to oneself and others in society. Ethics are the guiding principles. -Where the proposed business activity/ operation of the company borders on the unknown, the company needs to apply the ethics principle to decide on the project.-Ethics help make relationships mutually pleasant and productive- imbibes a sense of community among members- a sense of belongingness to society. MODULE-2 Theory of consumption -The demand for any good is the amount consumers want to buy and are able to buy in a particular period of time. The branch of economics devoted to the study of consumer behavior, especially as it applies to decisions related to purchasing goods and services through markets Determinants of Demand- price, income, price of related goods, expectation taste, population, govt. policies etc. Demand is the quantity of good and services that customers are willing and able purchase during a specified period under a given set of economic conditions. The period here could be an hour, a day, a month, or a year. 52

The conditions to be considered include the price of good, consumers income, the price of the related goods, consumers preferences, advertising expenditures and so on. The demand schedule is a table that shows the relationship between the price of the good and the quantity demanded. The demand curve is a graph of the relationship between the price of a good and the quantity demanded. Ceteris Paribus: Other thing being equal Three reasons why demand is downward sloping, a. The substitution effect, b. The income effect , c. The law of diminishing marginal utility 1The substitution effect a lower price of a good causes a person to buy more of that good instead of alternative goods. If the price of Nike shoes increases, people will start to buy Adidas and Reebok . 2 The income effect The change in the quantity demanded caused by a price changes effect on real income which measures a persons purchasing power. When the price of a good decreases, your real income (purchasing power) increases, or You can now buy more of everything. Lets say you buy 25 gallons of gas a week, and the price of gas is $2 a gallon. Youre spending $50 a week on gas .Now the price of gas decreases to $1 a gallon. You can now buy 50 gallons of gas a week for the same amount of money, or you can buy 25 gallons of gas and more of other goods.3The law of diminishing marginal utility Utility measures the want-satisfying power of a good or service. Marginal utility is the additional or incremental satisfaction (utility) a consumer receives from acquiring one additional unit of a product. Cardinal Utility Analysis- A basic formulation of consumer demand theory involves an analysis of the total utility and marginal utility derived from the consumption of a good. Go under water and hold your breath, keep holding it until you think you will pass out. Then come up out of the water, that first breath is wonderful -- tremendous utility. That is utility - the meeting of a need or being satisfied. Marginal Utility is the change in utility from one more good or service being consumed. So the amount of utility from the first cup of coffee or that first breath is huge. Diminishing Marginal Utility is the fact that each addition good or service consumed creates a smaller and smaller amount of additional utility. In the examples above, that second cup of coffee in the morning or the second breath after the first will provide additional satisfaction or need meeting, but it will not provide near as much satisfaction (utility) as the first one did. The third cup or third breath has even less additional satisfaction or need meeting ability (utility) as the second and the first. The key principle of consumer demand theory is the law of diminishing marginal utility, which offers an explanation for the law of demand and the negative slope of the demand curve The law of diminishing marginal utility states that, as a consumer consumes more and more units of a specific commodity, the utility from the successive units goes on diminishing. Mr. H. Gossen, a German economist, was the first to explain this Law in 1854.

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Alfred Marshall later on restated this Law in the following words: The additional benefit which a person derives from an increase of his stock of a thing diminishes with every increase in the stock that he already has. Basis of the law of demand. As he buys more and more, the marginal utility of the successive units begins to diminish. Then he pays less amount for the successive units .From this it is clear that if a person wishes to increase the sale of a commodity, he must lower its price The Law of Equi-Marginal Utility is an extension to the law of diminishing marginal utility This law states that how a consumer allocates his money income between various goods so as to obtain maximum satisfaction .Suppose there are two goods 'x' and 'y' on which the consumer has to spend his given income. The consumers behavior is based on two factors: (a) Marginal Utilities of goods 'x' and 'y (b) The prices of goods 'x' and 'y' .Making the marginal utility per dollar spent the same for all goods gets the most out of a budget. shift money from the area in which it is giving a low return to the area in which it has a high return, he will be better off. This is the basic idea of the equi-marginal principle. Maximization occurs when the return on the last dollar spent is the same in all areas. In terms of a formula, a person wants (Marginal Benefit of A)/(Price of A) = (Marginal Benefit of B)/(Price of B) Equimarginal utilities - If good A costs twice as much as good B, then buy good A only when its margenial utility is at least twice as great as good Bs marginal utility Equimarginal principle- a consumer having a fixed income and facing given market prices of goods will achieve maximum satisfaction or utility when the MU of the last dollar spent on each good is exactly the same as the marginal utility of the last dollar spent on any other good. Utility maximizing rule -The Law of Equi-Marginal Utility states that the consumer will distribute his money income in such a way that the utility derived from the last rupee spent on each good is equal . When spending a limited amount of money, consumers try to equate the marginal utility per dollar for the items being purchased. Consumers Equilibrium- consumer will attain its equilibrium (maximum satisfaction) at the point , where marginal utility of a product divided by the marginal utility of a rupee or price of the product is equal to the price. MU of a product Consumers equilibrium= (one commodity) price of the product Mu good 1 More goods =MU/$ P1 P2 Mu good 2 = P3 = MU of a rupee Mu good 3 =

Consumers equilibrium- by using indifference curves.-ordinal utility -The idea of utility as measurable in a cardinal way was subject to much criticism, The idea of a utility measure as a rank ordering replaced the idea of cardinal measurement -An ordinal measure is a ranking only. No unit of measurement-Higher numbers imply only more preferred. In the ordinal utility context maximizing utility

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means choosing that bundle of goods that is on the highest indifference curve achievable with given income and prices The marginal rate of substitution is the rate at which a person will give up good y (the good measured on the y-axis) to get more of good x (the good measured on the x-axis) and at the same time remain on the same indifference curve. Diminishing marginal rate of substitution is the general tendency for the marginal rate of substitution to decrease as the consumer moves down along the indifference curve, increasing consumption of good x and decreasing consumption of good y.

Tools needed to determine how consumers should allocate their income between 2 goods 1Indifference Curves 2. Budget Constraint Consumers strategy is to keep moving to higher and higher indifference curves until he reaches the highest one that is still affordable. The Budget Line- A budget line describes the limits to consumption choices and depends on a consumers budget and the prices of goods and services. The goal of the consumer is to buy the affordable quantities of goods that make the consumer as well off as possible. The consumers preference map describe the way a consumer values different combinations of goods. The consumers budget and the prices of the goods limit the consumers choices. The substitution effect involves the substitution of good x1 for good x2 or vice-versa due to a change in relative prices of the two goods. The income effect results from an increase or decrease in the consumers real income or purchasing power as a result of the price change. The sum of these two effects is called the price effect. Elasticity- is a general concept that can be used to quantify the response in one variable when another variable changes- The responsiveness of one variable to changes in anotherWhen price rises, what happens to demand? Demand falls BUT! How much does demand fall? If price rises by 10% - what happens to demand? We know demand will fall By more than 10%By less than 10%?By same 10%Elasticity measures the extent to which demand will change due to price change. Types- Price elasticity of demand, Income elasticity of demand- Cross elasticity Expectations- Advertisement Elasticity - Price elasticity of supply. 55 Elasticity Of price

PRICE ELASTICITY OF DEMAND Price elasticity of demand is the degree of responsiveness of the quantity demanded to change in the price. % change in quantity demanded price elasticity of demand % change in price

Types of price elasticity of demand- .Ed= 0 perfectly inelastic ../Ed< 1 - Inelastic or less than unit elastic- / Ed = 1 Ed >1 Elastic . /Ed = perfectly elastic Factors affecting elasticity of demand 1availability of substitutes commodities having substitutes is very elastic.2postponement of consumption-commodities, whose consumption can be postponed for sometime is elastic.3proportion of expenditure- where a significant part of income is spent-is very elastic 4 nature of the commodity-necessities-inelastic-comforts& luxuries- elastic-different uses of the commodity- which has several uses- elastic5.habits- habituated of some commodities- inelastic Importance of price elasticity of demand1It helps the monopolist in maximizing his profit. 2 It helps the govt. at the time of budget preparation. Govt. can levy more tax on the commodity , whose demand is inelastic. 3.terms & conditions of foreign trade are always in favour of those countries ,whose import demands are elastic , and export demands are inelastic . 4.It is useful to deciding remuneration to factors of production. .labour demand is inelasticwages and salaries will increase Demand Forecasting: Forecasting simply attempts to predict the level of sales at some future dateHow many Japanese tourists will visit India in 2012?-How many delegates will attend conferences in London in 2001Demand forecasting refers to the prediction or estimation of a future situation under given constraints Types of forecasting. Short term- 1 year sales, purchase, pricing and financing. 56 Unit elastic./

Medium term----assess demand situation at trade cycle ,eg. Garment industryLong term ----more than one year---planning a new unit Major uses1Helping for continuous production planning-to eliminate the gap between-Demand and supply. 2 Regular supply of commodities-to maintain sufficient inventory of products. - Formulation of price policy3 no fluctuation over a period of time4.For better planning and allocation of national recourses5.To formulate effective sales performance sales targets & actions6.Arrangements of finance 7.prepare the budget for institutional finance8.To determine the production capacity plant size and production. Determine the use of the forecast. Eight Steps in Forecasting 1. Select the items to be forecast. 2. Determine the time horizon of the forecast. 3. Select the forecasting model(s). 4. Gather the data. 5. Make the forecast. 6 Validate and implement results. 7&8 Monitor forecasts and adjust when needed production capacity. There are two approaches A. survey method-qualitative-To collect information regarding the intention of the consumers by Market research, survey, & economic intelligence. Short term . 1 Survey of buyers intentions-Complete enumeration-Sample survey-End-use method 2.Opinion poll method-Jury of executive opinion-Sales force composite-Delphi method-Market studies B.Statistical method-quantitative-To use past trends and taking them guide and by extrapolating past trends to estimate future demand.. Long run --

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1.Time-series-Trend fitting-- least squire method-Moving average-Exponential smoothing-Adoptive control-Box-Jenkins2.Causal-Regression-Econometrics-Leading indicators-Diffusion index-Input-Output analysis-Life-cycle analysis The production function. production function specifies the maximum output that can be produced with a given quantity of in puts . It is the relation between physical in put and physical output. Fixed factors..factors not related to the level and volume of product..Building Variable factors..factors which are directly related to the volume of outputlabur, fuel Fixed cost- supplementaryoverhead cost- Payment for fixed factors of production in the short run. Eg. Rent of the factory--variable cost- prime cost- payment to the variable factors of production eg. Cost of raw materialTotal cost -is the lowest total expense needed to produce each level of out put.Total cost = total fixed cost + total variable cost TC = TFC + TVCMarginal cost : Marginal cost denotes the extra or additional cost of producing 1 extra unit of out put.MC = TCn TCn-1 .Average cost : Average cost is the total cost divided by the total out put. AC = TC/Q The Production Process--The production process can be divided-into the long run and the short run-Short run.a period in which firms can adjust production by changing variable factorsLong runa period in which firms can adjust production by changing all factors-The terms long run and short run do not necessarily refer to specific periods of time. -They refer to the degree of flexibility the firm has in changing the level of output. Total product-It refers to the total volume of goods & service produced during a given period of time. Average product Per unit production of the variable factor Marginal product - The change in the total output due to the application of one more or one less unit of variable factor. 1.Law of variable proportion/ diminishing return- (increasing only one factor) - The law stating that if one factor of production is increased while the others remain constant, the overall returns will relatively decrease after a certain point we will get less and less extra out put when we add additional doses of an in put while holding other inputs fixe. This law is also called the flower pot law. If it did not hold true, the worlds entire food supply could be grown in a single flowerpot Stage 1 TP,MP,AP will increase in this stage. Stage 2TP increases at a diminishing rate. MP decreases and become 0 AP starts decreasing Stage 3 TP- start declining MP-become negative 58

AP- start declining Assumptions of the law -technology is remain constantone factor only varying , others are remaining constant-Possibility to change factor proportion 2. Law of Returns to scale -increasing In case, all in puts are increased in the same proportion and the scale of production is expanded in three formsIncreasing.( Economies of scale). returns to scale-more than the rate of input increase Constant&.at the same rate of input increase returns to scale Diminishing returns to scale . Less than the rate of input increase

What Does Economies Of Scale Mean? The increase in efficiency of production as the number of goods being produced increases. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods. There are two types of economies of scale:External economies - the cost per unit depends on the size of the industry, not the firm.Internal economies - the cost per unit depends on size of the individual firm External economies of scale the advantages firms can gain as a result of the growth of the industry normally associated with a particular are Supply of skilled labour Reputation-Local knowledge and skills-Infrastructure-Training facilities The long-run average cost curve LRAC-shows the minimum average cost at each output level when all inputs are variable, that is, when the firm can have any plant size it wants. There is a relationship between the LRAC curve and the firm's set of short-run average cost curves. If each plant size is associated with a different amount of fixed costs, then each plant size for a firm will give us a different set of short-run cost curves. Choosing a different plant size (a For the U-shaped long-run average cost curve, there are economies of scale over small outputs, and diseconomies of scale at larger outputs. Not all firms necessarily suffer from diseconomies of scale at large outputs. When a firm has economies of scale over a range of outputs big enough to supply the total market demand,that firm is called a natural monopoly. long-run decision) then means moving from one short-run cost curve to another.

Market structure-Number of suppliers-Products degree of uniformity-Do firms in the market supply identical products or are there differences across firms?-Ease of entry into the market-Can new firms enter easily or are they blocked by natural or artificial barriers?-Forms of competition among firms-Do firms compete only through prices or are advertising and product differences common as well?

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1.Perfectly Competitive Market Structure- Many buyers and sellers-Each Firm is a price taker-Each buys and sells only a tiny fraction of the total amount exchanged in the market-Standardized or homogeneous product-Buyers and sellers are fully informed about the price and availability of all resources and products-Firms and resources are freely mobile over time they can easily enter or leave the industry. Because the perfectly competitive firm can sell any quantity for the same price per unit, marginal revenue is also average revenue -Average revenue, AR, equals total revenue divided by quantity AR = TR / qRegardless of the rate of output, the following equality holds along the firms demand curve -Market price = marginal revenue = average revenue-Firms have time to enter and exit and to adjust their scale of their operations-Short-run economic profit will in the long run encourage new firms to enter the market and may prompt existing firms to expand the scale of their operations: the industry supply curve shifts rightward in the long run, driving down the price-New firms will continue to enter a profitable industry and existing firms will continue to increase in size as long as economic profit is greater than zero 2.A monopoly is a single supplier/seller to a market.( and a large number of buyers) market situation where there is only one provider of a product or service, in other words a firm that has no competitors in its industry. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods Barriers to entry are the source of all monopoly power-there are two general types of barriers to entrytechnical barriers-legal barriers( Licenses, patents) To maximize profits, a monopolist will choose to produce that output level for which marginal revenue is equal to marginal cost. marginal revenue is less than price .Since MR = MC at the profit-maximizing output and P > MR for a monopolist, the monopolist will set a price greater than marginal cost. Monopoly profits will be positive as long as P > AC. Monopoly profits can continue into the long run because entry is not possible. some economists refer to the profits that a monopoly earns in the long run as monopoly rents. The size of monopoly profits in the long run will depend on the relationship between average costs and market demand for the product Perfect competition exhibits allocative efficiency, price= MC. Under Monopoly, the price is greater than MC. Without productive efficiencies by a monopoly, P monp is greater than Ppc and Q mon is less than Qpc .Reduction in welfare under monopoly. Possible inefficiency in Monopoly 3.An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). The word is derived from the Greek for few sellers. Because there are few participants in this type of market, each oligopolist is aware of the actions of the others. The decisions of one firm influence, and are influenced by the decisions of other firms Above the kink, demand is relatively elastic because all other firms prices remain unchanged. Below the kink, demand is relatively inelastic because all other firms will introduce a similar price cut, eventually leading to a price war. So the best option for the oligopolist is to produce at point E which is the equilibrium point and incidentally the kink point. In an oligopoly, firms operate under imperfect competition and a kinked demand curve which reflects inelasticity below market price & elasticity above

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market price. Following from the fierce price competitiveness created by this sticky-upward demand curve, firms utilize non-price competition in order to accrue greater revenue and market share. 4.Monopolistic competition-A market structure in which several or many sellers each produce similar, but slightly differentiated products. Each producer can set its price and quantity without affecting the market place as a whole.( For eg. Many FMCG products, especially weak brandsA firm in monopolistic Competition making short run profits as AC is below the AR curve at the profit maximizing Level of output. A firm in monopolistic .Competition in the long run make normal profits only, as it has to lower price because of competition from other firms ; Thus AR curve at the profit maximizing Level of output is just equal to LRAC curve Circular Flow of Income: The cyclical operation of demand, output, income, and new demand. Leakages: flows out of circular flow when resource income is received and not spend directly on purchases from domestic firms-Injections: Added spending in circular flow that does not come out of current resource income. National income is the final outcome of all economic activities of a nation valued in terms of money. It is the money value of all final goods and services produced in a country during a period of one year. It is the money value of the end result of all economic activities of the nation. Conceptually, national income refers to the money value of the entire volume of final goods and services resulting from all economic activities of the country. National income is the most important macroeconomic variable and determinant of the business level and economic status of a country.The level of national income determines the level of aggregate demand for goods and services. National income concepts 1.Gross National Product (GNP) 2. Gross Domestic Product (GDP) 3. Net National Product (NNP) Gross National Product-GNP-GNP is the most important and widely used measure of national income. It is the most comprehensive measure of the national productive activities in an open economy. It is the value of all final goods and services produced during a specific period, usually one year, plus income earned abroad by the nationals, minus incomes earned locally by the foreigner Gross Domestic Product-GDP -GDP is defined as the market value of all final goods and services produced in the domestic economy during a period of one year, plus income earned locally by foreigners, minus income earned abroad by the nationals.The concept of GDP is similar to that of GNP with a significant procedural difference NNP is defined as GNP less depreciation.NNP = GNP depreciation.NNP gives the measure of net output available for consumption by the society (including consumers, producers, and the Govt.).NNP is the real measure of national income.NNP = NNI (net national income). NNP is the same as national income at factor cost. NNP is measured at market prices including direct taxes. Indirect taxes are not a part of actual cost of production. Therefore, to obtain real national income, indirect taxes are deducted from the NNP. National income is NNP less indirect taxes

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There are many concepts of national income which are used by different economists and all of which are inter-related. For measuring national income, an economy is viewed from three different angles: 1. Net product method -the national economy is considered as an aggregate of productive units of different sectors such as agriculture, mining, manufacturing, trade and commerce, services, etc. The production method measures national income as the sum of net products produced by the production units in the given period. Therefore, the production method involves the following steps: (i) Identifying the production unit (ii) Estimating their net products (iii) Valuing the goods and services (iv) Estimation of net income from abroad. 1. estimating the gross value of domestic output in the various branches of production. 2. determining the cost of material and services used, and also the depreciation of physical assets 3. deducting these costs and depreciation from gross value to obtain the net value of domestic output. 2. The income method- the whole of national economy is viewed as a combination of individuals and households owning different kinds of factors of production which they use themselves or sell factorservices to make their livelihood. factor-income method -The income method measures national income as the sum total of factor income shares accruing to the factor owners. Factors of Production: Land, Labour, Capital and Organization. Factor Incomes: Rent, Wage, Interest and Profit. One can easily aggregate all the factor incomes over a period of time and this aggregate figure is known as national income at factor cost. There are major additions and deductions to the national income accounting. Additions: Income from foreign sectors in the form of rent, profits etc. Deductions: Incomes from all illegal activities: theft, rubbery, smuggling, child labor, prostitutions etc., Incomes to the foreign sector acting in domestic sectors .The total factor-incomes are grouped under three categories: 1. Labour incomes, 2.capital incomes and 3. mixed incomes 3. The expenditure method -The national economy may also be viewed as a collection of consuming, saving and investing units (individuals, households, firms and governments- expenditure method ) The expenditure method measures national income at the final expenditure stages. In estimating the total national expenditure, anyone of the two following methods are used: All the money expenditures at market price are computed and added up together. The value of all the products finally disposed off are computed and added up Factors affecting national income 1. Factors of Production Normally the more efficient and richer the resources, the higher the level of national income or GNP will be.-a)Land-Resources like coal, iron & timber are essential for heavy industries so that they must be available and accessible.- In other words, the geographical location of these natural resources affect the level of GNP. b)Capital-Capital is greatly determined by investment. Investment in turn depends on other factors like profitability, political stability etc. c) Labour & Entrepreneur The quality or productivity of human resources is more important than quantity.-Manpower planning and education affect the productivity and production capacity of an economy

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2. Technology -This factor is more important for nations with little natural resources. The development in technology is affected by the level of invention and innovation on production. 3.Government -Government can help to provide a favourable business environment for investment. It provides laws and order, regulations that affect exchanges.The government promotes free trade and competition which encourage economic activities 4. Political Stability -A stable economic and political system helps the allocation of resources. Wars, strikes and social unrests will discourage investment and business activities Uses of National Income Statistics Standard of Living The per capita GNP allows us to compare the standard of living of different nations. In general, a nation has a higher standard of living if its per capita GNP is greater than that of another nation. Policy Formulation In the compilation of GNP statistics, the government had already gathered a lot of information of the economy. The government can base on these figures to plan and decide its policies International Comparison By converting the local GNP figures into a common unit ( usually in US$ ), we can compare the standard of living of different nations. It helps to show the rate of growth or development of different nations. Business Decision -The GNP figures can show the level of development of different industries and sectors of an economy. It helps the businessmen to plan for production MODULE-3 The ISLM Model

IS curve is the relationship between equilibrium aggregate output and the interest rate-LM curve is the combinations of interest rates and aggregate output for which MD = MS Equilibrium in the goods market implies that an increase in the interest rate leads to a decrease in output. Equilibrium in financial markets implies that an increase in output leads to an increase in the interest rate. When the IS curve intersects the LM curve, both goods and financial markets are in equilibrium. IS and LM interactions The IS curve captures the essential relationship between the- rate of interest and income in the markets for goods and services- (the circular flow of income). The LM curve captures the essential relationship between the rate of interest and income in the money market. For the two markets to be consistent with each other - the same rate of interest ruling in both the goods and services market and in the money market - there can only be one equilibrium level of national income (Y*), shown by the intersection of the IS curve with the LM curve Fiscal policy refers to the governments choices regarding the overall level of government purchases or taxes. Fiscal policy influences saving, investment, and growth in the long run. In the short run, fiscal policy primarily affects the aggregate demand. When policymakers change the money supply or taxes, the effect on aggregate demand is indirectthrough the spending decisions of firms or households .When the 63

government alters its own purchases of goods or services, it shifts the aggregate-demand curve directly. When the government alters spending or taxes, the resulting shift in aggregate demand can be larger or smaller than the fiscal change. The multiplier effect tends to amplify the effects of fiscal policy on aggregate demand. The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand. What is Monetary Policy? The term monetary policy refers to actions taken by central banks to affect monetary magnitudes or other financial conditions. Monetary Policy operates on monetary magnitudes or variables such as money supply, interest rates and availability of credit. Policy ultimately operates through its influence on expenditure flows in the economy. In other words affects liquidity and by affecting liquidity, and thus credit, it affects total demand in the economy MP is a part of general economic policy of the govt.-Thus MP contributes to the achievement of the goals of economic policy. Objective of MP may be: Full employment, Stable exchange rate, Healthy BoP , Economic growth, Reasonable Price Stability, Greater equality I distribution of income & wealth, Financial stability ,Variations in Reserve Ratios Instruments of Monetary Policy 1.Discount Rate (Bank Rate) (also called rediscount rate) 2.Open Market Operations (OMOs) 3.Other Instruments Policy in the IS-LM Model - Fiscal Policy-Expansionary fiscal policy shifts the IS curve to the rightContractionary fiscal policy shifts the IS curve to the left Monetary Policy- Expansionary monetary policy shifts the LM curve to the rightmonetary pol icy shifts the LM curve to the lef. Problems Using IS-LMA. Interpretation Problems (what is happening?)-Problems in knowing how to interpret real-world events within the IS-LM framework B. Implementation Problems (how to deal with it?) C. Problems encountered in undertaking policy Contractionary

MODULE-4 1. Keynes theory- Keynes theory of income and employment is based on the concept of aggregate demand and aggregate supply

aggregate demand- the value of total expenditures on all goods and services in the economy during a specific period of time Components: a. house hold consumption demand b. Investment demand c. govt. demand d. Net export demand. Y= C+ I+ G + NX Aggregate supply: the quantity of goods and services produce by the entire economy - AS= C+S

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Classical concept. AS curve is perfectly inelastic with respect to prices. It is at full employment level of out put.-Keynes model: AS is perfectly elastic with respect to prices until the full employment level of out put .firms are willing to supply any amount of out put at the prevailing price level. The Multiplier: The view that a change in autonomous expenditures (e.g. investment) leads to an even larger change in aggregate income. An increase in spending by one party increases the income of others. Thus, growth in spending can expand output by a multiple of the original increase. The multiplier is the number by which the initial change in spending is multiplied to obtain the total amplified increase in income. The size of the multiplier increases with the -marginal propensity to consume (MPC). 2.Classical theory -Refers to the theory first proposed by Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations.Classical theory was the predominant theory in industrialized nations from the time of Adam Smith until the Great Depression. The ideal quantity of total output is the quantity that will yield full employment of labor. The quantity of total output that results in full employment of labor is called Natural Real GDP. According to classical theory, a market economy is s Classical theory argues that inadequate demand cannot be a problem in a market economy due to Says Law. Says LawSupply creates its own demand. The act of production leads to equivalent income to resource owners According to classical theory, flexible interest rates in the credit market cause any consumer savings to be exactly offset by business investment. This assumes that the quantity of both savings and investment is determined by the interest rate are self-regulating and will automatically adjust to Natural Real GDP. According to classical theory, the economy is self-regulating and will automatically close a recessionary gap. The surplus of labor will cause wage rates in the economy to fall. The decrease in wage rates will shift the SRAS curve to the right, until Natural Real GDP is reached According to classical theory, the economy is self-regulating and will automatically close an inflationary gap. The shortage of labor will cause wage rates in the economy to rise. The increase in wage rates will shift the SRAS curve to the left, until Natural Real GDP is reached. If the economy is self-regulating and automatically adjusts to Natural Real GDP, the proper macroeconomic policy is laissez-faire 3 Rostow's ModelStage 1 Traditional Society-The economy is dominated by subsistence activity where output is consumed by producers rather than traded. Any trade is carried out by barter where goods are exchanged directly for other goods. Agriculture is the most important industry and production is labour intensive using only limited quantities of capital. Resource allocation is determined very much by traditional methods of production. Stage 2 Transitional Stage (the preconditions for takeoff)-Increased specialisation generates surpluses for trading. There is an emergence of a transport infrastructure to support trade. As incomes, savings and investment grow entrepreneurs emerge. External trade also occurs concentrating on primary products Stage 3 Take Off- Industrialisation increases, with workers switching from the agricultural sector to the manufacturing sector. Growth is concentrated in a few regions of the country and in one or two manufacturing industries. The level of investment reaches over 10% of GNP.The economic transitions are accompanied by the evolution of new political and social institutions that support the industrialisation. The growth is self-sustaining as investment leads to increasing incomes in turn generating more savings to finance further investment. 65

Stage 4 Drive to Maturity-The economy is diversifying into new areas. Technological innovation is providing a diverse range of investment opportunities. The economy is producing a wide range of goods and services and there is less reliance on imports. Stage 5 High Mass Consumption-The economy is geared towards mass consumption. The consumer durable industries flourish. The service sector becomes increasingly dominant. 4.Harrod-Domar Model- The model suggests that the economy's rate of growth depends on: the level of saving, and the productivity of investment i.e. the capital output ratio. Warranted growth the rate of output growth at which firms believe they have the correct a mount of capital and therefore do not increase or decrease investment, given expectations of future demand. Natural rate of growth The rate at which the labour force expands, a larger labour force generally means a larger aggregate output. Actual growth The actual aggregate output change. There is no guarantee that an economy will achieve sufficient output growth to sustain full employment in a context of population growth. The problem arises when actual growth either exceeds or fails to meet warranted growth expectations. A vicious cycle can be created where the difference is exaggerated by attempts to meet the actual demand, causing economic instability - Capital stock (K) ,Output (Y) GDP, Capital-Output ratio (k): the dollar amount of capital needed to produce a $1 stream of GDP. K/Y or K/Y, Savings (S) and the savings ratio (s): the fixed proportion of national output that is used for new investment So S = sY(1) Net investment is the change in the capital stock I = K (2) Remember that k = K/Y or K/Y, so that ----K = kY (3) Net savings must equal to net investment so that S = I. Combining (1), (2) and (3): sY = kY ------s/k = Y/Y ------ Y/Y is the growth rate of GDP . 5.Schumpeter model -Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long- term economic growth. Innovations in the information and communications technology (ICT) industry are glaring examples of modern day constructive destruction MODULE-5 - Exchange Rate-BOP Exchange rates -The value of one currency relative to another currency as the number of units of one currency required to purchase one unit of the other currency. Foreign Exchange Market The financial market where exchange rates are determined -Transactions conducted in the foreign exchange market determines the rates at which currencies are changedThe price of one currency in terms of another is called exchange rate. There are two kinds of exchange rate based on transactions that make up the foreign exchange market:Spot transactions involve the near-immediate exchange of bank deposits, completed at the spot rate. -Forward transactions involve exchanges at some future date, completed at the forward rate. When a currency increases (decreases) in value, it experiences appreciation (depreciation)----

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Flexible exchange rates are exchange rates, which fluctuate according to market forces. Advantages: a.Allow countries to maintain independent economic policies. b. Permit a smooth adjustment to external shocks. C Don't need to maintain large internationalreserves.3.Disadvantages: a. Flexible exchange rates are highly unstable so that flows of foreign trade and investment may be discouraged. b.They are inherently inflationary Fixed exchange rates are exchange rates which do not fluctuate or which change within a predetermine band.2Fixed exchange rates provide the stability of exchange rate, but their disadvantages include: a)Too rigid to take care of major upheavals. B). Need large reserves to defend the fixed exchange rate. C). May cause destabilizing speculations; most currency crises took place under a fixed exchange system. Defining Balance of Payments (BOP):A measurement of all international economic and financial transactions between the residents of a particular country and the rest of the world The Balance of Payments of any country is divided into two major accounts: the Current Account and the Capital/Financial Account. Current Account tracks: Balance of Trade: (net) merchandise exports and imports. Services Balance: (net) financial services and travel (other) services -Financial: Provided by banks to non-residents. Travel /other: Provided by domestic entities to foreign country residents, such as meals, hotels, air travel, student exchanges, construction. Income Balance: (net) investment income from abroad and to foreign entities (arises from previous investments).Net Transfers: (net) private remittances to residents abroad (money/gifts) or by governments (aid). The Capital and Financial Accounts -capture cross border investments during a recorded period. Capital Account: Purchases (or sales) of real estate.-Financial Account:(net) Foreign Direct investment (FDI).FDI in the U.S. minus U.S. FDI abroad -(net) Portfolio investment-Non-controlling equity investments, i.e., common stock (<10%)-Debt instrument investments (i.e., bonds).-Include both personal and institutional (mutual funds)-(net) Other financial transactions-Bank loans. A countrys BOP can have a significant impact on the level of its exchange rate and vice versa depending on that countrys exchange rate regime-The effect of an imbalance in the BOP of a country works somewhat differently depending on whether that country has fixed exchange rates, floating exchange rates, or a managed exchange rate system-Under a fixed exchange rate system the government bears the responsibility to assure a BOP near zero-Under a floating exchange rate system, the government of a country has no responsibility to peg its foreign exchange rate Direct Investment in which the investor exerts some explicit degree of control over the assets-Portfolio Investment in which the investor has no control over the assets nor any participation in the management-Other Investment consists of various short-term and long-term trade credits, cross-border loans, currency deposits, bank deposits and other capital flows related to cross-border trade Advantages- Growth of capital stock-Incorporated technologies-Possibilities to gain managerial and labor skills-Higher incomes and economic development. (Taxation for public sector)-Finance educationFinance health-Finance infrastructure development, etc.

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Trade Restrictions: Arguments -National Defense. 2Sanctions to Punish Offending Nations 3.Protect Infant (or Dying) Industry 4.Protect Domestic Jobs from Cheap Foreign Labor 5.Scientific Tariff or Fair CompetitionCountries use protectionist measures to shield a countrys markets from intrusion by foreign competition and imports Arguments for Protectionism include:1maintain employment and reduce unemployment.2increase of business size, and 3retaliation and bargaining.4protection of the home market. 5need to keep money at home.6encouragement of capital accumulation.7maintenance of the standard of living and real wages.8conservation of natural resources.9protection of an infant industry 10industrialization of a lowwage nation .11national defense KINDS OF TRADE RESTRICTIONS 1Tariff barriers- (Qualitative barriers) a.Ad valorem duty, b.Specific duty -cCompound duty- dVariable levy- Creates revenue for government Benefits-Infant industry protection-Dumping of foreign goods at low prices to kill off competitionCheap labour protection from cheap foreign labour-Strategic trade policy national welfare at the cost of other nations-Externalities protect industries from foreign competition in order for them to capture benefits of R&D 2.Non-tariff barriers (Quantitative barriers) a.Quotas b.Voluntary export restraints, c. Orderly marketing arrangements 3.Non-quantitative, non-tariff barriers-a.Direct government participation in trade-b.Customs and other administrative procedures-c.Standard. Intellectual Property is a property that arises from the human intellect. It is a product of human creation. Intellectual Property is the creation of the human intellectual process and is therefore the product of the human intellect or mind. It is an intangible form of property. It is a personal property. It is a basic form of property. It is based on information Economic liberalization is a process and a matter of degree MEANING Grant of exclusive rights for a certain period over intangible assets created through human skill, intelligence, labour and effort INTELLECTUAL PROPERTY RIGHTS IN INDIA CHIEF COMPONENTS 1Copyright 2.Trademark -3Patent 4.Industrial Designs-5Geographical indications-6 Semi-conductors (Layout-Designs (Topographies) of Integrated Circuits) -7.Plant Variety & Bio-Diversity IPR PROTECTION MECHANISM IN INDIA- SALIENT FEATURES In conformity with International standards and as amended from time to time, the Indian laws provide for both civil and criminal liability; Protection available to both registered as well as unregistered IPRs

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through civil suits, temporary / permanent injunction, arrest, penalty, damages, compensation etc.; Criminal remedy more effective than civil proceedings; GOVERNING STATUTES & TERM OF PROTECTION Under Copyright Act, 1957 Lifetime + 60 yrs., for Natural entity and 50 yrs. from publication for Artificial Entity; Under Patents Act, 1970 20 year, renewable; Under Trademarks Act, 1999 10 year, renewable; Under Designs Act, 2000 - 10 year + 5 year extension; Under Geographical Indications of Goods (Registration and Protection) Act,1999 10 Years; Under Protection of Plant Variety & farmers Right Act, 2000 Maximum 18 years; Biological Diversity Act, 2002; Under Semiconductor Integrated Circuits Layout Design Act, 2000, 10 year. Act to be implemented hence no protection as of date ECONOMIC LIBERALIZATION- The level of liberalization of a countrys economy cannot be determined in absolute terms, and has to be assessed on a comparative basis-There may be various factors which can help to characterize a particular economy as regulated or liberalized, such as (1) level of private enterprise (2) macro economic policy (3)m icro economic policy 1) level of private enterprise 1. What percentage of the GDP comes from private ownership? What percentage of the labor force is employed in the private sector? How large is the informal sector of the economy? 2. What major privatization legislation has been passed? What were its substantive features? 3. What proportion of agriculture, housing and land, industry, and small business and services is in private hands? 4. What has been the extent of insider (management, labor, and nomenklatura) participation in the privatization process? What explicit and implicit preferences have been awarded to insiders? 5. How much public awareness of and support for privatization has there been? What is the nature of support and opposition to privatization by major interest groups 2) Macro economic policy1. Has the taxation system been reformed? What areas have and have not been overhauled? To what degree are taxpayers complying? Is tax compliance difficult to achieve? Has the level of revenues increased? Is the revenue-collection body overburdened? What is the overall tax burden? 2. Does fiscal policy encourage private savings, investment, and earnings? Has there been any reform/alteration of revenue and budget policies? How large are budget deficits and overall debt? Is the financing of the social insurance/pension system sustainable? What proportion of the budget is taken up by subsidies to firms and individuals? 69

3. Has there been banking reform? Is the central bank independent? What are its responsibilities? Is it effective in setting and/or implementing monetary policy? What is the actual state of the private banking sector? Does it conform to international standards? Are depositors protected? 4. How sound is the national currency? Is the value of the currency fixed or does it float? How convertible is the currency? How large are the hard currency reserves? Has exchange rate policy been stable and predictable 5. Is there a functioning capital market infrastructure? Are there existing or planned commodities, bond, and stock markets? What are the mechanisms for investment and lending? What government bodies have authority to regulate capital markets? Does the regulatory system provide for investor protection, transparency and corporate accountability. 3)micro economic policy-1.Are property rights guaranteed? Are there both formal and de facto protections of private real estate and intellectual property? Is there a land registry with the authority and capability to ensure accurate recording of who owns what? What are the procedures for expropriation, including measures for compensation and challenge? Have any seizures taken place? 2. To what extent have prices been liberalized? What subsidies remain? 3 Is it possible to own and operate a business? Has there been legislation regarding the formation, dissolution, and transfer of businesses, and is the law respected? Do there exist overly cumbersome bureaucratic hurdles that effectively hinder the ability to own and dispose of a business? Are citizens given access to information on commercial law? Is the law applied fairly? Do regulation or licensing requirements impose significant costs on business and consumers? Do they create significant barriers to entry and seriously hamper competition?. 4Is business competition encouraged? Are monopolistic practices limited in law and in practice? If so,how? To what degree is "insider" dealing a hindrance to open competition? Are government procurement policies open and unbiased? 5. Are courts effective, transparent, efficient, and quick in reaching decisions on property and contract disputes? What alternative mechanisms for adjudicating disputes exist?6. Does corruption inhibit business? 7. To what extent has international trade been liberalized? To what degree has there been simplification/overhaul of customs and tariff procedures, and are these applied fairly? What informal trade barriers exist? 8. To what extent has foreign investment and capital flow been encouraged or constrained 9. Has there been reform of the energy sector? To what degree has the energy sector been restructured? Is the energy sector more varied, and is it open to private competition? Is the country overly dependent on one or two other countries for energy, including whether exported fuels must pass through one or more countries to reach markets? 10. How stringent are the labour laws? How co-operative are the workforce and the trade unions? 11. How effective is the legal framework for creditor rights? 12. How sensitive are the insolvency laws to creditor rights? Do the insolvency laws provide for corporate recovery? How efficient is the system for rehabilitation of viable business? QUESTIONS 1. 2. 3. 4. 5. 6. 7. What are the major features of Micro and Macro Economics? Define Micro and Macro Economics. How these two are helpful to managers? Explain the major benefits of Micro and Macro Economics? Distinguish between internal and external environment of business. Explain the emerging business environment and business ethics in India. .Explain the Law-of diminishing marginal utility theory with a suitable example. Distinguish between cardinal & ordinal utility analysis. 70

8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

Define indifference curve. How it helps to explain low of demand? How price effect can be divided in to income and substitution effect? What is equi-marginal principle? How it explains consumers equilibrium? Define price elasticity of demand and explain its importance in management decisions. Explain, with diagrams- the different degrees of price elasticity of demand. Explain the concepts-income elasticity, cross- elasticity, advertisement elasticity, elasticity of price expectation. Define production function. Explain the law of variable proportion. How long run average cost curve explain the law of return to scale. write a brief note on economies of scale. Explain the price and out put determination method of perfect competition. What is monopoly? What are the major features? How price is determined in monopoly? Explain the functioning of oligopoly market. Discuss the various oligopoly models. What is full coast pricing? what is the relation between product life cycle and pricing? Describe an economy in terms of circular flows of income and expenditure. What is meant by withdrawals and injections? Define national income, what is its importance? what are the important methods of national income measurement Explain the Keynesian theory of income and employment. How it differ from classical model? Explain the concept of multiplier with a suitable example. Explain the classical model of economic planning How Keynesian model is differ from classical model? Critically examine Rostows model of economic planning explain the role of savings in Harror- Domer Model of economic planning. Competition through innovation is the driving force of economic development -explain Explain the concept of ISLM. How these are deriving and reaching an equilibrium? Explain the effect of monetary and fiscal policy with the help of ISLM model. What are the Problems of Using IS-LM in the Real World? .Briefly describe ,how BOPs are use full for exchange rate determination. How BOP differ from BOT? Explain the role of foreign private investment in correcting BOPs of LDCs, and critically examine their debt management policies. .How protectionism will help to correct BOP problems? .Explain the major prospects of economic liberalization in LDCs - take India as an example

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EXECUTIVE COMMUNICATION
MODULE- 1 COMMUNICATION It is derived from the Latin word communis which means common. It is an important aspect of human behavior and symbolizes human beings ability to convey opinions, feelings, information and ideas to others through words, body language or signs. Features of communications It is the life blood of the business It is a continuous process It needs proper understanding It involves interaction and transaction Leads achievement of the organizational objective Functions and importance of communication in business organization: Communication is the life blood of organization Maintain good employee-employer relationship Avoids Organizational Conflict Boost the Morale of Employees Helps in effective Decision Making Powerful Motivational Tool Helps in Better Coordination and accomplishing Organizational Goals Communication Models: Linear Model

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Transaction Model

Principles of Business communication: Clarity Completeness Conciseness Consideration Courtesy Correctness

Formal communication

It is a means of communication that is formally controlled by managers or people occupying positions in an organization. Communication flows through formal channels. Informal communication Side by side with formal channels of communication there exists on a much larger scale, an informal channel of communication or a secondary network of information. It is also known as grapevine communication. Internal Operational Communication It consists of the structured communication within the organizations work goal. External Operational Communication It is that part of an organizations communication structure which is concerned with achieving the organizations work goals 73

Downward Communication: employer or superior to

Communication that flows from upper to lower (such as manager to

subordinate). It conveys executive decisions and provides information that helps employees do their jobs. Job instructions, job rationales, procedures and practices information, feedback, and indoctrination are examples of downward communication. Upward Communication:

Transmission of messages from lower to higher levels of the organization (such as communication initiated by subordinates with their superiors). Performance on the job, job related problems, fellow employees and their problems, subordinates perceptions of org policies and practices, tasks and procedures are some examples of upward communication. Horizontal Communication:

Flow of messages across functional areas at a given level of an organization (this permits people at the same level to communicate directly). It flows between different departments Facilitates problem solving, info sharing across different work groups, task coordination between departments and project teams are examples of horizontal communication. Grapevine Communication: It represents the unofficial channels of communication which are created and controlled by people themselves rather than the management. It follows no set of lines or definite rules, but it spreads very fast like the grapevine. Rumors being communicated in an organization are also a type of grapevine. Information Overload: It is a term popularized by Alvin Toffler that refers to the difficulty a person can have understanding an issue and making decisions that can be caused by the presence of too much information. The term itself is mentioned in a 1964 book by Bertram Gross, The Managing of Organizations

One-way communication Communication in which information is always transferred in only one pre-assigned direction. It does not include a return channel.

Two-way communication Two-way communication - uses communication to negotiate with publics, resolve conflict, and promote mutual understanding and respect between the organization and its public(s). 74

MODULE 2 BODY LANGUAGE: Branch that deals with the study of the way body communicates is called Kinesics. It stands for the way the body communicates without words, and through the movement of its parts. KINESICS It is also called body language. Movements of the body, or some part of it, used to communicate an idea, intention or feeling. BARRIERS OF COMMUNICATION 1. 2. 3. 1. i. ii. iii. 2. i. ii. iii. iv. 3. i. ii. iii. iv. 1. Language and Semantic barriers Organisational barriers Physical barriers Semantic barriers Lack of common language Poor vocabulary Poor knowledge of grammar and punctuation Organisational barriers Line of hierarchy Strict rules and regulations Wrong medium of communication Overload of communication Physical barriers Noise Time Distance Gender barriers Psychological barriers Attitudinal barriers Attitude of seniors Attitude of juniors 2. Difference in perceptions 3. Abstraction 4. Stereotyping 5. Emotional barriers

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6. Cultural barriers 7. Poor listening skills 8. Lack of feedback Proxemics:Study of how we use space around to communicate the message ie, proxemics is the personal space language. There are 4 types of informal spaces (a)Intimate zone-physical contact to 18 inches Here only family members, close friends or selected persons are allowed. (b)Personal zone-18 inches to 4 feet This is meant for conversations with peers, friends, colleagues etc. (c)Social zone-4 feet to 12 feet This is used for formal & official relationships. (d)Public zone-12 feet to 30 feet This is most suitable for public meetings. Semiotics It is the study of cultural sign processes (semiosis), analogy, metaphor, signification and communication, signs & symbols. It divided into three branches, which include: Semantics : Relation between signs and the things to which they refer Syntactics : Relations among signs in formal structures Pragmatics : Relation between signs and the effects they have on the people who use them Phonetics It is the systematic study of the production, transmission & reception of speech sounds. Study of sounds of human speech or pronunciation. 3 categories Articulatory phonetics : according to production in the vocal organs Acoustic phonetics : according to physical properties Auditory phonetics : according to effect of sound on the ear Graphics Graphics are visuals that aim to inform, illustrate or entertain through print or audio visual mediums of mass communication. Graphic communication is the communication through graphics & graphical aids. It encompasses all processes from the origination of the idea through reproduction, finishing & distribution of 2 or 3- dimensional products or electronic transmissions.

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It involves using visual material such as drawings, photographs, slides, transparencies & sketches to relate ideas. Colour Colour produces emotional response to peoples mind. Different colours produce different feelings. Red - alertness, excitement, lively & aggressive Orange being happy, exotic, healthy & vibrant Yellow being communicative, friendly, imaginative & playful Green being clean, natural, adventurous & analytic Blue being faithful, lonely, quite & rational Purple being creative, magical, mystical, artistic & sophisticated White safety, purity, cleanliness, innocence, goodness, perfection Black power, death, elegance, formality, death, evil, mystery, fear, strength, authority, grief Patterns of communication They are methods of communication that are used frequently in specific circumstances or with certain people. It determines the way in which communication happens in an organisation. Various patterns of communication are Chain members communicate with people next to them in sequence Wheel information flow to & from one single member Circle communicate with any 2 other members All channel / Comcon communicate with all the members in a group Communication networks A communication network represents a pattern of information flow among group members. 2 types centralised network & decentralised network Centralised network one central person - Unequal access of information Types :Y network Wheel network Chain network Decentralised network No central person -Information can flow freely Types :Circle network All channel network

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Feed forward and feedback:-

past.

Feed forward Giving someone else positive suggestions for the future rather than focussing on negatives of the It allows a leader to create an image of desired management behaviours in the future. Feedback It is the response of a receiver to senders message. It could be nonverbal smiles, signs, oral or written. Feedback should be more affective if it is well-timed. 2 types positive & negative. Positive feedback suitable acknowledgement of a task performed well Negative feedback opposite to the favourable expectations of the receiver MODULE-3

Measures and Solutions for effective communication 1. 2. 3. 4. 5. 6. 7. Clear and expressive Avoid jargons Receiver should be involved Noise should be avoided Choose correct technique of communication Effective organisational structure Hierarchical problems

Communication in negotiation An interactive communication process that may take place whenever we want something from someone else or another person wants something from us. Characteristics of negotiation 1. 2. 3. 4. 5. Minimum two parties Pre-determined goals Expectation of outcome Outcome should be satisfactory Willing to compromise

Approaches to negotiation 1. 2. 3. 4. Win-lose Lose-lose compromise Win-win

Negotiation process 1. Preparation 78

2. 3. 4.

Opening phase Bargaining phase Closure phase

Role of IT in effective communication 1. 2. 3. 4. 5. 6. Increases productivity Reduces stress Better understanding Better means of conveying message Enhances relationship Saves time and money

Transactional analysis It is defined by Websters New Dictionary as a form of popular psychotherapy conducted on the premise that there are three states of the ego (parent, adult, and child) in each individual, which must be brought into balance.

The parent ego state is authoritarian, the adult ego state is rational and child ego state is impulsive. It is a study of many types of transaction that take place between people, and offers a model of personality and the dynamics of self and its relationship with others. Ego state Self awareness Script analyses Stroking Game analyses Ego states 1. Parent ego 2. Adult ego 3. Child ego Self awareness 1. 2. 3. 4. Open self Blind self Hidden self Unknown self

Script analyses 1. 2. 3. 4. I am ok, you are ok I am ok, you are not ok I am not ok, you are ok I am not ok, you are not ok

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Stroking Recognition of others, and strokes are the units of interpersonal recognition Games analysis In game playing, people assume 3 roles they are: 1. 2. 3. Persecutors Victims rescues

Benefits of transactional analysis 1. 2. 3. 4. 5. development of positive thinking interpersonal effectiveness motivation self evaluation improve communication skill

Speaking in business communication Forms of speaking

Face-to-Face Communication Mechanical Device a) Speaking Tubes b) Dictating Machines Intercoms Functions of speaking 1) To improve and enhance their academic performance. 2) To increase the options of employment. 3) To enhance their subsequent professional competence 4) To improve their personal effectiveness. Types of speaking Speaking with confidence Informal conversation Beauty pageants Pantomime script Teaching Extemporaneous speaking

Listening 80

Effective listening is the process of analysing sounds, organizing them into recognisable patterns, interpreting the patterns and understanding the message by inferring the meaning. Types and functions of listening Objectives of listening To learn To increase ones understanding To adverse counsel To relieve ones boredom Importance of listening Communication is not complete without effective listening. An alternative listener stimulates better speaking by speaker. A good listener learns things more than others. A good listener learns to detect prejudices, assumptions and attitudes. Main process in listening Hearing Filtering Comprehending Remembering Responding Levels of listening Non-listening Passive listening Active listening Major types of listening Discriminative listening Comprehension listening Evaluative listening Attentive listening Pretence listening Selective listening Intuitive listening MODULE IV BUSINESS CORRESPONDENCE Business correspondence or business letter is a written communication between two parties. BC means through which views are expressed and ideas or information is communicated in writing in the process of business activities. Principles of letter writing i. Correctness- a letter should provide accurate data without errors. Sentences should be free from grammar mistakes. Words should be correctly chosen and proper spelt. ii. Coherence- It implies use of proper words in proper place to make the meaning logically complete and easily understandable to the reader. 81

iii. Clearness Use simple and right words. Avoid unnecessary words and jargons. iv. Consistency-Use related ideas to make up theme. Avoid contradictory view points or terms and conditions. v. Courtesy - Be positive and optimistic. Try to avoid negative expressions. vi. Completeness Develop message in your mind before you write or dictate. vii. Clarity- Message should be expressed in clear terms and should avoid ambiguity. viii. Relevant information- Facts, figures and information must be accurate, reliable and should contain relevant matters. Styles: Indented form Full block form Modified block form Hanging indentation Full block form

Planning of letter writing Understand the context Use words appropriate to the subject Use short sentences and paragraphs Use standard draft or format Specialised writing 82

Constant improvisation Types of business letters Complaint letters- are an effective way of expressing the customers/consumers dissatisfaction with a product or service. Adjustment letters- is a responsive letter to a complaint made by a customer in writing. Collection letters- otherwise called recovery letters, which sometimes sends to customer to pay money or to recovery some money. Reminders- otherwise called follow up letters, which most often the reminder letter is used as a reminder of the missed payment Enquiry appeal- it is a letter made by prospective customers regarding availability of various products, services and other related aspects. Warning letters- it is used in companies to improve the performance of employees or for curbing any kind of bad behaviour. Sales letters- is a piece of direct mail which is designed to persuade the reader to purchase a particular product or service in the absence of a salesman. AIDA Strategy In AIDA strategy marketers capture the attention of the potential customer, generate interest, desire and specified action. The four letters in AIDA represents following words: A Attention I- Interest D- Desire A-Action Job employment letter Application letters seeking jobs essentially of two types: i. ii. Suomoto In response

Resume writing Tips Tip 1 - Use Titles or Headings That Match the Jobs You Want Tip 2 - Use Design That Grabs Attention Tip 3 - Create Content That Sells Tip 4 - Quantify and Use Power Words Tip 5 - Analyze Ads and Job Descriptions to Identify Key Words Tip 6 - Identify and Solve Employer's Hidden Needs Tip 7 - Sell the Benefits of Your Skills Tip 8 - Create an Image That Matches the Salary You Want Tip 9 - Prioritize the Content of Your Resume 83

Tip 10 - Tweak and Target Your Resumes and Cover Letters .Job Resume Format and Example Gary Andrews 512 North St. Los Angeles, California, USA (012) 345-6789 garry.pants@aol.com CAREER OBJECTIVE Seeking a dynamic position in Web Developing in order to increase my knowledge and further develop my skills in the field CAREER PROFILE Presently employed in one of the top web design company Provides fresh designs and on demand applications for the site Professional and work oriented Handled high end web projects and maintenance More than 5 Years of working experience in the field WORK EXPERIENCE Web Master 2008 present

Patriots Studios, Los Angeles, California

Conducts regular maintenances on each website created by the company Makes sure that the website is bullet proof and free from bugs and errors Ensures that the website is accessible by the public and the employees all the time Provides contact information for problems and inquiry encountered by users with the web site 2006 2008

Web Designer

Speed Limit Studios, Los Angeles, California, USA Created eye catching and interactive web pages for clients Enhanced and modified previously created web pages if more suitable designs and applications become available Communicated with the client for their own preferences on how their websites appearance and functionalities 84

Computer Analyst

2004 2006

Select Corporation, Los Angeles, California, USA Determined the software and hardware needed by the company Provided computer technology solutions that aid faster growth in the company Presented solutions to problems regarding Information Technology in general EDUCATIONAL BACKGROUND Bachelors Degree in Computer Science Los Angeles Technical University California, USA Major in Computer Programming Minors in IT Management Graduated with honours Deans Lister for 6 semesters TECHNICAL EXPERTIES Languages: HTML, XML, CSS, Java, C++ Software: Adobe Dream Weaver, Adobe Photo Shop, Macromedia Flash, Visual Studio.Net, Visual Basic 6 and MS Office. CHARACTER REFERENCES Available upon request 2000 2004

MODULE-5 EMAIL-ELECTRONIC MAIL Computer based messaging system that transports electronic messages from one computer to another through a communication network. ADVANTAGES OF USING E-MAIL E-mail communication is swift, in fact instantaneous E-mail communication is extremely economical E-mail communication has a large global reach and access The sender can send copies of the message to many others instantaneously It can be stored and retrieved as and when required by both of the sender and the receiver COMMUNICATION NETWORKING SYSTEM 85

Word processor; these relate to software that facilitate better organized and appealing business correspondence. Teleconferencing; is a conference or discussion that takes place over the telephone. Video conferencing; video conferencing goes on a step ahead of teleconferencing, whereby apart from the audio messages, video messages are available. Short messaging services; is yet another message transmission medium that has grown rapidly in both developed and the developing countries. CHARACTERISTCS OF BUSINESS REPORTS Generally submitted to a higher authority Communicates upwards in an organisation Logically organised Objective in tone For a limited audience Both short and long IMPORTANCE OF BUSINESS REPORTS Conveyor of information; report serve as conveyor of information. Review and evaluate operations; reports help management to review and evaluate operations continuously. Decision making; a report aims at providing correct, objective and suitable information to persons who require it so that correct decision can be taken at his end. Better coordination; reports aim to provides common understanding of information between different groups in the organization thus ensuring better coordination. Tools for measuring performance; reports are useful tools for measuring departmental performance. Help in making desirable changes; reports help in making and implementing desirable changes to business polices. STRUCTURE OF REPORTS Title page Table of contents Acknowledgements Executive summary Body of the report TYPES OF BUSINESS REPORTS Informational reports and analytical reports Routine or periodic reports and special reports Informal and formal reports STEPS IN REPORT WRITING Planning; it is the first step in the writing process. It involves, knowing the purpose of message, knowing the audience, determining the contents of the message, gathering the collection information, organization of the message. Drafting; compose; the first version of the message. Revising; once the draft is ready, revise the writing. 86

Formatting; it gives a neat and visually appealing look to the document. Proofreading; this is the last opportunity of the writer has to make any changes to the message before it passes on to the reader. WRITING STYLE OF REPORTS Use of short simple words Varied vocabulary Crisp, concise and clear writing Use of positive language Logical flow of ideas in paragraphs Use of variety of sentence type Reflecting courtesy BASIC PURPOSES OF AN ILLUSTRATION SHOULD BE KEPT IN MIND To give a general impression To show detailed information To show the structure and working of a system INTERVIEWING-THE IMPORTANT ASPECTS To be well informed Homework should be done Understanding the roll Easing the candidate Testing knowledge Supply of questions Listening skills Process of elimination Performance rating matrix Conduct with dignity The ultimate test ESSENTIALS OF PUBLIC SPEAKING Speakers personality and demeanour Know your audience Speech preparation Art of speaking Voice of modulation Pauses and punches Listen participation Great delivery Speaking without hurting CHARACTERISTIC OF GROUP DISCUSSIONS Interface; is the interaction among the various members of the group. Leader and members; group discussion is effective only when there is a group of members and leader.

87

Participation; the effectiveness and efficiency of a group discussion depend to a large extent upon the active participation of the members. Inter personal attraction Pressure to conform in a group discussion, there is always an element of pressure to conform to norms. Conflict- disagreement among the members of group. ADVANTAGES OF GROUP DISCUSSION It provides a deeper understanding of the subject It improves the ability to think critically It enhance in confidence in speaking It provides different approaches to solving a problem It helps the group in taking a decision IMPORTANT INGREDIENTS FOR SUCCESS IN GROUP DISCUSSION Positive personality Communication skill Sound knowledge and awareness level Ability to coordinate VIDEO CONFERENCING- live exchange of information among people distanced from each other but linked by a telecommunication system. Plan well in advance for the conference Prepare a detailed agenda like you would do for a meeting and follow it Involve all participants equally during the meeting Speak normally and clearly. dont shout Address individuals by their names to assure their attention when speaking

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FINANCIAL ACCOUNTING
MODULE1: ACCOUNTING PRINCIPLES Accounting Concepts Accounting concept refers to the basic assumptions and rules and principles which work as the basis of recording of business transactions and preparing accounts. The main objective is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. All the concepts have been developed over the years from experience and thus they are universally accepted rules. Following are the various accounting concepts that have been discussed in the following sections: 1. Business entity concept 2. Money measurement concept 3. Going concern concept 4. Accounting period concept 5. Accounting cost concept 6. Duality aspect concept 7. Realisation concept 8. Accrual concept 9. Matching concept 1.BUSINESS ENTITY CONCEPT Significance of Business Entity Concept The following points highlight the significance of business entity concept: 1 This concept helps in ascertaining the profit of the business as only the business Expenses and revenues are recorded and all the private and personal expenses are ignored. 2 This concept restraints accountants from recording of owners private/personal transactions. 3 It also facilitates the recording and reporting of business transactions from the business 4 It is the very basis of accounting concepts, conventions and principles. 2.MONEY MEASUREMENT CONCEPT Significance of Money Measurement Concept The following points highlight the significance of money measurement concept: 1 This concept guides accountants what to record and what not to record. 2 It helps in recording business transactions uniformly. 3 If all the business transactions are expressed in monetary terms, it will be easy to Understand the accounts prepared by the business enterprise. 4 It facilitates comparison of business performance of two different periods of the same two different firms for the same period. 3 .GOING CONCERN CONCEPT

point of view.

firm or of the

89

Significance of Going Concern Concept The following points highlight the significance of going concern concept; 1.This concept facilitates preparation of financial statements. 2.On the basis of this concept, depreciation is charged on the fixed asset. 3. It is of great help to the investors, because, it assures them that they will continue to get income on their investments. 4. In the absence of this concept, the cost of a fixed asset will be treated as an expense in the year of its purchase. 5 .A business is judged for its capacity to earn profits in future. 4 .ACCOUNTING PERIOD CONCEPT Significance 1. It helps in predicting the future prospects of the business. 2. It helps in calculating tax on business income calculated for a particular time period. 3.It also helps banks, financial institutions, creditors, etc to assess and analyze the performance of business for a particular period. 4. It also helps the business firms to distribute their income at regular intervals as dividends. 5.ACCOUNTING COST CONCEPT Significance 1.This concept requires asset to be shown at the price it has been acquired, which can be verified from the supporting documents. 2.It helps in calculating depreciation on fixed assets. 3. The effect of cost concept is that if the business entity does not pay anything for an asset, this item will not be shown in the books of accounts. 6. DUAL ASPECT CONCEPT Dual aspect is the foundation or basic principle of accounting. It provides the very basis of recording business transactions in the books of accounts. This concept assumes that every transaction has a dual effect, i.e. it affects two accounts in their respective opposite sides. Therefore, the transaction should be recorded at two places. It means, both the aspects of the transaction must be recorded in the books of accounts. Thus, the duality concept is commonly expressed in terms of fundamental accounting equation : Assets = Liabilities + Capital Significance 1.This concept helps accountant in detecting error. 2. It encourages the accountant to post each entry in opposite sides of two affected accounts

7. REALISATION CONCEPT Significance 90

1.It helps in making the accounting information more objective. 2. It provides that the transactions should be recorded only when goods are delivered to the buyer. 8. ACCRUAL CONCEPT Significance 1. It helps in knowing actual expenses and actual income during a particular time period. 2.It helps in calculating the net profit of the business. 9. MATCHING CONCEPT Significance 1.It guides how the expenses should be matched with revenue for Determining exact profit or loss for a particular period. 2. It is very helpful for the investors/shareholders to know the exact amount of profit or loss of the business. Accounting Equation The recording of business transaction in books of accounts is based on a fundamental equation called Accounting Equation. Whatever business possesses in the form of assets is financed by proprietor or by Outsiders. This equation expresses the equality of assets on one side and the claims of outsiders (liabilities) and owners or proprietors on the other side In Mathematical form,

Assets = Liabilities + Capital (owners equity)

The accounting equation holds at all times over the life of the business. When a transaction occurs, the total assets of the business may change, but the equation will remain in balance. Rectification Of Accounting Errors Every businessman is interested in finding out the true profit and correct financial position of his business at the close of the trading period. The effort of the accountant is to prepare the final accounts in such a fashion which exhibits true picture of the business. Accounts are considered to be authentic proof of true financial position of a concern. But in spite of best efforts there are certain transactions which are omitted to be recorded or entered wrongly in the books. Such errors affect the final accounts. An accountant should, therefore, try to locate such errors and rectify them before the preparation of final accounts. Accountants prepare trial balance to check the correctness of accounts. If total of debit balances does not agree with the total of credit balances, it is a clear-cut indication that certain errors have been committed while recording the transactions in the books of original entry or subsidiary books. It is our utmost duty to locate these errors and rectify them, only then we should proceed for preparing final accounts. All errors of accounting procedure can be classified as follows: 1. Errors of Principle 91

When a transaction is recorded against the fundamental principles of accounting, it is an error of principle. For example, if revenue expenditure is treated as capital expenditure or vice versa. 2. Clerical Errors These errors can again be sub-divided as follows: (i) Errors of omission When a transaction is either wholly or partially not recorded in the books, it is an error of omission. It may be with regard to omission to enter a transaction in the books of original entry or with regard to omission to post a transaction from the books of original entry to the account concerned in the ledger. (ii) Errors of commission When an entry is incorrectly recorded either wholly or partially-incorrect posting, calculation, casting or balancing. Some of the errors of commission effect the trial balance whereas others do not. Errors effecting the trial balance can be revealed by preparing a trial balance. (iii) Compensating errors Sometimes an error is counter-balanced by another error in such a way that it is not disclosed by the trial balance. Such errors are called compensating errors. From the point of view of rectification of the errors, these can be divided into two groups : (i) Errors affecting one account only, and (ii) Errors affecting two or more accounts. Errors affecting one account Errors which affect can be : (a) Casting errors; (b) Error of posting; (c) Carry forward; (d) Balancing; and (e) Omission from trial balance. All types of errors in accounts can be rectified at two stages: (i) Before the preparation of the final accounts; and (ii) After the preparation of final accounts Errors rectified within the accounting period The proper method of correction of an error is to pass journal entry in such a way that it corrects the mistake that has been committed and also gives effect to the entry that should have been passed. But while errors are being rectified before the preparation of final accounts, in certain cases the correction can't be done with the help of journal entry because the errors have been such. Normally, the procedure of rectification, if being done, before the preparation of final accounts is as follows: (a) Correction of errors affecting one side of one account Such errors do not let the trial balance agree as they effect only one side of one account so these can't be corrected with the help of journal entry, if 92

correction is required before the preparation of final accounts. So required amount is put on debit or credit side of the concerned account, as the case maybe. For example: (i) Sales book under cast by Rs. 500 in the month of January. The error is only in sales account, in order to correct the sales account, we should record on the credit side of sales account 'By under casting of. sales book for the month of January Rs. 500".I'Explanation:As sales book was under cast by Rs. 500, it means all accounts other than sales account are correct, only credit balance of sales account is less by Rs. 500. So Rs. 500 have been credited in sales account. (ii) Discount allowed to Marshall Rs. 50, not posted to discount account. It means that the amount of Rs. 50 which should have been debited in discount account has not been debited, so the debit side of discount account has been reduced by the same amount. We should debit Rs. 50 in discount account now, which was omitted previously and the discount account shall be corrected. (ii) Goods sold to X wrongly debited in sales account. This error is affecting only sales account as the amount which should have been posted on the credit side has been wrongly placed on debit side of the same account. For rectifying it, we should put double the amount of transaction on the credit side of sales account by writing "By sales to X wrongly debited previously." (iv) Amount of Rs. 500 paid to Y, not debited to his personal account. This error of affecting the personal account of Y only and its debit side is less by Rs. 500 because of omission to post the amount paid. We shall now write on its debit side. To cash (omitted to be posted) Rs. 500. Difference in Trial balance Trial balance is affected by only errors which are rectified with the help of the suspense account. Therefore, in order to calculate the difference in suspense account a table will be prepared. If the suspense account is debited in' the rectification entry the amount will be put on the debit side of the table. On the other hand, if the suspense account is credited, the amount will be put on the credit side of the table. In the end, the balance is calculated and is reversed in the suspense account. If the credit side exceeds, the difference would be put on the debit side of the suspense account. Effect of Errors of Final Accounts 1. Errors effecting profit and loss account It is important to note the effect that an en-or shall have on net profit of the firm. One point to remember here is that only those accounts which are transferred to trading and profit and loss account at the time of preparation of final accounts effect the net profit. It means that only mistakes in nominal accounts and goods account will effect the net profit. Error in the these accounts will either increase or decrease the net profit. How the errors or their rectification effect the profit-following rules are helpful in understanding it : (I) If because of an error a nominal account has been given some debit the profit will decrease or losses 93

will increase, and when it is rectified the profits will increase and the losses will decrease. For example, machinery is overhauled for Rs. 10,000 but the amount debited to machinery repairs account -this error will reduce the profit. In rectifying entry the amount shall be transferred to machinery account from machinery repairs account, and it will increase the profits. (il) If because of an error the amount is omitted from recording on the debit side of a nominal account-it results in increase of profits or decrease in losses. The rectification of this error shall have reverse effect, which means the profit will be reduced and losses will be increased. For example, rent paid to landlord but the amount has been debited to personal account of landlord-it will increase the profit as the expense on rent is reduced. When the error is rectified, we will post the necessary amount in rent account which will increase the expenditure on rent and so profits will be reduced. (iil) Profit will increase or losses will decrease if a nominal account is wrongly credited. With the rectification of this error, the profits will decrease and losses will increase. For example, investments were sold and the amount was credited to sales account. This error will increase profits (or reduce losses) when the same error is rectified the amount shall be transferred from sales account to investments account due to which sales will be reduced which will result in decrease in profits (or increase in losses). (iv) Profit will decrease or losses will increase if an account is omitted from posting in the credit side of a nominal or goods account. When the same will be rectified it will increase the profit or reduce the losses. For example, commission received is omitted to be posted to the credit of commission account. This error will decrease profits ( or increase losses) as an income is not credited to profit and loss account. When the error will be rectified, it will have reverse effect on profit and loss as an additional income will be credited to profit and loss account so the profit will increase ( or the losses will decrease). 2. Errors effecting balance sheet only If an error is committed in a real or personal account, it will effect assets, liabilities, debtors or creditors of the firm and as a result it will have its impact on balance sheet alone. because these items are shown in balance sheet only and balance sheet is prepared after the profit and loss account has been prepared. So if there is any error in cash account, bank account, asset or liability account it will effect only balance sheet. BANK RECONCILIATION STATEMENT A Bank Reconciliation Statement is a statement prepared by the customer of a bank showing the causes of disagreement between the balances as per his cash book and pass book as on a particular date. It is prepared to bring the cash book balance in agreement with the balance as per Pass book. NEED AND IMPORTANCE :Preparation of bank reconciliation statement is of very great importance to a trader. If the bank balance shown by the cash book does not agree with the balance as per pass book, the trader has to identify the reasons of the difference. This is possible only by preparing a Bank Reconciliation Statement. In the absence of a Bank Reconciliation Statement, the customer is not sure of the correctness of the bank balance shown by the cash book. Hence, the preparation of bank reconciliation statement is of very great importance to the customer. CAUSES OF DIFFERENCE BETWEEN CASH BOOK AND PASS BOOK BALANCE 94

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Cheques issued but not presented for payment. Cheque paid in for collection but not collected. Direct payment by a customer to the bank. Interest on deposit credited by the banker. Interest, dividend, rent, etc. collected by bank. Payment made on behalf of the customer. Bank charges as per pass book. Bills receivable discounted, but dishonoured. Interest on overdraft debited in pass book. Credit instruments credited by bank but not recorded in cash book.

PREPARATION OF THE BANK RECONCILIATION STATEMENT After ascertaining the cause of disagreement between the balance as per cash book and pass book, the trader prepares a reconciliation statement to establish the genuineness of the balances of the two sets of books. The Bank Reconciliation Statement is prepared in such a way that on adjusting the amount of the items of difference in the balance of one set of books, the balance of the other set is arrive at.Bank Reconciliation Statement may be divided into four cases, on the basis of the balance with which it is started. 1. Starting with debit balance as per cash book. 2. Starting with debit balance as per pass book. 3. Starting with credit balance(overdraft) as per cash book. 4. Starting with credit balance (overdraft)as per pass book. THE ITEMS USUALLY ADDED TO THE BALANCE AS PER CASH BOOK 1.Direct payment by a customer to bank. 2.Interest on deposit credited by the bank. 3.Cheques issued but not presented for payment. 4.Interest, dividend, rent, etc. collected by bank. 5.Bills, promissory notes etc. collected and credited in the pass book 6.Cheques deposited for collection but omitted to be recorded in the cash book. THE ITEMS USUALLY DEDUCTED FROM THE CASH BOOK BALANCE 1.Cheques paid in for collection but not collected. 2.Payment made by bank as per standing instructions such as insurance premium, rent, lighting, etc. 3.Bank charges as per pass book. 4.Bills discounted but dishonoured. 5Interest on overdraft debited in pass book etc. OVERDRAFT: The amount drawn by the customer of a bank in excess of his deposit balance is called overdraft. In case of overdraft, the bank column of the cash book will have credit balance and the pass book will have debit balance. On preparing the reconciliation statement starting with overdraft, the adjustments should be made in the opposite direction of starting with the deposit balance. When the bank makes any payment for the customer, the overdraft as per pass book increases.

95

MODULE 2: FINAL ACCOUNTS PREPARATION OF FINAL ACCOUNTS Final accounts consists of trading a/c P&L a/c and balance sheet.Trial Balance consists of Net Balances of all ledgers. If the Trial Balance is tallying we can assume the posting of entries are correct. P & L includes Revenue & Expenses, post the same to P&L. Then either Net profit / Loss will arrive. Then calculation of depreciation and taxes, the net balance will transfer to balance sheet. Balance sheet consists of Source of Fund & Application of funds (Assets & Liabilities). 1. Trading account A trading account is an account which contains, " in summarized form, all the transactions, occurring, throughout the trading period, in commodities in which he deals" and which gives the gross trading result. In short, trading account is the account which is prepared to determine the gross profit or the gross loss of a trader.The aim of preparing trading account is to find out gross profit or gross loss while that of second section is to find out net profit or net loss.

Preparation of Trading Account:Trading account is prepared mainly to know the profitability of the
goods bought (or manufactured) sold by the businessman. The difference between selling price and cost of goods sold is the,5 earning of the businessman. Thus in order to calculate the gross earning, it is necessary to know: (a) Cost of goods sold.(b) sales. (b) Total sales can be ascertained from the sales ledger. The cost of goods sold is, however, calculated. n order to calculate the cost of sales it is necessary to know its meaning. The 'cost of goods' includes the purchase price of the goods plus expenses relating to purchase of goods and brining the goods to the place of business. In order to calculate the cost of goods " we should deduct from the total cost of goods purchased the cost of goods in hand. We can study this phenomenon with the help of following formula: Opening stock + cost of purchases - closing stock = cost of sales As already discussed that the purpose of preparing trading account is to calculate the gross profit of the business. It can be described as excess of amount of 'Sales' over 'Cost of Sales'. This definition can be explained in terms of following equation:Gross Profit = Sales-Cost of goods sold or (Sales + Closing Stock) -(Stock in the beginning + Purchases + Direct Expenses)

Usual Items in a Trading Account:

A) Debit Side: 1. Opening Stock. It is the stock which remained unsold at the end of previous year. It must have been brought into books with the help of opening entry; so it always appears inside the trial balance. Generally, it is shown as first item at the debit side of trading account. Of course, in the first year of a business there will be no opening stock. 2. Purchases. It is normally second item on the debit side of trading account. 'Purchases' mean total purchases i.e. cash plus credit purchases. Any return outwards (purchases return) should be deducted out 96

of purchases to find out the net purchases. Sometimes goods are received before the relevant invoice from the supplier. In such a situation, on the date of preparing final accounts an entry should be passed to debit the purchases account and to credit the suppliers' account with the cost of goods. 3. Buying Expenses. All expenses relating to purchase of goods are also debited in the trading account. These include-wages, carriage inwards freight, duty, clearing charges, dock charges, excise duty, octroi and import duty etc. 4. Manufacturing Expenses. Such expenses are incurred by businessmen to manufacture or to render the goods in saleable condition viz., motive power, gas fuel, stores, royalties, factory expenses, foreman and supervisor's salary etc. (B) Credit Side: 1. Sales. Sales mean total sales i.e. cash plus credit sales. If there are any sales returns, these should be deducted from sales. So net sales are credited to trading account. If an asset of the firm has been sold, it should not be included in the sales. 2. Closing Stock. It is the value of stock lying unsold in the godown or shop on the last date of accounting period. Normally closing stock is given outside the trial balance in that case it is shown on the credit side of trading account. But if it is given inside the trial balance, it is not to be shown on the credit side of trading account but appears only in the balance sheet as asset. Closing stock should be valued at cost or market price whichever is less.

Valuation of Closing Stock

The ascertain the value of closing stock it is necessary to make a complete inventory or list of all the items in the god own together with quantities. On the basis of physical observation the stock lists are prepared and the value of total stock is calculated on the basis of unit value. Thus, it is clear that stocktaking entails (i) inventorying, (ii) pricing. Each item is priced at cost, unless the market price is lower. Pricing an inventory at cost is easy if cost remains fixed. But prices remain fluctuating; so the valuation of stock is done on the basis of one of many valuation methods. The preparation of trading account helps the trade to know the relationship between the costs be incurred and the revenues earned and the level of efficiency with which operations have been conducted. The ratio of gross profit to sales is very significant: it is arrived at : Gross Profit X 100 / Sales With the help of G.P. ratio he can ascertain as to how efficiently he is running the business higher the ratio, better will be the efficiency.

Closing Entries pertaining to trading Account

For transferring various accounts relating to goods and buying expenses, following closing entries recorded: (i) For opening Stock: Debit trading account and credit stock account

97

(ii) For purchases: Debit trading account and credit purchases account, the amount being the et amount after deducting purchases returns. (iii) For purchases returns: Debit purchases return account and credit purchases account. (iv) For returns inwards: Debit sales account and credit sales return account (v) For direct expenses: Debit trading account and credit direct expenses accounts individually. (vi) For sales: Debit sales account and credit trading account. We will find that all the accounts as mentioned above will be closed with the exception of trading account (vii) For closing stock: Debit closing stock account and credit trading account After recording above entries the trading account will be balanced and difference of two sides ascertained. If credit side is more the result is gross profit for which following entry is recorded. (viii) For gross profit: Debit trading account and credit profit and loss account If the result is gross loss the above entry is reversed. Format of Trading Account: Trading For the year ending .......20...... Dr. To Opening stock To purchases ......... Less Returns ......... To Carriage inwards To Cartage To dock charges To Wages To Duty To Freight To Clearing charges To Etc. Etc., To Gross profit (Transferred to profit and loss account) Cr. By Sales ......... Less returns ......... By Closing stock By Gross loss transferred to profit and loss account Account

........ ........ ......... ......... ......... ......... ......... ......... ......... ......... .........

......... ......... .........

Advantages of Trading Account: The advantages of the trading account are as follows:

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1. A trader can find out the gross profit and thereby can ascertain the percentage of profit he has earned on the cost of goods sold. This percentage of gross profit may serve as his ready guide for the adjustment of future sale price. 2. A trading account help a trader to compare his stock at open with that at the close. He can further find out whether the purchases he has made during the period of account have been judicious. 3. Once can compare the figure of sales with similar figure of the previous year and can find out whether business is improving or declining. 4. If the gross profit disclosed by the trading account is less than expected, an enquiry can be made into the cause responsible for the decline. And if the gross profit is more than was expected, steps can be taken to maintain it. 2. Profit and Loss Account Profit and loss account is the account whereby a trader determines the net result of his business transactions. It is the account which reveals the net profit (or net loss) of the trader.The profit and loss account is opened by recording the gross profit (on credit side) or gross loss (debit side).The expenses which are recorded in profit and loss account are ailed 'indirect expenses'

FORMAT OF PROFIT&LOSS ACCOUNT: For the year ended.

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Particulars To gross loss b/d To selling& distribution expense: (bad debts, commission paid, sales tax, freight, advertising, packaging) To administrative expense: (legal exp, trade exp, rent, rates & taxes, insurance, printing& stationery) To Depreciation To provision debts.. for bad

Rs

Particulars By gross profit b/d By discount received By rent

Rs

By commission By interest

By profit on sale of asset.. By Net Loss transferred to capital a/c

To Net Profit transferred to capital a/c

Final Accounts in Relation to Capital and Revenue Items A final account is a general term used in bookkeeping for the account where the profit or loss of the business is determined at the end of the accounting period. Examples of final accounts for the trader are his Trading Account and Profit and Loss Account; for the manufacturer, they are his Manufacturing Account, Trading and Profit and Loss Account; and for a nonprofit making organization, it is its Income and Expenditure Account. Note that the balance sheet is not an account. It is a statement. It is important to distinguish between a revenue expenditure and a capital expenditure, and between a revenue receipt and a capital receipt because only revenue items appear in the final accounts. Revenue expenditure is considered as an expense and must be debited to the final account, whereas revenue receipts are revenue of the business and must be credited; whereas revenue receipts are revenue of the business and must be credited to the final account.

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On the other hand, capital expenditure or capital receipt is not brought to the final account. Revenue Expenditure Revenue expenditure are cost incurred for the day-to-day running expenses of the business. They include the purchase of stock for resale, purchase of services such as employee's wages, electricity, water, cost of carriage of goods, stationery, and depreciation on fixed assets. These items of revenue expenditure can only be used once. Income is normally earned from this revenue expenditure. Capital Expenditure Capital Expenditure are payments for the purchase of assets that can be used over and over again in the business. Normally, such assets can last for more than one accounting period. The capital expenditure also adds to the value of an existing fixed asset. The benefit of such expenditure to be derived by the business are spread over a number of years according to the lifespan of the fixed asset. Revenue Receipts Revenue receipts refer to receipts from the normal activities of the business. For example, revenue receipts of a trading organization are receipts from sale of goods, discounts received, commission received and interest on bank deposits. All revenue receipts earned for a particular period, whether payments for them have actually been received or not, have to be credited to the Trading and Profit and Loss Accounts. These will increase it profits.
Capital receipts Capital receipts refer to receipts that is derived from sources other than the normal trading activities of the business. It may comprise capital paid by partners, or in the case of a limited company, sums received from its shareholders or debenture holders, loans and proceeds from the sale of its assets. Manufacturing accountIt is an account prepared by manufacturing concerns in order to find out the cost of goods manufactured . opening stock of raw materials and work in progress , purchase of materials and all direct expenses are debited in it and closing stock of rawmaterials and work in progress are credited in it . the difference in this account forms the cost of goods manufactured which is transferred to trading a/c .

Eg:Prepare manufacturing,rading & P&L a/c for the year ended 31-march-2010 & the B/S as on that date.
Capital Drawings Creditors Discount received Bank O/D 7000 8000 702 4000 25000 Purchases Debtors Wages Manufacturing expense Carriage inwards 11000 6000 5000 400 30230

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Provision for bad & D/D Purchase returns Sales Sales return Opening stock Plant & Machinery (including p&m 5000 purchased On 1-1-2010) Furniture Buildings 17000 1500 15000 530

600

Carriage o/w Bad debts 150 Salaries Interest & bank charges(dr) 126 Discount allowed Insurance(dr) Cash at bank Cash in hand Closing stock 30 7550 300

420

67500 86 9000

2800

150

140

ADJTS: 1.Interest on capital at 10% p.a. 2.Outstanding expenses: salaries-100 Wages-50 Interest on bank loan-100 3.Depreciation on machinery & furniture at 10% p.a & building at 2.5% p.a. 4.Prepaid expense on insurance Rs.100 & the salary Rs.50. 5.Reserve for bad & D/D at 10% of debtors. 6.Furniture costing Rs.500 was sold for Rs.350 & this amount was later credited to furniture account.

Dr MANUFACTURING & TRADING P&L A/C FOR THE YEAR ENDED 31-3-10 Particulars Amount 102 Particulars Amount

To purchases less returns Carriage in Wages Manufacturing expense Depreciation on machinery 400

29700

by cost of production(?)

42475

6050 5000 1325 42475 42475

To opening stock Cost of production Gross profit c/d

9000 42475 23489

by sales less returns closing stock

67414 7550

74964 To salaries Int & bank charges Discount Insurance Carriage out Prov for D/D Loss on sale of furniture Depreciation: Building Furniture Int: on capital Netprofit to capital a/c 375 135 2500 16535 24191 2850 226 150 200 420 650 150

74964 by grossprofit b/d discount 23489 702

24191

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BALANCE SHEET In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of , a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot of a company's financial condition".[1]one of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year.A standard company balance sheet has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first and typically in order of liquidity. Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. 1. Businesses have assets and so they cannot, even if they want to, immediately turn these into cash at the end of each period. Often, these businesses A business operating entirely in cash can measure its profits by withdrawing the assets entire bank balance at the end of the period, plus any cash in hand. However, many businesses are not paid immediately; they build up inventories of goods and they acquire buildings and equipment. Current assets 1. 2. 3. 4. Cash and cash equivalents Inventories Accounts receivable Prepaid expenses for future services that will be used within a year

Non-current assets (Fixed assets) 1. 2. 3. 4. Property, plant and equipment Investment property, such as real estate held for investment purposes Intangible assets Financial assets (excluding investments accounted for using the equity method, accounts receivables, and cash and cash equivalents) 5. Investments accounted for using the equity method 6. Biological assets, which are living plants or animals. Bearer biological assets are plants or animals which bear agricultural produce for harvest, such as apple trees grown to produce apples and sheep raised to produce wool.[17] Liabilities 2. Accounts payable 3. Provisions for warranties or court decisions 4. Financial liabilities (excluding provisions and accounts payable), such as promissory notes and corporate bonds 5. Liabilities and assets for current tax 6. Deferred tax liabilities and deferred tax assets 7. Unearned revenue for services paid for by customers but not yet decided. Adjusting entries & closing entries

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Adjusting entries are made at the end of the accounting period (but prior to preparing the financial statements) in order for a companys accounting records and financial statements to be up-to-date on the accrual basis of accounting. For example, each day the company incurs wages expense but the payroll involving workers wages for the last days of the month wont be entered in the accounting records until after the accounting period ends. Similarly, the company uses electricity each day but receives only one bill per month, perhaps on the 20th day of the month. Prepaid Insurance. During the accounting period some of those premiums expired (were used up) and need to appear as expense in the current accounting period and the asset balance reduced. Closing entries are dated as of the last day of the accounting period, but they are entered into the accounts after the financial statements are prepared. For the most part, closing entries involve the income statement accounts. The closing entries set the balances of all of the revenue accounts and the expense accounts to zero. This means that the revenue and expense accounts will start the new year with nothing in the accountsallowing the company to easily report the new year revenues and expenses. The net amount of all of the balances from the revenue and expense accounts at the end of the year will end up in retained earnings (for corporations) or owners equity (for sole proprietorships). Thanks to accounting software, the closing entries are quite effortless. ADJUSTMENTS 1. Closing stock When it is given in the trial balance: Taken only in balance sheet in the asset side. When it is given in adjustment: Credit side of trading a/c & taken in the asset side of balance sheet. 2.Outstanding expense(Expense due but not paid): When it is given in trail balance: Only taken in the liability side of balance sheet. When it is given in adjustment: Add along with concerned expense in the P&L a/c & shown in the liability side of balance sheet. 3.Pre-paid expense: When it is given in trail balance: Only taken in the asset side of balance sheet. When it is given in adjustment: Deduct from the concerned expense in the P & L a/c & shown in the asset side of balance sheet. 4.Accrued income: When it is given in trail balance: Asset side of B/S. When it is given in adjustment: Add along with concerned income & shown on the asset side of B/S. 5.Income received in advance: 105

 T/B-Liability side of B/S. Adjt-Deduct from the concerned income & shown in the liability side of B/S. 6.Interest on capital: T/B-Taken only in P&L a/c as an expense. Adjt-Shown in P&L a/c as an expense & add along with capital in the B/S. 7.Interest on drawings: T/B-Taken only in P&L a/c as an income. Adjt-Shown in P&L a/c as an income & deduct from capital. 8.Depreciation: T/B-Taken only in P&L a/c as an expense. Adjt-Shown in P&L a/c as an expense & deduct from the concerned asset in the B/S. 9.Bad debt: When it is in given in T/B: It is shown on the debit side of P&L a/c. When it is given in Adjt: It is deducted from sundry debtors in the B/S & debited in P&L a/c. 10.Provision for bad debt or doubtful debts. When it is given in T/B: It is deducted from bad debt in P&L a/c or Credited in P&L a/c. When it given in Adjt: It is added along with bad debt in P&L a/c & deducted from sundry debtors in B/S. 11.Managers commission. Calculation of management commission: (a)Before charging such commission Profit before commission*rate of commission/100 (b)After charging such commission: Profit * rate/(100+rate) It is shown on the debit side of P&L a/c & on the liability side of B/S. 12.Provision for discount on debtors. It is always given in adjt: It is shown on the debit side of P&L a/c & is deducted from debtors after deducting further bad debt & new provision on debtors . 106

13.Provision for discount on creditors. Adjt: It is credited in P&L a/c & deducted from creditors in B/S. 14.Loss of goods by fire. It has 3 effects in final a/c. If insurance claim is recieved; It is credited to trading a/c(entire amt of loss) It is debited in P&L a/c(correct loss) Correct loss=entire loss-insurance claim Amount received from insurance company is shown on the asset side of B/S. If insurance clain is not received; Entire loss is credited to trading a/c & also debited in P&L a/c. MODULE 3: Depreciation: ACCOUNTING FOR DEPRECIATION Introduction The concept of depreciation is closely linked to the concept of business income. In the revenue generating process the use of long-term assets tends to consume their economical potential. The economical potential so consumed represents the expired cost of these assets and must be recovered from the revenue of the business in order to determine the income earned by the business. In short depreciation is the decrease or depletion in the value of an asset due to wear and tear, lapse of time, obsolescence, exhaustion and accidents.According to William Pickles, Depreciation is the permanent and continuing diminution in the quality, quantity or value of an asset.The Institute of Chartered Accountants of England and Wales defines depreciation as the part of the cost of a fixed asset to its owner which is not recoverable when the asset is finally put out use by him. Provision against this loss of capital is an integral cost of conducting the business during the effective commercial life of the asset and is not depend upon the amount of profit earned. Causes of depreciation 1. Wear and Tear: Assets get worn or torn out on account of constant use. 2. Exhaustion: An asset gets exhausted through working. This is the case with mineral mines, oil wells etc. 3. Obsolescence: Some assets are discarded before they are worn out because of changed conditions. 4. Efflux of Time: Certain assets get decreased in their value with the passage of time. 107

5. Accidents: An asset may meet with an accident and therefore, it may get depreciated in its value. FEATURES OF DEPRECIATION 1. The term depreciation is used only in respect of fixed assets. 2. Depreciation is a charge against profit. This means that true profit of the business cannot be ascertained without charging depreciation. 3. All fixed assets, with certain possible exceptions, e.g., land and antiques, etc., suffer depreciation although the process may be invisible or gradual. Objectives of Providing for Depreciation 1. Ascertainment of the actual true profit. 2. Presentation of true financial position. 3. Replacement of asset. METHODS OF PROVIDING FOR DEPRECIATION The following are the various methods of providing for depreciation: 1. Uniform charge method a. Fixed instalment method b.Depletion method c.Machine hour rate method 2.Declining charge or accelerated depreciation method a.Diminishing balance method b.Sum of years digits method c.Double decling method 3.Others Group depreciation method Inventory system of depreciation Annuity method Depreciation fund method Insurance policy method

1.Uniform charge methods 108

In case of these methods, depreciation is charged on a uniform basis year after year.Such methods are considered appropriate only for such assets which are uniformly productive. The following three methods fall in this category. A. fixed instalment method: This is also termed as the straight line method according to this method, depreciation is charged evenly every year through out the effective life of the asset. The amount of depreciation is calculated as follows: Depreciation=original cost of the asset-estimated scrap value/life of the asset in number of accounting periods. D=C-S/N Merits: this method is simple to understand and easy to apply. This method is very suitable particularly in case of those assets which get depreciated more on account of the expiry of the period.e.g lease-hold properties, patents etc. Demerits: this method does not take into account the effective utilisation of the assets. The total charge for use of the asset goes on increasing from year though the asset might have been used uniformly from year to year. The method tends to report an increase rate of return on investment in the asset on account of the fact that get balance of the assets account is taken. B.Depletion method: This is also knownas the productive out put method.according to this method, the charge for depreciation in respect of the use of an asset will be based on the following factors: Totals amount paid Total estimated quantities of the output available The actual quantity taken out during the accounting year C.Machine hour rate method:this is also known as the service hours methods. This method takes into accounts the running time of the assets for the purpose of calculating depreciation.the methods is particularly suitable for charging depreciation on plant and machinery,aircraft,etc.the amount of depreciation on plant and machinery aircraft etc.the amount of depreciation is calculating as follows:

original cost of the assets-scrap value /life of the asset in hour. 2.Declining charge depreciation method In case of these methods,the amount charged for depreciation declines over the assets expected life.these methods are suitable in those cases where:the receipt are expected to decline as the asset gets older and it is believed that the allocation of depreciation should be related to the assets of pattern expected receipt. The following method fall in this category. 109

A.Diminishing balance method According to this method depreciation is charged on the book value of the asset each year.thus the amount goes on decreasing every year. The formula for calculating the rate of depreciation Depreciation rate =1-n netresidual value/acquisitioncost. Merits: this method is simple to understand and easy to follow. Demerits: the value of cann

the

assets

of the diminishing balance method.the amount of depreciation to be charged to the profit and loss account under this method goes on decreasing every year. C. double declining balance method This method is similar to reducing or declining balance method explained earlier except that the rate of depreciation is charged at the rate which is twice the straight line rate.while computing this rate two things have to be kept in mind.

INVENTORY VALUATION An inventory valuation allows a company to provide a monetary value for items that make up their inventory. Inventories are usually the largest current asset of a business, and proper measurement of them is necessary to assure accurate financial statements. If inventory is not properly measured, expenses and revenues cannot be properly matched and a company could make poor business decisions. Inventory and financial statements When ending inventory is incorrect, the following balances of the balance sheet will also be incorrect as a result: merchandise inventory, total assets, and owner's equity. When ending inventory is incorrect, the cost of merchandise sold and net income will also be incorrect on the income statement. The inventory accounting involves two major aspects: The cost of the purchased or manufactured inventory has to be determined and Such cost is retained in the inventory accounts of the company until the product is sold The following methods are the most commonly used for inventory valuation by companies: 110

First-in First-Out (FIFO): the first goods to be sold (cost of sales) are the first goods that were purchased or consumed (cost of production). The ending inventory is formed by the last goods that were purchased and came in at the end to the inventory. Last-in First-out (LIFO): the first goods to be sold (cost of sales) are the last goods that were purchased or consumed (cost of production). The ending inventory is formed by the first goods that were purchased and came in at the beginning to the inventory. Average Cost: this method requires calculating the average unit cost of the goods in the beginning inventory plus the purchases made in the period. Based on this average unit cost the cost of sales (production) and the ending inventory of the period are determined. Specific Identification: each article sold and each unit that remains in the inventory are individually identified. Inventory accounting systems The two most widely used inventory accounting systems are the periodic and the perpetual. Perpetual: The perpetual inventory system requires accounting records to show the amount of inventory on hand at all times. It maintains a separate account in the subsidiary ledger for each good in stock, and the account is updated each time a quantity is added or taken out. Periodic: In the periodic inventory system, sales are recorded as they occur but the inventory is not updated. A physical inventory must be taken at the end of the year to determine the cost of goods sold. Regardless of what inventory accounting system is used, it is good practice to perform a physical inventory at least once a year. Inventory costing methods - periodic The periodic system records only revenue each time a sale is made. In order to determine the cost of goods sold, a physical inventory must be taken. The most commonly used inventory costing methods under a periodic system are: 1. first-in last-out (FILO), 2. last-in first-out (LIFO), and 3. Average cost or weighted average cost. These methods produce different results because their flow of costs is based upon different assumptions. The FIFO method bases its cost flow on the chronological order purchases are made, while the LIFO method bases it cost flow in a reverse chronological order. The average cost method produces a cost flow based on a weighted average of unit costs. Inventory costing methods - perpetual The perpetual inventory system requires that a separate inventory ledger be maintained for each good. Inventory ledgers provide detailed information on purchases, cost of goods sold, and inventory on hand. Each column gives information on quantity, unit cost, and total cost. The most commonly used inventory costing methods under a perpetual system are 1. first-in first-out (FIFO), 2. last-in first-out (LIFO), and 3. Average cost or weighted average cost. 111

In the FIFO and LIFO method, each purchase record is kept with its purchase prices. Every piece sold is subtracted from each purchase record until no qty is left and the next purchase record is considered. When the average cost method is used, an average unit cost of each good is calculated each time a purchase is made. The advantages of the perpetual inventory system are a high degree of control, it aids in the management of proper inventory levels, and physical inventories can be easily compared. Whenever a shortage (i.e. a missing or stolen good) is discovered, the Inventory Shortages account should be debited. Periodic versus perpetual systems There are fundamental differences for accounting and reporting merchandise inventory transactions under the periodic and perpetual inventory systems. To record purchases, the periodic system debits the Purchases account while the perpetual system debits the Merchandise Inventory account. To record sales, the perpetual system requires an extra entry to debit the Cost of goods sold and credit Merchandise Inventory. By recording the cost of goods sold for each sale, the perpetual inventory system alleviated the need for adjusting entries and calculation of the goods sold at the end of a financial period, both of which the periodic inventory system requires. Using non-cost methods to value inventory Under certain circumstances, valuation of inventory based on cost is impractical. If the market price of a good drops below the purchase price, the lower of cost or market method of valuation is recommended. This method allows declines in inventory value to be offset against income of the period. When goods are damaged or obsolete, and can only be sold for below purchase prices, they should be recorded at net realizable value. The net realizable value is the estimated selling price less any expense incurred to dispose of the good. Methods used to estimate inventory cost In certain business operations, taking a physical inventory is impossible or impractical. In such a situation, it is necessary to estimate the inventory cost. Two very popular methods are 1) - retail inventory method, and 2)- gross profit (or gross margin) method. The retail inventory method uses a cost to retail price ratio. The physical inventory is valued at retail, and it is multiplied by the cost ratio (or percentage) to determine the estimated cost of the ending inventory. The gross profit method uses the previous years average gross profit margin (i.e. sales minus cost of goods sold divided by sales). Current year gross profit is estimated by multiplying current year sales by that gross profit margin, the current year cost of goods sold is estimated by subtracting the gross profit from sales, and the ending inventory is estimated by adding cost of goods sold to goods available for sale.

INFLATION ACCOUNTING Inflation accounting 112

Inflation generally refers to the increasing trend in general price levels. That means the purchasing power of money goes down. The American Institute Of Certified Public Accountants defines the inflation accounting as a system of accounting, which purports record as built in mechanism, all economic events in the terms of current cost. It is a method designed to show the effect changing costs and prices on affairs of a business unit during the course of relative accounting period. METHODS OF ACCOUNTING FOR CHANGING PRICES The generally accepted methods of accounting for price level changes are 1. Current Purchasing Power Method (CPP) 2. Current Cost Accounting Method (CCA) 3. Hybrid Method Current Purchasing Power Method

The CPP method also termed as constant rupee method. This method attempts to restate all items in financial statements in terms of units of equal purchasing power. The CPP method basically attempts to remove the distortions in financial statement which arise due to changes in the value of rupee. For converting historical rupees in to current purchasing power as at the date of balance sheet an index number is required. This done through a conversion factor Conversion factor =Price index at the date of conversion Price at the date of transaction There are two approaches to determine the profit under CPP method. They are net change method and income method. LIMITATIONS OF CPP METHOD CPP method is based on indices. It would be very difficult to apply with individual firms. It would be a very difficult task to select a price index because there are various price indexes. This method deals with the changes in general price level and not with the changes in the price level of individual firms. 2 Current Cost Accounting Method

The limitations of CPP method led to the origin of CCA method. In here money remains to be the measurement. The items of financial statements are restated in terms of current value of that item and in terms of general purchasing power of money. The profits are computed on the basis of current values of items. This requires the following adjustments Revaluation adjustment Depreciation adjustment Cost of sale adjustment Monetary working capital adjustment 113

Advantages of CCA method 1. Computation of depreciation based on the fixed assets current value provides a realistic measure of the resources used in a period. 2. Assets are shown at their current values in the balance sheet 3. It clearly differentiates the gains from the operations from the gains from the holding asset 4. Computation of monetary gains and losses highlights the effects of holding monetary items. 5. Cost of sales adjustment enables the entity to maintain its value in real terms.

Disadvantages of CCA method 1. Treatment of backlog depreciation is not proper. 2. This method ignores the materiality factor. 3. This method ignores the purchasing power gains and losses on the monetary items of the firm. 4. This method is based on uniform accounting practices which are not true in actual practices. 3.HYBRID METHOD It combines the features of both CCA and CPP method. It has the benefits and limitations of both CCA and CPP method. It is still in the evolutionary stage and not suitable for practical application. MODULE 4: ACCOUNTS FOR ENTITIES Accounts of Non-Trading Organizations Non-Trading Organizations Unlike trading organizations, non-trading organizations such as clubs, societies, associations, are not formed mainly to make profits. Rather, they exist to promote their members' cultural, social and recreational interests. The normal activities of such non-trading organizations are therefore different from that of a trading organization as the activities of the former are not designed solely to obtain profit. However, some nontrading organizations may run a bar or a restaurant on a permanent basis for profits. Also, they may, at one time or another, organize fund-raising projects such as a fun-fair or a jumble sale. Such projects are not permanent. They may be held to raise funds for a specified purpose such as to add to a club's building fund, or merely to increase the club's finds. Receipts of Non-Trading Organizations

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The main items of revenue receipts are subscription from members, and interest from investments or Bank Accounts. Gross trading profits (total sales revenue less cost of goods sold) from permanently run bars and restaurants is another source of revenue receipts for some none-trading organizations. Donations, unless specifically stated to be set aside for a capital purpose, e.g. the club building fund, are normally treated as revenue receipts. Proceeds from fund-raising projects such as sale of refreshments and the like, are normally treated as revenue receipts, unless it is specifically stated that the proceeds from a particular project are to be set aside for a capital purpose such as building a swimming pool. Other examples of revenue receipts are locker fees, charges to other clubs for the use of premises, sale of golf clubs and tennis balls. Clear examples of capital receipts are legacies, endowments and government grants. Legacies are sums of money left to a club by someone in his will. Expenditure of Non-Trading Organizations Non-trading organizations have both revenue as well as capital expenditure. The main revenue expenditure of non-trading organizations are rent of club premises; caretaker's and staff wages; honorarium; other miscellaneous expenses like laundry, repairs and maintenance to club equipment and premises, cost of shuttlecocks, tennis balls or printing paper and stationery. If the club were to have fund-raising projects, another important revenue expenditure would be the cost of such fund-raising projects. This must be set off against the proceeds obtained from the fund-raising projects. Examples of capital expenditure are payments for the purchase of fixed assets to be used in the club, such as the purchase of table tennis nets, tables and furniture for use in the club house. Receipts and Payments Account The Receipts and Payments Account is the equivalent of the Cash or Bank Account of a trading organization. It summarizes the main items of cash or cheque receipts and cash or cheque payments made during the course of the financial period or year. Income and Expenditure Account The Income and Expenditure Account is the equivalent of the Profit and Loss Account of a trading organization. All items of capital expenditure and capital receipts are excluded, e.g. the purchase of a new table-tennis table or the the donation received for the construction of a tennis court cannot be recorded here as capital expenditure and capital receipt. Accumulated Fund Account

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Accumulated Fund Account is equivalent of the Capital Account for a trading organization. All additions to the accumulated fund are credited to this account. Thus, large legacies and donations towards specific capital project are credited here straightaway. The balance on the accumulated fund for the beginning of a particular period is the difference between the total value of its assets and its total liabilities at that date (that is, the beginning of the financial period). It is very important to work out the figure for the accumulated find (at the beginning of a period) before drawing up the Balance Sheet at the end of the period. The surplus from the Income and Expenditure Account is added to this fund, while the deficit is deducted from it. ACCOUNTS OF PROFESSIONALS Professional peoples like doctors, solicitors, etc. usually keep cash book, stock register and receipts and expenditure account for maintaining a record of their professional income and expenses. In this connection, it should be noted that professional people prepare their accounts on cash basis. However, they take into account outstanding expenses, but not outstanding income. This is because they do not file suits for recovery of their dues. For this purpose, income and expenditure account is debited with the outstanding income as reserve after adding it to the income really received. Thus, the debit nullifies the addition. The account revealing profit or loss is known as receipts and expenditure accounts as the payments would indicate actual cash disbursement only. ACCOUNT OF DOCTORS : Usually, a practicing doctor keeps a diary for recording all details about the patients including fees. He groups income from the diary and records in daily cash book having columns for visits, prescriptions made and consultation fees. In case a number of specialists join and practice in partnership, an analytical cash book having different columns for charges for various specialists may be kept. Hence, the total fees of various specialists may be ascertained separately. Similarly, expenses in the cash book under various heads, such as medical expenses, surgical expenses, cost of medicines and drugs, cost of bandaging materials, etc. may be analysed. ACCOUNTS OF SOLICITORS: Solicitors serve as a link between a client and his advocate. They receive and pay on behalf of themselves end clients, respectively. Hence, separate records of receipts and payments are maintained for office and clients. For this purpose cash book kept by solicitors are provided with one extra column for clients on both debit and credit sides. All receipts from clients are debited to cash book in the clients column And credited to his/ hers personal account or deposits account. But in the case of payment on the behalf of the client, clients personal account is debited and cash book is credited in the clients column. Thus, the balance of the clients column maintained in the cash book must be equal to the balance shown by the clients personal account. This balance is adjusted in the bills for services rendered to the clients. SINGLE ENTRY SYSTEM

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Single entry system of book keeping may be described as a loose and defective way of recording transactions ,wherein some transactions are recorded in their two fold aspect, some are recorded in so far as they effect one aspect only, and few other are completely omitted to be recorded. This type of accounting system with additional information can typically be compiled into an income statement and balance sheet by a professional accountant. Advantages Single-entry systems are used in the interest of simplicity. They are usually less expensive to maintain than double-entry systems because they do not require the services of a trained person. Disadvantages 1. Data may not be available to management for effectively planning and controlling the business. 2. Lack of systematic and precise bookkeeping may lead to inefficient administration and reduced control over the affairs of the business. 3. Single-entry records do not provide a check against clerical error, as does a double-entry system. This is one of the most serious defects of single-entry systems. 4. Single-entry records seldom make provision for recording all transactions. In addition, many internal transactions, such as adjusting entries are often not recorded. 5. Because no accounts are provided for many of the items appearing in both the Income Statement and Balance Sheet, omission of important data is possible. 6. In the absence of detailed records of all assets, lax administration of those assets may occur. 7. Theft and other losses are less likely to be detected.

Ascertaining profit under the single entry system

Under the single entry system of book-keeping, it is not possible to prepare a regular trading and profit & loss account, because no record is kept of the nominal accounts, therefore, the exact profit or loss for a particular period cannot be ascertained. The net profit for a particular period can be ascertained in a rough manner by comparing the financial position of the business at the commencement of the period with the financial position at the end of the period. This requires the preparation of two statements of affairs, one in the beginning and the other at the end. Opening and closing balances of capitals can be the ascertained by preparing statement of affairs, and comparison of the capitals at the two dates will reveal either profit or loss. Preparation of accounts from incomplete accounts Books of accounts which are not prepared according to the double entry system are called incomplete records or accounts. The system of keeping incomplete records is called single entry system. It is an incomplete, unscientific and unsystematic method of keeping the books of accounts of a trader. Reasons for incompleteness 1 2 3 Lack of knowledge of recording transactions under double entry system. The system is economical as lesser number of books need be maintained. This method is most suitable to small firms and those concerns which have mainly cash transactions 117

The system being incomplete, actual income can be concealed.

ASERTAINMENT OF PROFIT OR LOSS Though the records are incomplete, the trader has to ascertain the profit or loss of his business and position regarding asset and liabilities. The main methods of ascertaining profit or loss and financial position are 1. Statement of affairs methods (Capital comparison method) 2. Final accounts method (Conversion method) Statement of affairs method Statement of affairs is the statement of assets and liabilities to ascertain the capital of a concern which keeps books under incomplete system. It is prepared in the form of balance sheet. The purpose of preparing is not to assess the financial position of the business but to find out the capital. Capital = Asset Liabilities Steps to find out the profit / loss i. ii. iii. iv. Find out the opening capital by preparing opening statement of affairs and closing capital by preparing closing statement of affairs. Add any amount of withdrawal from the business and less any amount of additional capital brought in to the business Calculate the excess of the adjusted capital over the opening capital to get the gross profit. From the gross profit, deduct depreciation, provisions, interest on capital etc. and add interest on drawings, prepaid expenses etc..

Closing capital ADD: Drawings for the period LESS: Additions during the year LESS: Opening capital GROSS PROFIT LESS: Adjustments: Depreciation Interest on capital ADD: Interest on drawings

,,,,,,,,,,,,,, ,,,,,,,,,,,,,,

,,,,,,,,,,,,,, ,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,

,,,,,,,,,,,,,,, NET PROIT/ LOSS

After ascertaining profit/loss , the final statement of affairs is prepared.

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FINAL ACCOUNTS METHOD In order to prepare final accounts from incomplete records, we have to find out the missing figures by making further computations and adjustment to available information. The various steps to convert single entry to double entry are Preparation of statement of affairs Preparation of cash books. Ascertain credit purchase and sales. Prepare bills receivable account Prepare bills payable account. Prepare stock account. Prepare revenue income account. MODULE 5: Hire purchase Definition Hire purchase (HP) is an idiom and legal term for a form of purchase in which payment for goods is made in installments over a period of time and in which title to the goods supplied - in other words, ownership - does not pass to the purchaser until all such payments have been made. Retention of title to goods differentiates HP from other common consumer credit systems. Thus hire-purchase means a transaction where the goods are sold by vendor to the purchaser under the following conditions: The goods will be delivered to the purchaser at the time of agreement. The purchaser has a right to use the goods delivered. The price of the goods will be paid in instalments. Every instalment will be treated to be the hire charges of the goods which is being used by the purchaser. If all instalments are paid as per the terms of agreement , the title of the goods is transferred by vendor to the purchaser. If there is a default in the payment of any of the instalments, the vendor will take away the goods from the possession of the purchaser without refunding him any amount received earlier in the form of various instalments. Characteristics of Hire-purchase system Hire-purchase is a credit purchase. The price under hire-purchase system is paid in instalments. The goods are delivered in the possession of the purchaser at the time of commencement of the agreement. Hire vendor continues to be the owner of the goods till the payment of last instalment. The hire-purchaser has a right to use the goods as a bailer. The hire-purchaser has a right to terminate the agreement at any time in the capacity of a hirer. The hire-purchaser becomes the owner of the goods after the payment of all instalments as per the agreement. If there is a default in the payment of any instalment, the hire vendor will take away the goods from the possession of the purchaser without refunding him any amount 119

Difference between Hire-purchase system and Instalment payment system In Hire-purchase system, the transfer of ownership takes place after the payment of all instalments while in case of Instalment payment system, the ownership is transferred immediately at the time of agreement. In Hire-purchase system, the hire-purchase agreement is like a contract of hire though later on it may become a purchase after the payment of last instalment while in Instalment payment system, the agreement is like a contract of credit purchase. In case of default in payment , in Hire-purchase system the vendor has a right to back goods from the possession of the hire-purchaser while in case of Instalment payment system, the vendor has no right to take back the goods from the possession of the purchaser; he can simply sue for the balance due. In Hire-purchase system, if the purchaser sells the goods to a third party before the payment of last instalment, the third party does not get a better title on the goods purchased. But in case of Instalment payment system, the third party gets a better title on the goods purchased. In Hire-purchase system the provisions of the Hire-purchase Act apply to the transaction while in case of Instalment payment system, the provisions of Sale of Goods Act apply to the transaction. Accounting In the books of Hire-purchaser Under Total Assets Value Method: Under this method of accounting in the books of hire-purchaser, is done on the assumption that the ownership of the asset is also transferred to the purchaser with the delivery of goods. The following journal entries are recorded under this method. (i)On taking the delivery of assets at the time of agreement: Asset A/c Dr. To Hire vendor A/c. (ii)On making the down-payment (if any): Hire-Vendor....... A/c. Dr. To Cash/Bank A/c (iii)On becoming the instalment due: Interest A/c. Dr. To Hire-Vendor A/c (iv)On payment of instalment: Hire-Vendor a/c Dr. To Cash/Bank A/c (Amount of instalment) (Amount of interest) (Amount of down payment) (Cash price of Asset)

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(v)On charging the depreciations: Depreciation A/c. Dr. To Asset A/c. (vi)On Transfer of interest and depreciation to P/L A/c: P/L A/c. Dr. To Interest A/c. To Depreciation A/c. (Total) (Bal. of Intt. A/c.) (Amount of depreciation)

(Bal. of Dep. A/c.)

1.7 Accounting in the books of Hire-vendor

(i)On delivery of goods to the hire-purchaser at the time of agreement: Hire purchaser A/c Dr. To Hire Sales A/c. (ii)On receipt of cash at the time of agreement (down payment), if any: Cash/Bank A/c. Dr. To Hire-Purchaser (Amt. of down payment) Cash Price

(iii)On interest being due: Hire Purchaser A/c Dr. To Interest A/c. (iv)On receipt of instalment: Cash/bank A/c. To Hire Purchaser (vi)On Transfer of amount of interest to P/L A/c: Interest A/c. Dr. To P/L A/c. (Balance of Intt. A/c.) (Amt. of Instalment) Amt. of Interest

121

Lease accounting: lease accounting is defined as the method of acquiring right to use an equipment or asset for a consideration. It enables the entrepreneur to reduce his investment in the project by taking plant or equipment on hire rather than owing it.A contract of lease is entered for this purpose.It may be defined as a contract where by the owner of an asset grants another party the exclusive rights to use the asset usually for an agreed period of time in return for the payment of rent. The important steps involved in a leasing transaction can be summarized as follows: 1. Firstly the lessee has to take a decision about the asset required and determine the manufacturer or the supplier. 2. The lessee then enters into a lease agreement with the lesser. 3. After the lease agreement is signed, the lesser contacts the manufacturer or supplier to supply the asset to the lessee. OBJECTIVE: The objective of the standard is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosures in relation to finance leases and operating leases. INSURANCE CLAIM In the course of running a business, a businessman is exposed to a number of risks such as fire, burglary, accident etc... Out of all the risks, the fire risk is the most dangerous. In the case it goes out of control, it may involve loss both in terms of property as well as human life. As prudent business secures him against such loss by taking a proper insurance policy. Such policy is usually taken for two types of losses (1) Loss to the property such as stock, plant, building etc... (2) Loss of profit on account of dislocation of business. CLAIMS UNDER FIRE INSURANCE POLICIES;-LOSS OF STOCK A fire insurance policy is usually for one year. The insurance company agrees to compensate the insured for any loss that he may suffer on account of loss of stock, in consideration of a certain amount paid as premium. The value of stock loss on fire can be ascertained as; Stock in the beginning of the accounting year Add: purchases till the date of fire Less: cost of goods sold Value of stock on the date of fire Less: stock of goods salvaged Value of stock lost on account of fire 122 . . . . . ...

The amount of claim for loss of stock to be filed with the insurance company depends on two important factors; 1)Rate of gross profit: for determination of the loss of stock, cost of sales is necessary. This can be ascertained by deducting the amount of gross profit from the sales made by the business. 2)Average clause:Inorder to discourage under insurance, usually the average clause is inserted in all contracts of fire insurance. The object of inserting such a clause is to limit the liability of the insurance company to that proportion of the actual amount of loss which the insured amount bears to the actual value of the property CLAIMS FOR LOSS OF PROFIT Fire results not only in loss of property but also of profits to the business on account of its dislocation. Such a loss can be got covered by taking a loss of profit policy The policy should be adequate to cover the likely amount of loss which the insured may suffer on account of dislocation of the business. The policy specifies both the period and the amount it covers. While determining the amount of policy the insured should take into account not only the amount of net profit he earns but also the amount of standing or fixed charges which have been charged against the revenue for determining the amount of net profit. Loss of profit occurs because of loss of sales on account of dislocation of the business. Moreover, the insured may have to incur certain additional expenses to mitigate the amount of loss. There may also be certain savings in expenses of the business because of its being closed down for some period. While calculating loss of profit, short sales, rate of gross profit, loss due to short sales, increased cost of working, saving in expenses, average clause etc. should be considered.

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BUSINESS MATHEMATICS
MODULE 1 Functions or mapping Mapping or function is a specified type of relation between two terms. Ordered Pairs A pair of 2 objects which occur in a particular order(in which the order of the object is important) E.g. Natural numbers and their squares can be represented by ordered pairs as (1,1),(2,4),(3,9).......... Relation A relation means an association of 2 objects based on some property possessed by them. R is usually used for relation. E.g. Let A= {1,3,4,7,9,10,11,16} B= {0,1,2,3,4,5} and the relation R is square of from A to B, then R= {(1,1)(4,2),(9,3),(16,4)} Functions Let A and B be 2 sets such that A= {a1,a2,a3} and B= {b1,b2,b3} If by some rule each element of A is associated with the unique element of B, say a1 with b1,a2 with b2 and a3 with b3,then the collection of each association is called a function from A to B and written as f:A B. Here b1 is the image of a1 and a1 is the pre image of b1. The above example can be made more clear by way of an arrow

diagram Hence y = f(x), y is called the image of x and x is called the pre-image of y. NECESSARY CONDITIONS FOR MAPPING A FUNCTION i. ii. For a function f from set A to set B, every element of set A should be associated to a unique element of set B. No element of A is associated with 2 or more elements of B.

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Domain and Range of a function The set of all 1st elements of the ordered pairs in a function f:A B is called domain of the function f. The set of all 2nd elements in a function f:A to B is called the range of the function f. The whole set B is called the co-domain of function f. E.g. Let A={1,2,3,4} B={1,4,9,16,25} And R={(x,y): x A, y B, x= y} Domain:{1,2,3,4}, Range:{1,4,9,16}, Co-domain:{1,4,9,16,25} Types of function a) One-one function or an injective mapping A function f:A B is said to be a one-one function if no two different elements in A have the same image in B. That is each element in B is the image of only 1 element in A. Example:

b) Many-one function A function f:A B is said to be a many-one function if 2 or more elements in A have the same image in B. Example:

c) Onto function A function f:A B is said to be an onto function if each element of set B is the image of atleast one element in set A.

Example: 125

d) Into function A function f:A B is said to be an into function if there exists atleast 1 element in B which is not the image of any element in set A. Example:

Composition of a function(Product mapping) Let f : A B and g : B C be two functions. Let h: A C be function such that h(x) = g(f(x))

There is a way to combine the above two functions to create a new function. It is called composition of two functions. It is a process through which we will substitute an entire function into another function.

Vectors Vector quantities are those which have direction as well as magnitude and combined according to certain laws of addition. Eg: Displacement, Force, Velocity etc. Line segment : Part of a straight line having 2 end points. Directed line segment : A line segment with an arrow head showing direction. Equal vector : They have same magnitude and they point in same direction. Negative vectors : They are vectors of equal magnitudes but point in opposite direction. Position vectors : When a vector OP is used to represent position of a point P with respect to point O as origin, vector OP is called position vector. Like and unlike vectors : Vectors which have same direction are called like vectors and which have opposite direction are called unlike vectors. Angle between like vectors = 0. Angle between unlike vectors = 180. 126

Null / Zero vector : If initial and final points of a vector coincides, then it is called a zero vector. Its length is 0 & its direction is indeterminate. Thus vector AA, vector BB etc are 0 vectors. Unit vector : Vector whose magnitude is unity (1) is called a unit vector in the direction of vector a, we have to simply divide by its magnitude. Caret a = vector a/|vector a|. Caret i, caret j, caret k are unit vectors parallel to x, y and z axes respectively. Unit vectors in different direction are not equal although their moduli are same. Ie, unity. Free and localized vector : A vector is said to be free if its initial point can be shifted anywhere on its line of support on a line parallel to its line of support. Thus it has no particular location in space. A vector is said to be localized if its initial point is fixed & cannot be transferred to anyother point on its line of support or a line parallel to its line of support. Co-initial vectors : Vectors having same initial point are called co-initial vectors. Co-planar vectors : 3 or more vectors lying on same plane or are parallel to same plane are called co-planar vectors. Collinear vectors : 2 or more vectors are said to be collinear if their directions are parallel, same or opposite irrespective of their magnitudes. Collinear vectors may not be along same line. Addition & Subtraction of vectors : Triangle method / Triangle law : If 2 vectors can be represented in magnitude & direction by 2 sides of a triangle in same order, then resultant is represented in direction & magnitude by 3rd side of triangle taken in opposite order. Parallologram method / Parallelogram law : If 2 vectors acting simultaneously at a point can be represented in direction & magnitude by 2 adjacent sides of a parallelogram, then their resultant is given completely in direction & magnitude by diagonal of parallelogram which passes through point of intersection. Polygon law : It states that if a number of vectors represented in direction & magnitude by sides of a polygon taken in order then resultant is given in magnitude & direction by closing side of polygon in opposite order. Properties of vector: Vector a + vector b = Vector b + vector a (commutative) Vector a +(vector b+ vector c) = (vector a + vector b)+ vector c (associative) m(vector a + vector b) = ma + mb (distributive) Null vector is identity for addition of vectors. Position vector : To every free vector there corresponds a vector of same magnitude & direction whose starting point is origin & terminal point is P. Then vector OP is called position vector of P relative to 0. Vector PQ = Position vector of Q Position vector of P Scalar / Dot product :Let vector a & vector b be 2 vectors & be angle between them, then scalar or dot product of 2 vectors a & b is Vector a vector b = |vector a||vector b|cos . Properties: Vector a vector b = vector b vector a(commutative) Vector a(vector b vecto c) = vector avector b vector avector c(distributive) 127

 (ma)b = m(ab) = a(mb) If ab = 0, either a = 0 or b = 0 or a perpendicular to b aa = a2cos = a2 (a+b)2 = (a)2 + (b)2 + 2ab Orthogonal vector triad: ii = jj = kk = 1 ij = jk = kI = 0 Corallary a = a1i + a2j +a3k b = b1i + b2j + b3k ab = a1b1 + a2b2 + a3b3 |a| = sq root of(a12 + a22 +a32) |a| = a1/b1 = a2/b2 = a3/b3 Vector / Cross product:Let vector a & vector b be 2 non zero, non parallel vectors & let be angle between them, then a x b = |a||b|sin caret n, where n is a unit vector perpendicular to both a & b, such that a, b & caret n form a right handed system. Notes A & b are parallel or collinear, then = 0 or 180, then a x b = vector 0. a x b = 0, then either a = 0 or b = 0 or sin = 0. a x a = vector 0 a x b b x a . But a x b = -(b x a) a x(b + c) = (a xb) + (a x c) 2 non zero vectors are parallel or collinear if and only if a x b = vector 0. Orthogonal triads: i x j = k = -j x i jxk=i=-kxj k x i = j = -I x k jxj=kxk=ixI=0 |a x b| = |a||b|sin Sin = |a x b|/|a||b| Sin2 + cos2 = 1 MATRIX A matrix is a rectangular arrangement of no: arranged in rows and columns. Order of matrix = no: of row * no: of columns. Types of matrix Raw matrix:- [ 1, 2] ; [ 1, 4, 8].

128

Column matrix :-

5 6 8

Square matrix:- 1

2 3

3 4

4 5 8

5 9 1 7 3

Zero matrix:-

0 0

0 0 0 2 0 0 0 1

Diagonal matrix:-

3 0 0

Unit or identity matrix:I= 1 0 0 0 1 0 0 0 1

Transpose of matrix:A= 2 0 3 4 1 7 At = 2 3 1 0 4 7

Equity of matrix Conditions:- Both matrix must have same order, Corresponding element of both matrix are equal. Addition and Subtraction A= 5 4 B= 3 0 2 Ie 5+3 2+4 8 6 1 4+0 1+2 4 3 4 5-3 2-4 2 -2 2 4-0 1-2 4 -1 129

Additive inverse A+B = B+A = 0 then A is said to be the additive inverse of B, & B is said to the additive inverse of A. Scalar multiplication m. c a b d = ma mc mb md ie 4 2 1 3 5 = 8 4 12 20

Multiplication of matrix A m*n * B n*p

Then n of A must be equal to n of B, then the resultant matrix will be in the form n*p. Determinants A determinant is simply a square array of numbers, arranged in rows and columns. Every determinant has a unique numerical value. a c b d = ad - bc.

Minors & Co-factors. The minor of an element is a determinant ie. Left after removing the row and column which intersect at the element and is of order 1 less than that of the given determinant. a1 a2 a3 b1 b2 b3 c1 c2 c3 minors of a1 b2 b3 c2 c3

Note : 1. Only square matrix have determinant. 2. The determinant of a square matrix can be expanded along any row or column. 3. If a row or column of a determinant consist of all zero, then the value of the determinant is all zero. Inverse of a matrix. We have seen that unit matrix I= 1 0 0 and zero matrix 1 0 0 0 of order 2, we have 0

a*1/a = 1 or a*a -1 = 1. This is called the multiplicative inverse of A. For a inverse of matrix to exist the following are necessary. 130

Conditions:- matrix must be square. The equation AB = AB = I must be satisfied. If A = a c Inverse of the matrix A is denoted by A-1 exist, if and only if (ad - cb) 0. A-1 = 1/(ad -bc) d -c -b a MODULE 2 DIFFERENTIATION It is the branch of maths concerned with the study of change. It comprises of two chief branches i.e., differential &integral calculus. Differential calculus is a subfield of calculus concerned with the study of how functions change when their inputs change. b then the d

Standard Results

Product rule If y = uv. Then use the formula dy/dx= u.(dv /dx) +v.(du/dx) Quotient rule If y= uv then dy/dx=[v.(du/dx)-u.(dv/dx)]/v2 Function of a function If y is a function of u and u is a function of x then dy/dx=dy/du*du/dx 131

Implicit functions In functions like x2+4xy-y=2x, y is not expressed in terms of x. This is called an implicit function. In the case of such functions differentiate term by term and obtain dy/dx. Logarithmic Differentiation This method is used when the function has an index which itself is a function. For example, y=x2x,y=(logx)x etc Proceed by taking logarithm on both the sides. Higher order derivatives The first derivative of y=f(x) is denoted by dy/dx or y1.The second derivative is denoted by d2y/dx2 or y2. Similarly nth derivative of y=f(x) is denoted by dny/dxn or yn. Applications of Differentiation in Business Mathematics The process of differentiation has very useful applications in the field of business and economics: 1. 2. 3. 4. 5. Marginal Cost: MC=dC/dx, where C is cost and x is quantity of production. Marginal Revenue: MR=dR/dx, where R is revenue & x is quantity of sales. Marginal Productivity: MP=dP/dL,where P is the output & L is the input. Marginal Utility: MU=dU/dx, where U is utility & x is quantity of commodity purchased. Marginal rate of substitution.

MAXIMA & MINIMA A

B At A, maximum occurs and dy/dx =0 & d2y/dx2 < 0, At B, minimum occurs and dy/dx =0 & d2y/dx2 >0 . ELASTICITY Price elasticity of demand,ed = -(p/q).(dq/dp) Price elasticity of supply, es(p/q).(dq/dp)

INTEGRATION Can be considered as the inverse of differentiation. Formulae for integration can be obtained from the formulae of differentiation. 132

Formulae

sin(x) cos(x) sec (x) cosec (x) sec(x)tan(x) cosec(x)cot(x)

2 2

-cos(x) sin(x) tan(x) -cot(x) sec(x) - cosec(x)

Note: a constant of integration should be added Integration by parts

Definite Integral = (b)-(a), where (x) is the integral of f(x). Properties of Definite integral 133

Theorem. If f (x) and g(x) are defined and continuous on [a, b], except maybe at a finite number of points, then we have the following linearity principle for the integral: (i)

f (x) + g(x) dx = (ii)

f (x) dx +

g(x) dx;

f (x) dx =

f (x) dx, for any arbitrary number

The next results are very useful in many problems. Theorem. If f (x) is defined and continuous on [a, b], except maybe at a finite number of points, then we have (i) f (x) dx = 0; (ii)

f (x) dx = (iii)

f (x) dx +

f (x) dx;

f (x) dx = -

f (x) dx;

Application of Integration to Business The process of Integration has very useful applications in the following fields of Business and Economics. 1) Total Cost=(Marginal Cost) 2) Total Revenue=(Marginal Revenue) 3) Consumers surplus= , Where f(q)=demand function, P=equilibrium price, Q=equilibrium quantity 4) Producers surplus=PQQ=Equilibrium quantity. ,where f(q)=Surplus function, P=Equilibrium Price,

134

MODULE 3 Classical Optimization Techniques The classical methods of optimization are useful in finding the optimum solution of continuous and differentiable functions. These methods are analytical and make use of the techniques of differential calculus in locating the optimum points. Since some of the practical problems involve objective functions that are not continuous and/or differentiable, the classical optimization techniques have limited scope in practical applications. However, a study of the calculus methods of optimization forms a basis for developing most of the numerical techniques of optimization presented in subsequent chapters. In this chapter we present the necessary and sufficient conditions in locating the optimum solution of a singlevariable function, a multivariable function with no constraints, and a multivariable function with equality and inequality constraints. A function of one variable f (x) is said to have a relative or local minimum at x = x* if f (x*) f (x* + h) for all sufficiently small positive and negative values of h. Similarly, a point x* is called a relative or local maximum if f (x*) f (x* + h) for all values of h sufficiently close to zero. A function f (x) is said to have a global or absolute minimum at x* if f (x*) f (x) for all x, and not just for all x close to x*, in the domain over which f (x) is defined. Similarly, a point x* will be a global maximum of f (x) if f (x*) f (x) for all x in the domain. The following figure shows the difference between the local and global optimum points.

A single-variable optimization problem is one in which the value of x = x* is to be found in the interval [a, b] such that x* minimizes f (x). The following two theorems provide the necessary and sufficient conditions for the relative minimum of a function of a single variable. Theorem 1: Necessary Condition If a function f (x) is defined in the interval a x b and has a relative minimum at x = x*, where a < x* < b, and if the derivative df (x)/dx = f 1(x) exists as a finite 135

number at x = x*, then f1(x*) = 0. Theorem 2: Sufficient Condition. Let f 1 (x*) = f 1 1 (x*) = = f (n-1) (x*) = 0, but f (n) (x*) 0. Then f (x*) is (i) a minimum value of f (x) if f (n)(x*) > 0 and n is even; (ii) a maximum value of f (x) if f(n) (x*) < 0 and n is even; (iii) neither a maximum nor a minimum if n is odd. MULTIVARIABLE OPTIMIZATION WITH NO CONSTRAINTS Here, we consider the necessary and sufficient conditions for the minimum or maximum of an unconstrained function of several variables. Theorem 3: Necessary Condition. If f (X) has an extreme point (maximum or minimum) at X = X* and if the first partial derivatives of f (X) exist at X*, then

Theorem 4: Sufficient Condition. A sufficient condition for a stationary point X* to be an extreme point is that the matrix of second partial derivatives (Hessian matrix) of f (X) evaluated at X* is (i) positive definite when X* is a relative minimum point, and (ii) negative definite when X* is a relative maximum point. MULTIVARIABLE OPTIMIZATION WITH EQUALITY CONSTRAINTS In this section, we consider the optimization of continuous functions subjected to equality constraints:

There are several methods available for the solution of this problem like the methods of direct substitution, constrained variation, and Lagrange multipliers. Lagrange Multipliers and their Applications Optimization problems, which seek to minimize or maximize a real function, play an important role in the 136

real world. It can be classifed into unconstrained optimization problems and constrained optimization problems. Many practical uses in science, engineering, economics, or even in our everyday life can be formulated as constrained optimization problems, such as the minimization of the energy of a particle in physics; how to maximize the profit of the investments in economics. The constrained optimization problems can be formulated into the standard form as:

Where, G, H are function vectors. The variables are restricted to the feasible region, which refers to the points satisfying the constraints. The Lagrange multipliers method, named after Joseph Louis Lagrange, provide a method for the constrained non- linear optimization problems. It can help deal with both equality and inequality constraints. Without the inequality constraints, the standard form of the nonlinear optimization problems can be formulated as:

The Lagrange function F is constructed as

By partial differentiation, the Lagrange function can be found. Linear Programming Linear programming (LP) problems are optimization problems in which the objective function and the constraints are all linear. Integer Programming Integer programming is a special class of Linear Programming problem.A linear programming problem in which some or all the variables in the optimal solution are restricted to assume non negative integer value is called Integer programming problem.

137

There are two common approaches. Historically, the first method developed was based on cutting planes (adding constraints to force integrality). Another technique has been based on dividing the problem into a number of smaller problems in a method called branch and bound. Applications and Importance Many industrial applications of large scale programming models are oriented towards planning decisions. In business and industry it becomes necessary in many situations to plan models involving integer valued variables. For example: in allocation of goods of the type trucks, aircrafts etc, fractional value of variables is meaningless. Transportation problems, Assignment problems and sequencing and routing problems are integer programming problems as they require integer values for the decision variables. Dynamic Programming Dynamic programming is a technique of optimisation using multistage decision process,in which a sequence of inter related decisions has to be made.This technique decomposes the original problem into a number of sub problems (or stages) each in one variable.The solution is obtained in an orderly manner by starting from one stage to the next and is completed after the final stage is reached. Goal Programming In linear programming ,there is only one objective(or goal) such as maximisation of profit(or output) or minimisation of cost(or time).But there may be situations where there may be multiple objectives.Goal programming is a technique which can be used for finding the optimum solutions to such situations. Applications 1.It can be used to amnagerial decision making areas. 2.In marketing Goal programming is useful for media planning. 3.This technique can be employed for port folio selection,capital budgeting,financial planning and scheduling in the field of finance management. 4.In the field of production,it can be employed to aggregate production planning and scheduling. MODULE 4 Quantitative Techniques And Its Applications In Business Quantity is something measurable with definiteness. It can be explained as the numerical expression of information or fact against qualitative expression, which is a non-numerical statement of fact. Thus quantitative techniques involve introduction of the element of quantities such as numbers, symbols and other mathematical expressions. Some Important techniques in Mathematics Arithmetic:

138

Indices, progressions, series, logarithms etc come under arithmetic logarithms and indices are used and simplification of mathematical calculations. In a series if some of the values are given we can estimate or expect the required values in the later point of the series. Using progressions we can find the sum, mean and the required term in a given series. Algebra: Algebraic concepts in sets, relations, functions etc are abstract in nature. These are used to identify the object and their characteristics. The relation between the objects and the scope or extend of relation with reference to the context is useful in quantitative analysis of different problems. Geometry: We can find the areas or volumes of the regions analytical geometry. Using plane geometry we can express regions in a pictorial manner. Calculus: Limits and Continuity, Differentiation, Integration, Differential Euations etc. are calculus concepts on the given equations. Matrices: Matrices are used to solve systems of Linear Equations. Application of quantitative techniques in Industry Quantitative techniques is recently developed `modern science. It is multi-disciplinary in nature with inbuilt tools for decision making. These specific features widened the scope of application of the subject into every sector where the decision makers play a significant role. It may be the apex administrative body, the government, the defense, the trade and industry, non trade organizations, service sectors or any such key sectors. Its application is more prominent in trade and industry which can be in the following way: Production: Production process converts the raw materials into useful finished products. Production unit lies between two stores house- the raw materials and finished products. The efficiency and the productivity of production department is determined by how best they can reduce wastage of idle materials, unnecessary movements of machines and men and materials between machines. All these can be monitored through different quantitative techniques. Procurement: Every business organization is required to purchase different inputs. The role of procurement department is to determine the required quality, which should not be more or less than the prescribed standard and how much to buy. The department should be able to balance between the time of order and the time of receiving the order. There should not be idle inventory. All these activities are undertaken with the help of quantitative techniques 139

Marketing: The success of any industry or trade is directly determined by its ability to market the products. The marketing department for the expansion of market share extensively uses market research , sales promotion techniques, consumer survey etc. Human Resource Management: An organization or an enterprise is an network of people selected and positioned in a post assigning specific task to be undertaken by them. It includes recruitment, training, payment of salaries and creation of healthy network of human power, which is the most important fuel to run an organization. At every stage of HR development programmes, quantitative techniques are applied by the human resource department. Finance: Obtaining timely and adequate finance is life to any organization. Quality of finance can be improved by applying the quantitative techniques. All the major enterprises use the major enterprises use the quantitative techniques to reduce wastage in utilizing capital. They reduce burdens of payments and obtain finance from cheaper sources. Budgetary control, credit risk analysis, cash flows etc are important techniques. Research and Development: Research and Development department became an essential part of every organization, including the Government Departments. The department takes the responsibility of conducting continuous studies to improve the work efficiency, market share and to build good public image. Research and development department encourages innovative projects, inventions and discoveries. All these activities directly depend on different quantitative techniques. It can be said that the maximum tools and models of quantitative techniques are utilized in research and development department. SET THEORY Set is collection of well-defined objects.{a,e,I,o,u} these objects are called elements of a set . Set represented by A. A={a,e,I,o,u}, B={1,2,3,4,5} The objects of the set will not be repeated. Various methods of representing a set 1. Description method a well-defined description about the set Eg: N is a set of natural numbers. 2. Tabular OR roster method- elements of the set are written inside a pair of braces separated by commas. Eg :{ 1,2,3,4,.} 140

3. Set builder or rule method actual elements are not written but a rule or statements or formula is written in briefest possible way. Eg:{x:x is a natural number} Types of set 1. EQUAL SETS Two sets are said to be equal if the elements of both the sets are the same A={x,y,z},B={y,x,z} 2. EQUIVALENT SETS Two sets are said to be equivalent if they have equal number of sets A={3,6,9}, B={a,b,c},n(A)=n(B) The number of elements in set are called cardinal numbers Eg: B={a,b,c,d,e} N(B)=5 3. Disjoint sets If two sets have no elements in common such sets are called disjoint sets P={2,4,8} Q={3,1,6} 4. Finite set A set is said to be finite sets if it has limited number of elements in it. P={1,2,3..20} 5. INFINITE SET Set of natural numbers whole numbers integers are infinite sets. Set have infinite number of elements 6. null set (empty set) A set which has no elements in it is called empty sets or null set and is represented as the symbol {} or 7. Joint set or overlapping sets If two sets have at least one elements in common they are said to joint or overlapping sets A={1,2,3,4} B={3,6,8,9} 8. Singleton or unit set A set which has only one element in it is called unit set 141

Eg:{x:x is the president of India} {a} , {10} 9. SUBSET In two sets A and B if All element of set A are also the elements of set B . Then set A is said to a subset of B, A B A={5,6,7,8}, B={2,3,4,15} 1. Every set is a subset of itself, 2. Empty set is a subset of every set 3. If A is a subset of B (A B) and (B A) then A=B A={a,b} Subset of A={},{a},{b}{a,b} 4. If a set has n elements the number of its subset is 2n Proper subset The set A is said to be a proper subset of B if, all elements of A is contained in B and there exists at least one elements in B which is not in A Number of proper subset = 2n-1 UNIVERSAL SET it is the set which containing all the sets under consideration as its subset . Universal set is denoted by U A={5,6,7,8} B={1,3,5,7} C={4,6.8.10} U={1,2,3,4,5,6,7,8,9,10} COMPLEMENT OF SET The compliment of a set is the set of all elements in the universal set which ar not in set A . It is denoted by A or Ac Eg: if U={1,2,3,4,5,6} A={2,3,5}, A={1,4,6} If S={x:xN}, A={even natural numbers}, then, A={odd natural numbers} SET OPERATIONS UNION Union of set A&B is the set which consists of all the elements which belongs either to set A or to set B or to both set and is denoted by AUB or AcupB A={5,6,7},B={6,8}, then, AUB={5,6,7,8} 142

1 union of two set is commutative 2 union of two set is associative 3 A is a subset of (AUB) A (AUB), B (AUB) INTERSECTION OF TWO SETS Intersection of two set A and B is the set of elements which are common to both AandB It is denoted by AB(A cap B) A={1,2,3,4} B={3,4,5,6} AB={3,4} Intersection of two set is commutative, AB=BA Intersection of two set is associative, A (BC)=(AB) C DIFFERENCES OF TWO SETS If A and B are two given sets ,then their differences A-B is the set of those elements which belongs to set A but not to set B For eg: if A={b,c,d,e} and B={a,b,c} A-B={d,e}, B-A={a} DISTRIBUTIVE LAWS 1 AU(BC)=(AUB)(AUC) The union is distributed over the intersection of two sets Let A={2,5,8,11}, B={2,4,6,8}, C={5,6,7,8},

BC={6,8}, AU(BC)={2,5,6,8,11} AUB={2,4,5,6,8,11}, AUC={2,5,6,7,8,11} (AUB) (AUC)={2,5,6,8,11} So , AU(BC)=(AUB)(AUC) ={2,5,6,8,11} DE-MORGANS LAWS The complement of two sets is equal to the intersection of their complements 143

(AUB)'=A'B' (AUB)'=A'B' CARDINAL PROPERTIES OF SETS 1. n(AUB)=n(A)+n(B)-n(AB), n(AUB)=n(A)+n(B) for disjoint set, 2. n(A-B)=n(A)-n(AB)=n(onlyA), 3. n(B-A)=n(B)-n(AB)=n(onlyB),

4 .n(A')=n(U)-n(A), 5 n(B')=n(U)-n(B) 6. n(AUB)'=n(U)-n(AUB) VENN DIAGRAMS Venn diagrams are most commonly used pictorial representation of set. The idea was developed by John Venn , he is English mathematician . On this diagram, universal set is represented by rectangle and all other set under consideration by circle or oval within the rectangle.

Permutations and Combinations Permutations A permutation is one of the different arrangements of a group of items where order matters. Summary If you want to arrange 3 people in groups of 3 at a time, there are 3! ways to accomplish this task. If you want to arrange 4 people in groups of 4 at a time, there are 4! ways to accomplish this task. If you want to arrange n objects in groups of n at a time, there are n! ways to accomplish this task.

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Permutation Formula

The number of permutations of n objects taken r at a time is:

Combinations Combination

A combination is one of the different arrangements of a group of items where order does not matter.

Combination Formula

The number of combinations of a group of n objects taken r at a time is:

CIRCULAR PERMUTATION The number of circular arrangements of n distinct items is: (n-1)! If there is a difference between the clockwise and anticlockwise arrangements,and (n-1)! /2 if there is no difference between the clockwise and anticlockwise. MODULE 5 Arithmetic progression (AP) An arithmetic progression (AP) or arithmetic sequence is a sequence of numbers such that the difference of any two successive members of the sequence is a constant. Each term differs from the previous one by a constant, called the common difference 145

 The common difference can be either positive or negative Useful in calculating simple interest, etc

An A.P. with first term a, common difference d, and n terms can be written as a, a+d, a+2d a+(n-1)d Sum of an Arithmetic Progression If a is the first term ,l is the last term, n is the number of terms & d is the cd or Geometric Progression A sequence where each term is a constant multiple (common ratio) of the previous term Useful in compound interest, time value of money, calculating depreciation etc. A geometric progression with first term a, a common ratio r, and n terms can be written as a, ar, ar2, ar3, ar n-1 Sum of n terms of a GP If a is the first term and r is the CR of a GP Sum to n terms of the GP is i) ii) Sn = a( rn-1)/ (r-1), if r >1 Sn = a( 1- rn ) / (1 r ), if r < 1

Harmonic Progression A sequence of numbers is said to form a harmonic progression if their reciprocals form an arithmetic progression. To find the nth term of an H.P To find the nth term of an H.P, find the nth term of the corresponding A.P. obtained by the reciprocals of the terms of the given H.P. Now the reciprocal of the nth term of an A.P. will be the nth term of the H.P. Binomial theorem The binomial theorem describes the algebraic expansion of powers of a binomial. According to the theorem, it is possible to expand the power (x + y)n into a sum involving terms of the form axbyc, where the exponents b and c are nonnegative integers with b + c = n, and the coefficient a of each term is a specific positive integer depending on n and b. For example,

146

The coefficient a in the term of xbyc is known as the binomial coefficient ( nCb) or ( nCc) (the two have the same value). These coefficients for varying n and b can be arranged to form Pascal's triangle. These numbers also arise in combinatorics, where gives the number of different combinations of b elements that can be chosen from an n-element set.

Pascal's triangle Properties The expansion is a series (an adding of terms). The number of terms in each expansion is one more than n. (terms = n + 1) The power of a starts with an and decreases by one in each successive term ending with a0. The power of b starts with b0 and increases by one in each successive term ending with bn The power of b is always one less than the "number" of the term. The power of a is always n minus the power of b. The sum of the exponents in each term adds up to n. The coefficients of the first and last terms are each one. The coefficients of the middle terms form an interesting (but perhaps not easily recognized) pattern where each coefficient can be determined from the previous term. The coefficient is the product of the previous term's coefficient and a's index, divided by the number of that previous term. Binomial Theorem (or Binomial Expansion Theorem)

The r th term of the expansion of

is :

Mathematics of finance Simple interest 147

If P=amount deposited initially( Principal), r=rate of interest, T=number of years for which P is deposited, total interest receivable. I=P*r*T & Amount receivable, A=P+I = P+(P*r*T) = P(1+rT) Compound interest Interest is added to the principal at the end of the compounding period. Compounding can be yearly, or can be monthly, quarterly, half yearly etc. More frequent compounding means more interest for you. In yearly compounding, A=P(1+r) after 1year, P(1+r)2 after 2years,and so on. After t years, A=P(1+r)t If compounding is k times in a year, A=P(1+r/k)kt Compounding Continuously

A(t )

Pert

Annual Percentage Yield (APY) The percentage that, compounded annually, would yield the same return as the given interest rate with the given compounding period. Discount factor At compound interest, P becomes P(1+r)T in T years. Therefore, if somebody promises to give Rs P(1+r)T after T years, it is worth only Rs P today. Amount receivable in future is to be multiplied by a number(always less than one) to arrive at the present worth of that amount. In above example, P(1+r)T is to be multiplied by 1/(1+r)T to arrive at present worth P. So the discount factor is 1/(1+r)T.

Present value of money PV= Future amount* Discount Factor(DF) DF = 1/(1+r)T

Future value of money A=P(1+r)T ,when the compounding is yearly. Therefore,FV=Present Amount*(1+r)T . We call (1+r)T compounding factor.

Annuities A series of fixed payments/receipts at a specified frequency, over a fixed period. 2 types of Annuities. Ordinary Annuity; payment is at the end of the period. Annuity Due; payment is at the beginning of each period.

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Present and Future value of Annuity For calculating PV of Annuity, PV of each payment is calculated and added.E.g. if Rs 100 is paid at the end of each year for 10 years, we calculate PV of each of these 10 payments of Rs 100 separately and add these 10 values. Similarly, for calculating FV of Annuity, FV of each payment is calculated and added.E.g. if Rs 100 is paid at the end of each year for 10 years, we calculate FV of each of these 10 payments of Rs 100 separately and add these 10 values.

FV

r 1 k R r k

kt

1 PV R

r 1 k r k

kt

149

STATISTICS FOR MANAGERS MODULE 1 COLLECTION & CLASSIFICATION OF DATA Collection of data is the process of enumeration together with the proper recording of results .The success of an enquiry is based upon the proper collection of data . There are mainly 2 type of collection of data: Primary data: These are collected for the first time and they are original in character. If an individual or an office collects the data to study a particular problem, the data are the raw materials of the enquiry. They are primary data collected by the investigator to study any particular problem. For collection of primary data, the investigator may choose anyone of the following methods: Direct personal observation Indirect oral interview Information through agencies Mailed questionnaires Schedules sent through enumerator Secondary data: These are already collected by someone for some purpose and are available for the present study. For instance, the data collected during census operations are primary data to the department of census and the same data, if used by a research worker for some study, are secondary data. Sources of secondary data : The various sources of secondary data can be divided into two broader categories Published sources: various governmental, international and local agencies publish statistical data and chief among them are : (a).international publications,(b).official publications of central and state govt.(c).semi-official publications (d).publications of research institutions (f).reports of various committees and commissions appointed by a govt. (g).journals and news papers. Unpublished sources: there are various of un published data .They are records maintained by various govt. and private agencies, the research carried out by individual research scholars in the universities or research institutions. Classification of data Classification is the process of arranging the available facts into homogeneous groups or classes according to resemblances and similarities. The following are the definitions : classification is the process of arranging things in many groups or classes according to their resemblances and affinities and give expressions to the unity of attributes that may subsist amongst adiversity of individuals Characteristics of classification All the facts are classified into homogeneous groups by the process of classification The basis of classification is unity in diversity Classification may be either real or imaginary Classification may be according to either similarities or dissimilarities It should be flexible to accommodate adjustments 150

Objects of classification To simplify the complexities of collected data To bring out the points of similarities of various items To facilitate comparison To bring out the relationships To prepare basis of tabulation To facilitate the statistical treatment of data To facilitate easy interpretation To eliminate unnecessary details Methods of classification Classification is done on the basis of characteristics possessed by the items the characteristics can be of two kinds measurable and non -measurable .height ,weight, production , are measurable while sex, marital status, education etc are non-measurable . the methods mainly classified into 4 types Classification according to attributes Under this method the data are classified on the basis of quantitative characteristics known as attributes. Attributes may be classified as simple or manifold In simple classification the data are divided on the basis of only one attributes. In manifold classification the data are divided on the basis of more than one attributes Classification according to variables Under this method data are classified on the basis of quantitative characteristics such as age , height , weight , etc. these characteristics capable of direct measurement Geographical classification When the data are classified according to geographical differences , we have geographical classification .here information relating to different places are shown Chronological classification When data are collected for a number of periods and they are arranged, chronologically we have chronological classification Frequency distribution A frequency distribution is an orderly arrangement of data classified. According to the magnitude of observations .when the data are grouped in to classes of appropriate size indicating the number of observations in each class .we get frequency distribution Tabulation method

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Tabulation method is the next step of classification .it is an orderly arrangement of data in rows and columns . It is a systematic presentation of data . Tabulation is the final stage in collection and compilation of data . It is the process between collection of data and its analysis . Objectives of tabulation To simplify complex data To facilitate statistical analysis To economise space To facilitate comparison To save time To remember the data Important functions of tabulation Tabulated data is easily understood Tables are intended to summarise the data Tabulation facilitate comparison Tabulation reveals the nature of relationship between the variables Tabulation eliminates all unnecessary details , which are collected It helps further analysis of the data Statistical Series A systematic arrangement of items into some logical order Individual Series Discrete Series Continuous Series Cumulative Series Frequency Distribution The frequency (f) of a particular observation is the number of times the observation occurs in the data. Arrangement of data into different classes to know the frequencies in each class. A frequency distribution is a tabular form that organises data into classes It is obtained by dividing the data into different classes and shows the number of observations in each class Frequency Distribution The objective is to provide insights about the data that cannot be quickly obtained by looking only at the original data. Frequency distribution can be constructed with classes of qualitative or quantitative attributes Discrete and Grouped Frequency distribution Discrete Frequency Distribution o The number of times each value of the variable occurs in the data. Grouped Frequency Distribution o After classifying the data, divide the data into different groups called classes/class interval and record the number of observations in each group(classes). Components of Grouped Frequency Distribution o Classes/ class interval o Class Frequency o Class Limit o Class Mark o Magnitude of class interval o Class Boundaries

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Class/ Class interval The classes /class interval or categories refer to the groupings of the observations according to their size. Eg. if students having mark 20 -25 is in a group, then 20-25 is a class. Types of Class Intervals o Inclusive Type : Both upper limit and lower limit are included in the class. Here the classes will be like 0 9, 10 19, 20 29 etc. o Exclusive Type : Upper limits is excluded from the class. Eg : 0 10, 10 20, 20 30 etc. o Open ended and closed ended class limit Frequency The frequency for a particular category or class is the number of observations that fall into that class. Class limits The class limits are the smallest or the largest numbers in each classes. In class 20-25, 20 is the lower limit and 25 is the upper limit Lower class limits are the smallest numbers belong to the different classes. Upper class limits are the largest numbers that belong to the different classes. Class marks Class marks are the midpoints of the classes (lower Limit + Upper Limit) Class Boundaries In grouped frequency distribution if gap exist between upper limit of the class and lower limit of the succeeding class, then it is difficult to identify the class of some of the observation eg. It is obtained by adding d to the lower limit and subtracting d fro the upper limit, where d is the gap between upper limit of any class and lower limit of the succeeding class. Magnitude Difference between upper and lower class boundaries. Eg. class 20-30, magnitude is 30-20 = 10 Continuous Distribution When the total number of items and their range is large, discrete series cannot help in analysis. Eg. Discrete series of age , 1-3, 4-6 where age between 3 to 4 is not considered Here the variable is continuous, which can take any numeric value Eg: Weights of students in a class, Age of the students, Monthly savings of a family etc Relative Frequency Distribution The relative frequency of a class is the fraction or proportion of the total number of data items belonging to the class A relative frequency distribution is a tabular summary of a set of data showing the relative frequency for each class 153

Steps in constructing a frequency distribution or frequency table o Find the range of values in the data o Decide the number of classes o Decide the size of the class/class width o Identify the number of observations in each class by using tally marks. Graphs and charts A graph should: be simple and not too cluttered, show data without changing the datas message, clearly show any trend or differences in the data, and be accurate in a visual sense (if one chart value is 15 and another 30, then 30 should appear to be twice the size of 15). Column chart: used when comparing data values is important, and there are five or fewer categories. When there are more than five, a dot chart should be used. Column graphs generally display data better than horizontal bar graphs, and are preferred where possible. Horizontal bar chart: used when category names are too long to fit at the foot of a column. As with the column chart, it is more suited to five or fewer categories. When there are more than five categories, use a dot chart. Dot chart: It is used when displaying a comparatively large number of categories and category order is unimportant. It is best used when portraying category values in descending order of size. Age pyramid: It is used when representing population age structure. Pictograph: only used by professional graphic artists, although simple pictorial presentations can be done by students. Care should be taken that comparisons are accurately depicted. Pie chart: It is used for simple comparison of a small number of categories. Values should be markedly different, or differences may not be easily seen. Labelling sectors with their actual values overcomes this problem. In some cases, where data values are close to each other, a pie charts message may be easily misunderstood. A column or horizontal bar chart may be more useful. Line chart: It is used for depicting data over time. Histogram: this should be used with the same advice for a column graph, when depicting continuous variable data. Frequency polygon: this should be used when depicting continuous variable data and you want to smooth out abrupt changes that may appear in a histogram.

Cumulative frequency curves or Ogives The curve obtained by plotting cumulative frequencies is called a Cumulative frequency curves or Ogives Less than method More than method Measures of Central Tendency Central tendency is a typical or representative score Mean 154

Median Mode Measures of Dispersion Mean, median and mode give locations of a data sets centre, but a data description will be more comprehensive if you also know the spread. Range Mean Deviation Inter-quartile Range Quartiles Variance and Standard Deviation

MODULE 2 Introduction to Probability A probability provides a quantitative description of the likely occurrence of a particular event. Probability is conventionally expressed on a scale from 0 to 1; a rare event has a probability close to 0, a very common event has a probability close to 1. Methods of Assigning Probabilities Classical Probability

Relative Frequency Approach

Subjective Probability A subjective probability describes an individual's personal judgement about how likely a particular event is to occur. It is not based on any precise computation but is often a reasonable assessment by a knowledgeable person. Independent Events Two events are independent if the occurrence of one of the events gives us no information about whether or not the other event will occur; that is, the events have no influence on each other. Union and Intersection of Events A Venn diagram is used to describe visually the relationship between the sample space and possible events within it; a contingency table shows frequencies or relative frequencies for two or more variables at the same time. 155

Definitions: Mutually exclusive events are events such that if one event occurs, the other cannot occur. Exhaustive events are events that include all possible outcomes of an experiment. Addition Rules for Probability When events are mutually exclusive: P(A or B) = P(A) + P(B) When events are not mutually exclusive: P(A or B) = P(A) + P(B) - P(A and B) Complementary Rule If A and A are complementary events then P(A ) = 1 P(A)

Conditional Probability Let A and B be two events. The conditional probability of event A, given event B, denoted by P(A|B) is defined as

P( A B)

P( A B) provided that P(B) > 0. P( B)

Similarly, the conditional probability of B given A is defined as

P( B A)

P( A B) provided that P(A) > 0. P( A)

Statistically Independence Two events are independent when the occurrence or non-occurrence of one event has no effect on the probability of occurrence of the other event. Definition : Two events A and B are independent if and only if P(A B) = P(A)P(B)

Multiplication Rules for Probability Terms: The marginal probability is the probability that a given event will occur. No other events are taken into consideration. 156

Joint probability is the probability that two or more events will all occur. Conditional probability is the probability that an event will occur given that another event has occurred or will occur. Independent events occur when the occurrence of one event has no effect on the probability that another will occur. Dependent events occur when the occurrence of one event changes the probability that another will occur. Multiplication Rule When Events are Independent P(A and B) = P(A) x P(B) Multiplication Rule When Events are Not Independent (Dependent) P(A and B) = P(A) x P(A| B) Bayes' theorem In probability theory, Bayes' theorem, often called Bayes' law or Bayes' rule, and named after Rev. Thomas Bayes, shows how one conditional probability (such as the probability of a hypothesis given observed evidence) depends on its inverse (in this case, the probability of that evidence given the hypothesis). Bayes gave a special case involving continuous prior and posterior probability distributions and discrete probability distributions of data, but in its simplest setting involving only discrete distributions, Bayes' theorem relates the conditional and marginal probabilities of events A and B, where B has a nonvanishing probability:

Where, P(A) is the prior probability or marginal probability of A. It is "prior" in the sense that it does not take into account any information about B. P(A|B) is the conditional probability of A, given B. It is also called the posterior probability because it is derived from or depends upon the specified value of B. P(B|A) is the conditional probability of B given A. P(B) is the prior or marginal probability of B, and acts as a normalizing constant.

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Probability distributions Introduction All the probability distributions can mainly classify under two categories, which are discrete probability distributions and continuous probability distributions. Discrete Probability Distributions Binomial Distribution Poisson Distribution Hypergeometric Distribution Continuous Probability Distributions Normal Distribution

Important concepts: 1. Random variable: A random variable is a variable whose value is determined by the outcome of a random experiment. A random variable can be discrete or continuous. 2. Discrete random variable: A random variable that assumes countable values is called a discrete random variable. 3 Continuous random variable: A random variable whose values are not countable is called a continuous random variable. A random variable that can assume any value contained in one or more intervals is called a continuous random variable. Terminology: A probability distribution is the relative frequency distribution that should theoretically occur for observations from a given population. A random variable is a variable that can take on different values according to the outcome of an experiment. A discrete random variable is a random variable that can only take on certain values (generally the integers) along an interval. A continuous random variable is a random variable that can take on any value along an interval. Nature/Characteristics of a Discrete Probability Distribution The probability of x is always greater than or equal to 0 and less than or equal to 1. The probability distribution includes all possible values (eg exhaustive) The values of x are mutually exclusive (only one value can occur in any one experiment. The sum of the probabilities of each outcome of the experiment add to one. The Binomial distribution The binomial distribution deal with consecutive trials, each of which has two outcomes, described as "success" and "failure" or sometimes as 0 or 1. 158

Characteristics of Binomial Distribution: There are two or more consecutive trials. In each trial there are just two possible outcomes, usually denoted as success or failure. The trials are independent.

Probability of exactly x successes in n trials:

P(X)= probability of exactly x success in n trials n = number of trials, x = the number of successes, p= the probability of success in a single trial (1-p) = q= the probability of failure in a single trial where P(success)+P(failure)=1 Mean of Binomial distribution Variance of Binomial distribution

Poisson distribution Poisson distribution is a discrete distribution. Typically, a Poisson random variable is a count of the number of events that occur in a certain time interval or spatial area. For example, the number of cars passing a fixed point in a 5 minute interval, or the number of calls received by a switchboard during a given period of time. A discrete random variable X is said to follow a Poisson distribution with parameter m, written X ~ Po(m), if it has probability distribution

where x = 0, 1, 2, ..., n m > 0. The following requirements must be met: the length of the observation period is fixed in advance; the events occur at a constant average rate; the number of events occurring in disjoint intervals are statistically independent. The Poisson distribution has expected value E(X) = m and variance V(X) = m; i.e. E(X) = V(X) = m. Normal Distribution Normal distribution is a continuous probability distribution. Strictly, a Normal random variable should be capable of assuming any value on the real line, though this requirement is often waived in practice. For example, height at a given age for a given gender in a given racial group is adequately described by a Normal random variable even though heights must be positive.

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A continuous random variable X, taking all real values in the range distribution with parameters and if it has probability density function

is said to follow a Normal

We write

This probability density function (p.d.f.) is a symmetrical, bell-shaped curve, centered at its expected value . The variance is .

The standard normal distribution is one with a mean of 0 and a standard deviation of 1. Standard scores, also called z-scores or standardized data, are scores which have had the mean subtracted and which have been divided by the standard deviation to yield scores which have a mean of 0 and a standard deviation of 1 The Normal Curve The normal curve is not a single curve, rather it is an infinite number of possible curves, all described by the same algebraic expression:

Exponential distributions Exponential distributions are a class of continuous probability distributions. They describe the times between events in a Poisson process, i.e. a process in which events occur continuously and independently at a constant average rate. Def: A continuous random variable X is said to follow exponential distribution if its probability density function is f(x) = memx for x varying between 0 & Mean of exponential distribution = 1/m Variance of exponential distribution= 1/m2

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MODULE 3 CORRELATION Correlation is a measure of the relation between two or more variables. The measurement scales used should be at least interval scales, but other correlation coefficients are available to handle other types of data. Correlation coefficients can range from -1.00 to +1.00. The value of -1.00 represents a perfect negative correlation while a value of +1.00 represents a perfect positive correlation. A value of 0.00 represents a lack of correlation. Correlation is a statistical technique that can show whether and how strongly pairs of variables are related. The main result of a correlation is called the correlation coefficient (or "r"). It ranges from -1.0 to +1.0. The closer r is to +1 or -1, the more closely the two variables are related. If r is close to 0, it means there is no relationship between the variables. If r is positive, it means that as one variable gets larger the other gets larger. If r is negative it means that as one gets larger, the other gets smaller (often called an "inverse" correlation). Types of Correlation 1. Positive & Negative 2. Simple & Multiple 3. Partial & Total 4. Linear & Non-linear Methods of studying correlation 1. Scatter diagram 2. Karl Pearsons coefficient of correlation 3. Spearmans Rank correlation coefficient 4. Method of least squares. Scatter diagram or dot-diagram is a graphic device for drawing certain conclusions about the correlation between two variables. The scatter of the points as also the direction of scatter diagram reveals the nature and degree of correlation between two variables Karl Pearsons coefficient of correlation (r) (Pearson product moment correlation coefficient) The quantity r, called the linear correlation coefficient, measures the strength and the direction of a linear relationship between two variables. The linear correlation coefficient is sometimes referred to as the Pearson product moment correlation coefficient in honor of its developer Karl Pearson. The mathematical formula for computing r is:

where n is the number of pairs of data.

Coefficient of Determination, r 2 or R2 : 161

The coefficient of determination, r 2, is useful because it gives the proportion of the variance (fluctuation) of one variable that is predictable from the other variable. It is a measure that allows us to determine how certain one can be in making predictions from a certain model/graph. The coefficient of determination is the ratio of the explained variation to the total variation. The coefficient of determination is such that 0 < r 2 < 1, and denotes the strength of the linear association between x and y. The coefficient of determination represents the percent of the data that is the closest to the line of best fit. The coefficient of determination is a measure of how well the regression line represents the data. If the regression line passes exactly through every point on the scatter plot, it would be able to explain all of the variation. The further the line is away from the points, the less it is able to explain. Coefficient of Correlation- Method of Least Squares It has been pointed out that Karl Pearson's Coefficient of Correlation is based on the assumption that there is linear relationship between the variables under study. One of the ways of studying this linear relationship between x and y is by finding out the linear values of y corresponding to values of x. This is done by the method of least squares. (i) The equation of a straight line is Y = a + bX (ii) To find the values of a and b two normal equations are used. They are (Y) = n(a) + b (X) Z(XY) = a (X) + b (x2) (i) .. (ii)

(iii) By putting the relevant values of X and Y in the above equations, we can get the values of the equation Y = a+bX (iv) With this equation we can find the linear values of Y for given values of X.

(v) The Coefficient of Correlation is found out by dividing the standard deviation of the linear values of Y by the standard deviation of the original values of Y. Or r = Sy/y values of Y. Where Sy is the S.D. of the computed (linear) values of Y and is the S.D. of the original

Spearman's Rank Correlation Spearman's Rank Correlation is a technique used to test the direction and strength of the relationship between two variables. In other words, its a device to show whether any one set of numbers has an effect on another set of numbers. 162

It uses the statistic R which falls between -1 and +1. Regression Analysis In general sense,it means the estimation or the prediction of the unknown value of one variable from the known value of the other variable. It is a statistical device used to study the relationship between two or more variables that are related. In the words of M.M.Blair Regression analysis is a mathematical measure of the average relationship between two or more variables in terms of the original units of the data Simple and Multiple Regressions On the basis of number of variables, regression can be classified into Simple and Multiple Regressions. When there are only two variables the regression equation obtained is called simple regression. In multiple regression analysis there are more than two variables and we try to find out the effectof two or more independent variables on one dependent variable. Let X,Y and Z be three variabnes. Let X andY be the independent variables and Z be dependent variable. Then we use multiple regression analysis to study the relative movem nt of Z, for a unit movement in X and Y. REGRESSION EQUATIONS The two regression equations are formulated to represent the two regression lines , namely: The regression line of X on Y, The regression line of Y on X Regression line X on Y To estimate the value of X for a given value of Y, we use the regression equation of X on Y. The equation of regression line of X on Y is: X-X = bxy (Y Y ) Where, bxy=regression coefficient of X on Y bxy ={nxy-(xy) Regression line Y on X To estimate the value of Y for a given value of X, we use the regression equation of Y on X. equation of regression line of X on Y is: Y- Y = byx (X-X) Where, byx=regression coefficient of Y on X 163 The ny2-(y)}

byx={nxy-(xy)

nx2-(x)2}

Relation between Regression Coefficient and correlation Coefficient byx =r.y/x bxy =r.x/y Properties of Regression Coefficients The sign of both regression coefficients will be the same. That is, both will be positive or both will be negative. Product of the regression coefficients is the square of correlation coefficient,ie, byx x bxy = r2 if byx and bxy will have the same sign as r. When there is perfect correlation byx and bxy are reciprocals of each other. Both the regression coefficients will not be greater than 1. How to identify the two regression equations? By supposing one of the equations as the regression of y on x and the other as x on y,we can obtain byx and bxy. If the product of these two is numerically not greater than 1 then our assumption is true. However, if byx and bxy numerically is greater than 1, then our assumption is wrong. Then we shall conclude in the other way. Multiple Regression Y=a+b 1x1+b2x2 X1y=ax1+b1x12+b2x1x2 X2y=ax2+b1x1x2+b2x22 Then, Y=na+b1x1+b2x2 X1Y=ax1+b1x12+b2x1x2 X2Y=ax2+b1x1x2+b2x22 Solve and obtain the values of a, b1 & b2

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MODULE 4 Time series analysis Time series is a technique which can be applied for the study of any activity whose behavior is determined by time factor and where chronological fluctuation of data have effect on decisions. Def: ( Morris Hamburg): A time series is a set of observations arranged in chronological order. Time series can be mathematically defined by the functional relationship between the phenomena or variable under study at a point of time, ie, Y = f(t). By reviewing historical data over time, we can better understand the pattern of past behavior of a variable and better predict the future behavior.

Examples of time series data 1. Profits earned by a company for each of the past five years. 2. Workers employed by a company for each of the past 15 years. 3. Number of students registered for the MBA programme of an institute for each of the past five years. 4. The weekly wholesale price index for each of the past 30 weeks. 5. Number of fatal road accidents in Kerala for each day for the past two months. Components of a Time Series 1. Secular trend It represents a gradual shifting of a time series to relatively higher (upward) or lower (downward) values over a long period of time. Trend is usually the result of changes in the population, demographics, technology, and/or consumer preferences. Eg : Upward tendency : Population, production & sales of certain products, prices, incomes etc Eg: Downward tendency : Deaths due to epidemics, infant mortality etc. Uses of Trend analysis Helps to get a general idea about the pattern of behavior under consideration. This helps in business forecasting and planning future operations. By isolating trend values from the given time series, we can study the short term and irregular movements. It enables us to compare two or more time series over different periods of time and to draw important conclusions about them. 2. Seasonal variation It represents any periodic, repeating pattern, less than one year in duration, in the time series. The pattern duration can be as short as an hour, or even less. 165

Eg: Production & sales of agriculture products, sales and profits of jewellery or textile shop, Customer arrivals in a hotel during a day etc. Seasonal variation have two main causes i. Climate in its widest sense ii. Customs ( festival season ) Uses Helps in planning future operations and formulating policy decisions regarding purchase, production, inventory control, personnel requirements, selling & advertisements etc. during various seasons of the year. 3. Cyclical variation The wavelike movements with a period of oscillation more than one year It represents any recurring sequence of points above and below the trend line lasting more than one year. They exhibit semi regular periodicity. We assume that this component represents multiyear cyclical movements in the economy. Eg : Economic prosperity, depression etc. Uses

A study of the cyclical component helps managers to formulate policies aimed at stabilising the level of business activity depending on whether it is prosperity, recession or stabilisation period. Helps government to take measures to prevent the deterioration of mild recession to deep depression and the swings of prosperity within limits without developing into storming speculations. 4. Irregular variation Also called random or erratic fluctuations. It is the catch-all factor that accounts for the deviation of the actual time series value from what we would expect based on the other components. It is caused by the short-term, unanticipated, and nonrecurring factors that affect the time series. One cannot attempt to predict its impact on the time series in advance. Eg : Wars, earthquakes, tsunami, strikes, lock outs etc can cause erratic fluctuations. Mathematical models 1. Additive model 2. Multiplicative model As most of the economic and business phenomenons conform to multiplicative model, additive model is used rarely. Measurement of Trend By inspection or estimate Freehand Curve Method Selected Point Method 166

By computation Semi-average Method Moving Average Method Least Square Method Seasonal Variations

Why is It Necessary to Measure Seasonal Variation? 1. To make purchases profitably, ie. To buy when price is low and hold it for subsequent use or sale when the price is high. 2. To adjust the data statistically for such variation. Measurement of Seasonal Variations 1. Method of Simple averages 2. Ratio to Moving average method 3. Ratio to trend method Trend and Seasonal Components in Forecasting Multiplicative Model - Steps

1. Calculating the Seasonal Indices 2. Deseasonalizing the Time Series 3. Using the Deseasonalized Time Series to Identify Trend 4. Seasonal Adjustments 5. Cyclical Component adjustments Multiplicative Model Using Tt , St , and It to identify the trend, seasonal, and irregular components at time t, we describe the time series value Yt by the following multiplicative time series model: Yt = Tt x St x It Tt is measured in units of the item being forecast. St and It are measured in relative terms, with values above 1.00 indicating effects above the trend and values below 1.00 indicating effects below the trend.

Calculating the Seasonal Indexes 1. Compute a series of n -period centered moving averages, where n is the number of seasons in the time series. 167

2. If n is an even number, compute a series of 2-period centered moving averages. 3. Divide each time series observation by the corresponding centered moving average to identify the seasonal-irregular effect in the time series. 4. For each of the n seasons, average all the computed seasonal-irregular values for that season to eliminate the irregular influence and obtain an estimate of the seasonal influence, called the seasonal index, for that season. Deseasonalizing the Time Series The purpose of finding seasonal indexes is to remove the seasonal effects from the time series. This process is called deseasonalizing the time series. By dividing each time series observation by the corresponding seasonal index, the result is a deseasonalized time series. With deseasonalized data, relevant comparisons can be made between observations in successive periods.

Using the Deseasonalizing Time Series to Identify Trend To identify the linear trend, we use the linear regression procedure; in this case, the data are the deseasonalized time series values. In other words, Yt now refers to the deseasonalized time series value at time t and not to the actual value of the time series. The resulting line equation is used to make trend projections, as it was earlier

Seasonal Adjustments The final step in developing the forecast is to use the seasonal index to adjust the trend projection. The forecast for period t, season s, is obtained by multiplying the trend projection for period t by the seasonal index for season s. Yt,s = Is[b0 + b1(t )] Linear programming In mathematics, linear programming (LP) problems are optimization problems in which the objective function and the constraints are all linear. History Linear programming was a mathematical model developed during the second world war to plan expenditures and returns such that it reduces costs to the army and increases losses to the enemy. It was kept secret until 1947. Postwar, many industries found its use in their daily planning.

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The founders of the subject are George B. Dantzig, who published the simplex method in 1947, John von Neumann, who developed the theory of the duality in the same year, and Leonid Kantorovich, a Russian mathematician who used similar techniques in economics before Dantzig and won the Nobel prize in 1975 in economics. A breakthrough came after 1947 when Fiacco and McCormick introduced the Interior Point Method in 1984. Dantzig's original example of finding the best assignment of 70 people to 70 jobs still explains its success. The computing power required to scan all the permutations to select the best assignment is vast and impossible. He observed that it takes only a moment to find the optimum solution using the simplex method, which is effectively noticing that a solution exists in the corners of the polygon described by the equations formed from the given constraints. Uses Linear programming is an important field of optimization for several reasons. Many practical problems in operations research can be expressed as linear programming problems. Certain special cases of linear programming, such as network flow problems and multicommodity flow problems are considered important enough to have generated much research on specialized algorithms for their solution. A number of algorithms for other types of optimization problems work by solving LP problems as sub-problems. Historically, ideas from linear programming have inspired many of the central concepts of optimization theory, such as duality, decomposition, and the importance of convexity and its generalizations. Likewise, linear programming is heavily used in microeconomics and business management, either to maximize the income or minimize the costs of a production scheme. Some examples are food blending, inventory management, portfolio and finance management, resource allocation for human and machine resources, planning advertisement campaign etc. Standard form Standard form is the usual and most intuitive form of describing a linear programming problem. It consists of the following three parts: A linear function to be maximized Problem e.g. maximize constraints of the following form e.g.

Non-negative variables e.g.

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The problem is usually expressed in matrix form, and then becomes: maximize subject to FORMULATION OF LPP 1. To write down the decision variables of the problem. 2. To formulate the objective function to be optimized (Maximized or Minimized) as a linear function of the decision variables. 3. To formulate the other conditions of the problem such as resource limitation, market constraints, interrelations between variables etc. as linear inequalities or equations in terms of the decision variables. 4. To add the non-negativity constraint from the considerations that negative values of the decision variables do not have any valid physical interpretation. The objective function, the set of constraint and the non-negative constraint together form an LPP. GRAPHICAL METHOD OF SOLVING LPP Graphical method can be applied if the number of decision variables is two. 1. Consider each inequality constraint as equation 2. Plot each equation on the graph, as each will geometrically represent a straight line. 3. Mark the region. If the inequality constraint corresponding to that line is then the region below the line lying in the first quadrant is shaded. For the inequality constraint sign, the region above the line in the first quadrant is shaded. The points lying in common region will satisfy all the constraints simultaneously. The common region thus obtained is called the feasible region. 4. Take all the corner points in the feasible region. Substitute each point in the objective function. The point/points which will optimize the objective function ( ie. Maximum value in case of maximization and minimum in case of minimization problems.) will be the solution point. MODULE 5 Statistics in business forecasting Statistical forecasting concentrates on using the past to predict the future by identifying trends, patterns and business drives within the data to develop a forecast. This forecast is referred to as a statistical forecast because it uses mathematical formulas to identify the patterns and trends while testing the results for mathematical reasonableness and confidence. Studying a problem through the use of statistical data analysis usually involves four basic steps. 1. Defining the Problem

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An exact definition of the problem is imperative in order to obtain accurate data about it. It is extremely difficult to gather data without a clear definition of the problem. 2. Collecting the Data We live and work at a time when data collection and statistical computations have become easy almost to the point of triviality. One must start with an emphasis on the importance of defining the population about which we are seeking to make inferences, all the requirements of sampling and experimental design must be met. Designing ways to collect data is an important job in statistical data analysis. Two important aspects of a statistical study are: Population - a set of all the elements of interest in a study Sample - a subset of the population

Statistical inference is refer to extending your knowledge obtain from a random sample from a population to the whole population. This is known in mathematics as an Inductive Reasoning. That is, knowledge of whole from a particular. Its main application is in hypotheses testing about a given population. The purpose of statistical inference is to obtain information about a population form information contained in a sample. It is just not feasible to test the entire population, so a sample is the only realistic way to obtain data because of the time and cost constraints. Data can be either quantitative or qualitative. Qualitative data are labels or names used to identify an attribute of each element. Quantitative data are always numeric and indicate either how much or how many. For the purpose of statistical data analysis, distinguishing between cross-sectional and time series data is important. Cross-sectional data re data collected at the same or approximately the same point in time. Time series data are data collected over several time periods. Data can be collected from existing sources or obtained through observation and experimental studies designed to obtain new data. In an experimental study, the variable of interest is identified. Then one or more factors in the study are controlled so that data can be obtained about how the factors influence the variables. In observational studies, no attempt is made to control or influence the variables of interest. A survey is perhaps the most common type of observational study. 3. Analyzing the Data Statistical data analysis divides the methods for analyzing data into two categories: exploratory methods and confirmatory methods. Exploratory methods are used to discover what the data seems to be saying by using simple arithmetic and easy-to-draw pictures to summarize data. Confirmatory methods use ideas from probability theory in the attempt to answer specific questions. Probability is important in decision making because it provides a mechanism for measuring, expressing, and analyzing the uncertainties associated with future events. The majority of the topics addressed in this course fall under this heading. 4. Reporting the Results Through inferences, an estimate or test claims about the characteristics of a population can be obtained from a sample. The results may be reported in the form of a table, a graph or a set of percentages. Because 171

only a small collection (sample) has been examined and not an entire population, the reported results must reflect the uncertainty through the use of probability statements and intervals of values. INDEX NUMBERS In business, managers are often concerned with the way in which values change over time: prices paid for raw materials; numbers of employees and customers, annual income and profits, etc. Index numbers are used to describe such changes. They are often concerned with money or manpower. It is necessary in business to be able to understand and manipulate the different published index series, and to construct your own index series. Index numbers measure the changing value of a variable over time in relation to its value at some fixed point in time, the base period, when it is given the value of 100. Indexes are often used to show overall changes in: a market, an industry the economy. Price indexes The most commonly quoted index is the Retail Price Index, the RPI. The Retail Price Index is a monthly index indicating the amount spent by a 'typical household'. It gives an aggregate value based upon the price of a representative selection of many hundred products and services with weightings produced by the 'Family expenditure survey' as a measure of their importance. The RPI shows price changes clearly and is applied when considering inflation for: wage bargaining, index linked benefits, insurance values, etc. The RPI is used as a benchmark against which other indexes are compared to show how the price of a product changes over time, due to: changing costs of raw materials; variable supply and demand; general inflation; etc. Other Indexes We can measure the way any variable changes over time: 172

unemployment figures; car registrations; gross national product; etc. Indexes can be calculated with any convenient frequency: yearly, monthly, daily, etc. Examples of each are: Yearly Monthly Daily G.N.P. Gross National Product Unemployment figures Stock market prices, etc.

Index values are measured in percentage points since the base value is always 100. Changes over time are measured as either a percentage point change by subtraction or as a percentage change.

percentage change =

change in index number 100 . original index number

Types of Index Numbers An index can be classified as a price index, a quantity index, a value index, or a special-purpose index.

Price index A price index measures the changes in prices from a selected base period to another period. EXAMPLE: Producer Price Index - measures the average change in prices received in the primary markets by producers of commodities in all stages of processing (1982=100).

Quantity index A quantity index measures the changes in quantity consumed from the base period to another period. EXAMPLE: Federal Reserve Board indexes of quantity output.

Value index A value index measures the change in the value of one or more items from the base period to the given period. The values for the base period and the given periods are found by PxQ.

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EXAMPLE: the index of department store sales

Special-purpose index A special-purpose index combines and weights a heterogeneous group of series to arrive at an overall index showing the change in business activity from the base period to the present. EXAMPLE: The federal government puts out an index of leading economic indicators.

Construction of Index Numbers Simple Price Index, P : Let p0 be the base period price, and pt be the price at the selected or given period. Thus, the simple price index is given by: P= (pt/p0) (100) An aggregate price index is developed for the specific purpose of measuring the combined change of a group of items. An unweighted aggregate price index in period t, denoted by It , is given by

With a weighted aggregate index each item in the group is weighted according to its importance, which typically is the quantity of usage. Letting Qi = quantity for item i, the weighted aggregate price index in period t is given by

When the fixed quantity weights are determined from the base-year usage, the index is called a Laspeyres index. When the weights are based on current period usage, the index is a Paasche index. Other methods used to calculate the index are, Fishers which is the geometric mean of Laspeyers & Paasche, Marshell - Edgeworth, Dorbish & Bowley , Waalches and Kellys methods

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DATA PROCESSING
Module -1 COMPUTER The word computer comes from the word compute which means to calculate. Computer is an electronic device that can perform arithmetic calculations at high speed A computer is also called a data processor because it can store,process and retrieve whenever desired The activity of processing data using a computer is called data processing.Data is the raw material used as input and information is the processed data obtained as output of data CHARACTERISTICS OF COMPUTER a) Automatic e) Versatility b) Speed f) Power of remembering c) Accuracy g) No I.Q. d) Diligence h) No feelings Charles babbage is considered to be the father of modern digital computer. FIVE BASIC OPERATIONS OF ACOMPUTER SYSTEM Inputting Storing Processing Outputting Controlling INPUT UNIT It accepts instructions and datas from the outside world It converts these data and instruction in computer acceptable form OUTPUT UNIT It accepts the results produced by the computer ,which are in coded form It converts the coded form into human acceptable form It supplies the converted results to outside world STORAGE UNIT Two types-primary storage and secondary storage data and instructions required for processing (received from input device) intermediate results of processing final results of processing,before they are released to an output device ARITHMETIC LOGIC UNIT(ALU) 175

ALU of a computer system is the place where the actual executions of instructions take place during processing operations. One of the basic components of c.p.u. CONTROL UNIT (CU) CU of a system manages and coordinates the operations of all other components of the computer system.CU acts as the central nervous system of the computer. PROCESSOR CONTROL PROCESSING UNIT(C.P.U.) The brain of the computer. Performs all the calculations and comparisons. Activates and controls the operations of other units of the computer. Two basic components are a) control unit b) arithmetic logic unit No other single component of the computer determines its overall performance as much as the c.p.u. REGISTERS Special memory units called registers,are used to hold information on a temporary basis as the instructions are executed and interpreted by the c.p.u. PRIMARY MEMORY RANDOM ACCESS MEMORY(RAM) Primary sorage of a computer RAM chips are volatile memory READ ONLY MEMORY(ROM) Rom- a non volatile memory chip Data stored in a ROM can be read and used-they cannot be changed ROMs are mainly used to store programs and data CACHE MEMORY It is commonly used for minimizing the memory processor speed mismatch.It is an extremely fast,small memory CPU and the main memory whose access time is closer to the processing speed of the cpu.It is used to temporarily store very active data and instructions during processing. LIMITATIONS OF PRIMARY STORAGE Limited capacity because the cost per bit of storage is high 176

Volatile data stored in it is lost when electric power is turned off or interrupted. SECONDARY STORAGE Used in a computer to overcome the limitations of primary storage,Used to store large volumes of data on a permanent basis..Also known as auxiliary memory. INPUT DEVICES Provides the means of communication between a computer and the outer world.Input devices are used to enter data from outside world into primary storage.Output device supply the result of processing from primary storage to the users. KEYBOARD DEVICES Keyboard allow the data entry into the computer system by pressing a set of keys POINT AND DRAW DEVICES Used to rapidly point to and select a graphic icon or menu item from multiple options displayed on the Graphical User interface of a screen MOUSE Commonly Used In Personal Computers Ans Workstations ELECTRONIC PEN Pen based point and draw device.used to directly point it on the screen to select menu items or icons or directly draw graphics on the screen IMAGE SCANNER Input device that translate paper document into an electronic format for storage in a computer.Electronic format of a scanned image is its bitmap representation. OPTICAL CHARACTER RECOGNITION DEVICE (OCR) Character recognition software that converts the bitmap image of the characters to the equivalent ASCII codes. OPTICAL MARK READER (OMR) Scanner capable of recognizing a pre specified type of mark of a pen or pencil,Very useful for grading tests with objective type of tests. BAR CODE READER Scanner used for reading bar-coded data. Scanner uses laser beam to stroke across the pattern of bar code

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Central Processing Unit (CPU)

CPU is the brain of the computer It is the part that interprets and carries out instructions. It controls and co-ordinates the operations of all other devices

CPU had two basic parts, 1. Control Unit and 2. Arithmetic and Logic All the resources are controlled from the control unit. The Control Unit guides the interpretation, flow and manipulation of all data and information Arithmetic and Logic Unit (ALU) All the arithmetic and logical operations are performed by the ALU. When the CU gets an instruction that involves A / L Operations , it passes to the ALU. The ALU performs the operation and the results are kept in registers or memory locations. The Control Unit PRINTER Devices for outputing printer-most common Video terminal Computer output microfilm-expensive Printer and microfilming are hard copy devices as data written using these PRINTER devices can be read by people

PRINTER 2 types Line printers Drum printer Chain printer Serial character printers-dot matrix printer

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Line printer Line printers print a complete line at a time Printing speed varies from 150 lines to 2500 lines per minute. Drum printers It has a cylindrical drum Charecters to be printed are embossed on its surface One set of characters are embossed on each line CHAIN PRINTER it has a steel band on which character sets are embossed For printing a line all chars in that line are send from comp mem to printer buffer Band rotates at high speed As the band rotates, hammer is activated when the desired char as specified in the buffer comes in front of it. Hammer will strike the carbon ribbon which is placed bw the chain ,paper and hammer

SERIAL PRINTERS Print one character at a time Here the print head consist of array of pins. Similar to type writers Normally slow(30-300 chars per sec) Eg : dot matrix printer

NON IMPACT PRINTERS Does not have hammers but traces the characters to be printed using ink or graphite particles -ink jet printers -laser printer INK JET PRINTERS For getting sharp print of characters we are using inkjet printers It consist of a print head which has a no of small holes Individual holes can be heated by an IC resistor When resistor heats the ink near it vaporizes and is ejected the holes and make a dot on the paper. Printer has enough memory to print a page Latest inkjet printers allow colour printing Printing speed-120 chars per sec Used to print figures besides printing text Most inexpensive printer for home use 179

LASER PRINTER Limitation of line and serial printers are the use of a print head and its mechanical move is slow In laser printers electronically controlled laser beam traces out the desired character to be printed on a photoconductive drum. Drum attracts an ink toner on exposed area

DISPLAY DEVICES A display device is a device for visual or tactile presentation of images (including text) acquired, stored, or transmitted in various forms. Ex : Computer monitor, TV screen. Also known as an information display MONITOR TECHNOLOGIES: CATHODE RAY TUBE (CRT) LIQUID CRYSTAL DISPLAY (LCD) PLASMA DISPLAY PANEL (PDP) ORGANIC LIGHT EMITTING DIODE (OLED)

CRT MONITOR cathode-ray tube: CRT: PRINCIPLE CRT display works on : Electron emission Electrons are emitted from the Cathode tube. Phosphorescence It is the emission of visible light, when electron beam strikes Phosphor material. LCD: Liquid Crystal Display A Liquid Crystal Display is a thin, flat display device made up of any number of pixels arrayed in front of a light source or reflector. It uses very small amounts of electric power, and is suitable for use in batterypowered electronic devices PLASMA TECHNOLOGY : A plasma display panel (PDP) is essentially a collection of very small uorescent-type lamps, each a few tenths of a millimeter in size. The plasma display itself is a simple device consisting of two parallel glass plates separated by a precise spacing of some tenths of a millimeter and sealed around the edges. ORGANIC LIGHT EMITTING DIODES (OLEDs) OLEDs: PRINCIPLE OLEDs are special because they are made up of organic polymer molecules (otherwise known as plastic) allowing light to emit when a voltage is applied. Scanner A scanner is a device that captures images from photographic prints, posters, magazine pages, and similar sources for computer editing and display. Scanners come in hand-held, feed-in, and flatbed types and for

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scanning black-and-white only, or color. Very high resolution scanners are used for scanning for highresolution printing, but lower resolution scanners are adequate for capturing images for computer display. What is computer memory? Computer memory refers to devices that are used to store data or programs (sequences of instructions) on a temporary or permanent basic for use in an electronic digital computer. Computers represent information in binary code, written as sequences of 0s and 1s. What is RAM? Random Access Memory (RAM) is the main 'working' memory used by the computer. When the Operating system loads from disk when you first switch on the computer, it is copied into RAM. The original IBM PC could only use up to 640 KB of memory (just over half a megabyte), Whereas a modern computer can effectively house as much RAM as you can afford to buy. What is ROM? Read Only Memory (ROM) as the name suggests is a special type of memory chip which holds Software which can be read but not written to. A good example is the ROM-BIOS chip, which Contains read-only software. Often network cards and video cards also contain ROM chips. SECONDARY STORAGE Used in a computer to overcome the limitation of Primary Storage. It has virtually unlimited capacity because the cost per bit of storage is very low. It has an operating speed far slower than that of the primary storage. Used to store large volume of data on a permanent basis. Also known as Auxiliary Memory

Module -2 OPERATING SYSTEM

Operating system comes in the category of system software. Definition: An operating system is an integrated set of programs that are used to manage the various resources and overall operations of a computer system. Its prime objective is to improve the performance and efficiency of a computer system, and increase facility, the ease with which the system can be used.

Functions of OS Processor management: assigning processors to different tasks. Memory management: allocation of main memory and storage to the system programs ,user programs ,data etc Input/output management: ie, coordinating and assigning of different input output devices while one or more programs are being executed. 181

File management: storage of files on various storage devices and the transfer of these files from one storage device to another. It allows the files to be modified through text editors. Establishment and enforcement of a job priority system: it determines the order in which jobs are executed in the system. Automatic transition from job to job as directed by special control statements Interpretation of commands and instructions Establishment of data security and integrity Production of error messages and error detecting aids. Maintenance of internal time clock and log of system usage for all users. Facilitates easy communication between the computer system and user. Different computer programs are there for the operating system. Out of these one program resides in main memory resident program Other programs stored on disk are called the transient program The OS isolates the hardware from the user. The user communicates with the OS, supplies application programs and input data, and receives output data. All the tasks performed by the OS are performed automaticallythe user need not concerned with what the OS is doing or how it handles tasks.

Efficiency of OS The efficiency and overall performance of an OS are evaluated by 2 factors: Throughput: It is the total volume of work performed by a system over a given period of time. Turnaround time: also called response time. It is time interval between, the time the user submits a job to the system for processing, and the time he receives results.

Types of operating system 1. Batch processing system Multi programming system Time sharing system Real time system Batch operating system During batch processing environment it requires grouping of similar jobs which consist of programs, data and system commands. This batch process does not need user interaction. Some examples of such programs include payroll, forecasting, and statistical analysis programs.

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Users are not required to wait while the job is being processed. They can submit their programs to operators and return later to collect them. Process scheduling, memory management, file management and 1/0 management in batch processing are quite simple. Jobs are typically processed in the order of submission, that is, in the first come, first served basis. Example Job is to produce a corporations monthly invoices, and the OS may have to execute a suite of programs to produce the invoice... One process to accumulate the sales in each divisions Another process to determine the invoice amount Third process to update the companys accounts payable information... These programs operate on information contained in files rather than information supplied by the interactive user. So there is no need for user interaction while the job is running Each user prepares a job and the jobs are collected into a batch and submitted to the computer. After the computer has finished executing the batch, it produces a batch of output listing. The output listing is given to user to reflect the result of running their job. But it has two major disadvantages: o Non-interactive environment o Off-line debugging

Non-interactive environment: Batch operating systems allow little or no interaction between users and executing programs. The turnaround time taken between job submission and job completion in batch operating system is very high. Users have no control over intermediate results of a program. This type, of arrangement does not create flexibility in software development. Off-line debugging: The second disadvantage with this approach is that programs must be debugged which means a programmer cannot correct bugs the moment it occurs. MULTI PROGRAMMING SYSTEMS In multiprogramming two or more users programs are placed in main memory and executes them concurrently. The CPU switches from one program to another almost instantaneously.

2.

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Since the operating speed of CPU is much faster than input/output operations, CPU can allocate time to several programs instead of remaining idle when one is busy with I/O operations. Thus in multiprogramming a number of programs are stored in main memory, where the CPU executes a portion of one then a segment of another and so on.

Requirements of multiprogramming system: 1. LARGE MAIN MEMORY: 1. Main memory should be large enough to accommodate a good number of user programs, also requires fast secondary storage device and fast CPU. 2. Memory protection: 1. Used to prevent a program in one memory partition from changing information in another memory partition. i. Memory partition feature is a combination of hardware and software which prevents one program from addressing beyond the limits of its allocated storage area. 3. Program status preservation: 1. Multiprogramming requires stopping of a program execution and then restarting its execution after some time. 2. Thus before a program is suspended and the control is passed to another program , the values of all CPU registers should be stored in the memory area of that program and then restored when control is ultimately returned to first program. This is known as program status preservation. 4. Proper job mix: 1. A proper mix of I/O bound and CPU bound jobs is required to effectively overlap the operations of CPU and I/O devices. 2. If a program is waiting for I/O operation, another program must have enough computation to keep CPU busy. Advantages: a) Increased throughput b) By using idle time of CPU for running other programs that are already residing in the main memory. Lower response time. 3. MULTI- PROCESSING SYSTEM

c)

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Applicable in systems with more than one CPU. Multiprocessing is used to describe interconnected computer configurations or computers with two or more independent CPUs that have the ability to simultaneously execute several programs. In such a system, instructions from different and independent programs can be processed at the same instant of time by different CPU or the CPUs may simultaneously execute different instructions from the same program. Advantages: a. Improves the performance of computer system b. Efficient utilization of devices c. Provides built-in back up i. Ie, if one of the CPU fails, the other automatically takes over the complete workload until repairs are made. ii. Thus a complete breakdown of such systems is very rare.

4. TIME SHARING SYSTEM It is a form of multiprogrammed Operating system which operates in an interactive mode with a quick response time. The user types a request to the computer through a keyboard. The computer processes it and a response (if any) is displayed on the user's terminal. A time sharing system allows the many users to simultaneously share the computer resources. Since each action or command in a time-shared system take a very small fraction of time, only a little CPU time is needed for each user. As the CPU switches rapidly from one user to another user, each user is given impression that he has his own computer, while it is actually one computer shared among many users Memory management in time sharing system Provides for the protection and separation of user programs. Input/output management feature of time-sharing system must be able to handle multiple users (terminals) The term multiprogramming refers to the situation in which a single CPU divides its time between more than one jobs. Time sharing is a special case of multiprogramming, where a single CPU serves a number of users at interactive terminals.

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Time sharing refers to the allocation of computer resources in a time dependent fashion to several programs simultaneously. Principal notion of a time sharing system is to provide a large number of users direct access to the computer for problem solving. This is accomplished by providing a separate terminal to each user. These entire terminals are connected to the main computer system. Advantages: i. ii. iii. iv. v. vi. vii. viii. ix. Reduces CPU idle time Offers computing facility to small users Providing advantages of quick response Reduces the output of paper Avoids duplication of software Disadvantages: Question of security Problem of reliability Problem of data communication

5. REAL TIME PROCESSING There are processes that require immediate response from the system like Stock market , finding the current product inventory etc In such cases real time processing system is needed. Real time means-immediate response from the computer. A system in which transaction accesses and updates a file quickly enough to affect the original decision making is called real time system. Essential feature: Input data must be processed quickly enough so that further action can be taken based on the results. Other words real time system is an online processing system with severe time limitations. Real time processing requires immediate transaction of input from all input originating terminals. Many remote stations are tied directly by high speed communication equipment to one or more CPUs. Examples for real time processing system are: Air traffic control system Reservation system Systems that provide immediate updating of customer accounts like ATM Process control systems in nuclear reactor plants. Real time system should be highly reliable Because minimal downtime may cause danger to several lives and cause financial loss. In an air traffic control system , several radar and computers keep track of air traffic in each region,They must operate constantly, with minimum maintenanceAn unscheduled downtime in this real time system may cost the life of several human beings. 186

In order to achieve the desired reliability, real time systems are normally duplicated, so that in the event of a break down, back up facilities are immediately available for continuous operation of the system. This makes some systems very expensive.

WINDOWS Microsoft Windows is a series of software operating systems and graphical user interfaces produced by Microsoft. Microsoft first introduced an operating environment named Windows on November 20, 1985 as an add-on to MS-DOS in response to the growing interest in graphical user interfaces (GUIs). Microsoft Windows came to dominate the world's personal computer market, overtaking Mac OS, which had been introduced in 1984. As of October 2009, Windows had approximately 91% of the market share of the client operating systems for usage on the Internet. The most recent client version of Windows is Windows 7; the most recent server version is Windows Server 2008 R2; the most recent mobile OS version is Windows Phone 7.

Early versions Windows 1.0, the first version, released in 1985

1.

It was announced in November 1983 (after the Apple Lisa, but before the Macintosh) under the name "Windows", but Windows 1.0 was not released until November 1987 2. The shell of Windows 1.0 was a program known as the MS-DOS Executive. 3. Other supplied programs were Calculator, Calendar, Cardfile, Clipboard viewer, Clock, Control Panel, Notepad, Paint, Reverse, Terminal, and Write. Windows 1.0 did not allow overlapping windows. Instead all windows were tiled. Only dialog boxes could appear over other windows. Windows 2.0 1. Released in October 1987 and featured several improvements to the user interface and memory management 2. Windows 2.0 allowed application windows to overlap each other and also introduced more sophisticated keyboard-shortcuts. It could also make use of expanded memory. Windows 2.1 1. Released in two different flavours: Windows/386 employed the 386 virtual 8086 mode to multitask several DOS programs, and the paged memory model to emulate expanded memory using available extended memory. 2. The early versions of Windows were often thought of as simply graphical user interfaces, mostly because they ran on top of MS-DOS and used it for file system services. Windows allowed users to execute multiple graphical applications at the same time, through cooperative multitasking. 3. Windows implemented an elaborate, segment-based, software virtual memory scheme, which allowed it to run applications larger than available memory: code segments and resources were swapped in and thrown away when memory became scarce, and data segments moved in memory when a given application had relinquished processor control. 187

Windows 3.0 and 3.1 1. Windows 3.0, released in 1990 2. Windows 3.0 (1990) and Windows 3.1 (1992) improved the design, mostly because of virtual memory and loadable virtual device drivers (VxDs) which allowed them to share arbitrary devices between multitasked DOS windows. 3. Also, Windows applications could now run in protected mode (when Windows was running in Standard or 386 Enhanced Mode), which gave them access to several megabytes of memory and removed the obligation to participate in the software virtual memory scheme. 4. They still ran inside the same address space, where the segmented memory provided a degree of protection, and multi-tasked cooperatively. For Windows 3.0, Microsoft also rewrote critical operations from C into assembly. Windows 95, 98, and Me 1. Windows 95, released in 1995.Windows 95 was released in August 1995, featuring a new user interface, support for long file names of up to 255 characters, and the ability to automatically detect and configure installed hardware (plug and play). 2. It could natively run 32-bit applications, and featured several technological improvements that increased its stability over Windows 3.1. There were several OEM Service Releases (OSR) of Windows 95, each of which was roughly equivalent to a service pack. 3. Microsoft's next release was Windows 98 in June 1998. Microsoft released a second version of Windows 98 in May 1999, named Windows 98 Second Edition (often shortened to Windows 98 SE). 4. In September 2000, Microsoft released Windows Me (Me standing for Millennium Edition), which updated the core from Windows 98 but adopted some aspects of Windows 2000 and removed the "boot in DOS mode" option. It also added a new feature called System Restore, allowing the user to set the computer's settings back to an earlier date. Windows NT family The NT family of Windows systems was fashioned and marketed for higher reliability business use. 1. The first release was NT 3.1 (1993), numbered "3.1" to match the consumer Windows version, which was followed by NT 3.5 (1994), NT 3.51 (1995), NT 4.0 (1996), and Windows 2000 (2000). 2. Microsoft then moved to combine their consumer and business operating systems with Windows XP, coming in both home and professional versions (and later niche market versions for tablet PCs and media centres); 3. They also diverged release schedules for server operating systems. Windows Server 2003, released a year and a half after Windows XP, brought Windows Server up to date with MS Windows XP. 4. After a lengthy development process, Windows Vista was released toward the end of 2006, and its server counterpart, Windows Server 2008 was released in early 2008. 5. On July 22, 2009, Windows 7 and Windows Server 2008 R2 were released as RTM (release to manufacturing). Windows 7 was released on October 22, 2009. Spread Sheet

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A spreadsheet is a computer applications that simulates a paper, accounting worksheet. It displays multiple cells that together make up a grid consisting of rows and columns each cell containing alphanumeric text, numeric values or formulas. Spreadsheets are frequently used for financial information because of their ability to re-calculate the entire sheet automatically after a change to a single cell is made. Range A cell on the same sheet is usually addressed as :=A1 A cell on a different sheet of the same spreadsheet is usually addressed as : =SHEET2!A1 Instead of using a named range of cells a range reference can be used. Reference to a range of cells is typically of the form (A1:A6) Which specifies all the cells in the range all through A6. A formula such as =Sum (A1 :A6) would add all the cells specified and put the result in the cell containing the formula itself. Formulas A formula defines how the content of that cell is to be calculated from the contents of any other cell, each time any cell is updated. A formula identifies the calculation needed to place the result in the cell it is contained within. A cell containing a formula therefore has to display components the formula itself and the resulting value. The formula is normally only shown when the cell is selected by clicking the mouse over a particular cell; otherwise it contains the result of the calculation. A formula assigns value to a cell or range of cells and typically has the format: =expression Where expression consists of : Values, such as 2,9,14 or 6.67E-11; References to other cells such as eg: A1 for a single cell or B1:B3 for a range. Arithmetic operators, such as +,-,*,\ and others Relational operators, such as >=, < and others ; Functions, such as SUM(), TAN() and many others. The available options for valid formulas depend on the particular spreadsheet implementation but in general most arithmetic operations and quite complete nested conditional operations can be performed by most of todays commercial spreadsheet. A formula may contain a condition (or nested conditions) with or without an actual calculation and is sometimes used purely to identify and highlight errors. In the example below it is assumed that the sum of 189

a column of percentages (All through A6) is tested for validity and an explicit message put into the adjacent right- hand side cell = IF(SUM(A1:A6)>100,more than 100%,SUM (A1:A6)) FUNCTIONS Spreadsheets usually contain a number of supplied functions, such as arithmetic operations trigonometric functions, statistical functions and so on. In addition there is a provision for user defined functions. In Microsoft excel these functions are defined using visual basic for applications in the supplied visual basic editor. EXCEL FUNCTIONS Excel functions include Database functions Logical functions Date functions Text functions Mathematical functions LOGICAL FUNCTION IF(logical_test , value_if_true , [value_if_false]) IFERROR(value,value_if_error) AND(logical1, [logical2], ...) OR(logical1,logical2,...)

ARITHMETIC FUNCTIONS EVEN(number) LOG(number,base) FACT(number) POWER(number,power)

TEXT FUNCTIONS BAHTTEXT(number) CHAR(number) CONCATENATE (text1,text2,...)

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LEN returns the number of characters in a text string. TRIM(text)- Removes all spaces from text except for single spaces between words

Database function (database, field, criteria) Database is the range of cells that makes up the list or database. A database is a list of related data in which rows of related information are records, and columns of data are fields. The first row of the list contains labels for each column. Field indicates which column is used in the function. Enter the column label enclosed between double quotation marks, such as "Age" or "Yield," or a number (without quotation marks) that represents the position of the column within the list: 1 for the first column, 2 for the second column, and so on. Criteria are the range of cells that contains the conditions you specify. You can use any range for the criteria argument, as long as it includes at least one column label and at least one cell below the column label in which you specify a condition for the column.
DAVERAGE Returns the average of selected database entries DCOUNT DCOUNTA DGET DMAX DMIN Counts the cells that contain numbers in a database Counts nonblank cells in a database Extracts from a database a single record that matches the specified criteria Returns the maximum value from selected database entries Returns the minimum value from selected database entries Multiplies the valuesin a particular field of records that match the criteria in a database Estimates the standard deviation based on a sample of selected database entries Calculates the standard deviation based on the entire population of selected database entries Adds the numbers in the field columonm records in the database that match the criteria Estimates variance based on a sample from selected database entries Calculates variance based on the entire population of selected database entries.

DPRODUCT

DSTDEV

DSTDEVP

DSUM DVAR DVARP

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MACROS IN WORD A macro is a shortcut to a task you do repeatedly. Think about the Centre align operation. You first highlight the word you want centred, then click the centre icon in the toolbar. This is a macro. It's the short way of performing the centre task. Another example: keyboard based macro-edit cut(ctrl+x) STEPS IN MACRO Create a macro Record a macro Stop recording View a macro

MAIL MERGE Quite simply, it is a way of placing content from a spreadsheet, database, or table into a Microsoft Word document Mail merge is ideal for creating personalized form letters or labels instead of editing the original letter several times to input different personalized information. this can save a lot of time as well as worry about not changing all of the information for the new recipient. In order to create a mail merge, two documents are needed: a Word document and a file with the data or records. This file can take many forms, such as an Excel spreadsheet, a database, or even another Word document that has a table in it.

STEPS IN MAIL MERGE: Start mail merge Select the recipients Insert merge field Preview MODULE :3 SQL is a standard language for accessing and manipulating databases. SQL stands for Structured Query Language SQL lets you access and manipulate databases SQL is an ANSI (American National Standards Institute) standard 192

RDBMS stands for Relational Database Management System. RDBMS is the basis for SQL, and for all modern database systems like MS SQL Server, IBM DB2, Oracle, MySQL, and Microsoft Access. The data in RDBMS is stored in database objects called tables. A table is a collections of related data entries and it consists of columns and rows. The PRIMARY KEY uniquely identifies each record in a database table. Primary keys must contain unique values. A primary key column cannot contain NULL values. Each table should have a primary key, and each table can have only ONE primary key. SQL FOREIGN KEY Constraint A FOREIGN KEY in one table points to a PRIMARY KEY in another table.

SQL COMMANDS: SQL can be divided into two parts: The Data Manipulation Language (DML) and the Data Definition Language (DDL). DML COMMANDS:

SELECT - extracts data from a database UPDATE - updates data in a database DELETE - deletes data from a database INSERT INTO - inserts new data into a database

DDL COMMANDS: The DDL part of SQL permits database tables to be created or deleted. It also define indexes (keys), specify links between tables, and impose constraints between tables. The most important DDL statements in SQL are: CREATE DATABASE - creates a new database ALTER DATABASE - modifies a database CREATE TABLE - creates a new table ALTER TABLE - modifies a table DROP TABLE - deletes a table CREATE INDEX - creates an index (search key) DROP INDEX - deletes an index

SYNTAX: SQL CREATE TABLE Syntax CREATE TABLE table_name ( column_name1 data_type, column_name2 data_type, column_name3 data_type,

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.... )

INSERT INTO table_name VALUES (value1, value2, value3,...) SQL SELECT Syntax SELECT column_name(s)FROM table_name SELECT * FROM table_name SQL ALTER TABLE Syntax To add a column in a table, use the following syntax: ALTER TABLE table_name ADD column_name datatype To delete a column in a table, use the following syntax: ALTER TABLE table_name DROP COLUMN column_name To change the data type of a column in a table, use the following syntax: ALTER TABLE table_name MODIFY COLUMN column_name datatype The DELETE Statement The DELETE statement is used to delete rows in a table. DELETE FROM table_name WHERE some_column=some_value

The DROP TABLE Statement The DROP TABLE statement is used to delete a table. DROP TABLE table_name SQL UPDATE Syntax UPDATE table_name SET column1=value, column2=value2,... WHERE some_column=some_value

The GROUP BY Statement The GROUP BY statement is used in conjunction with the aggregate functions to group the result-set by one or more columns. SQL GROUP BY Syntax SELECT column_name, aggregate_function(column_name) FROM table_name WHERE column_name operator value GROUP BY column_name The ORDER BY Keyword The ORDER BY keyword is used to sort the result-set by a specified column.

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The ORDER BY keyword sort the records in ascending order by default. If you want to sort the records in a descending order, you can use the DESC keyword. SQL ORDER BY Syntax SELECT column_name(s) FROM table_name ORDER BY column_name(s) ASC|DESC INDEXING:

An index is a structure that provides faster access to the rows of a table based on the values of one or more columns. The index stores data values and pointers to the rows where those data values occur. In the index the data values are sorted and stored in the ascending or descending order. So the RDBMS can quickly search the index to find a particular data value, and hence the row associated with it. Indexes are created using the CREATE INDEX statement. Syntax is: Creates an index on a table. Duplicate values are allowed: o CREATE INDEX index_name ON table_name (column_name) 3 types of indexes are there: o Composite index: indexes involving more than one column. o Unique index : indexes that prevent duplication of data o Clustered index: where indexes are sorted both logically and physically. An index is a logical reorganization of the data in a table. The record numbers do not change; the index just allows the table to be viewed in an order other than record number order. A sort is a physical reorganization of the records in a table.

SQL FUNCTIONS SQL Scalar functions SQL scalar functions return a single value, based on the input value. Useful scalar functions: UCASE() - Converts a field to upper case

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LCASE() - Converts a field to lower case MID() - Extract characters from a text field LEN() - Returns the length of a text field ROUND() - Rounds a numeric field to the number of decimals specified NOW() - Returns the current system date and time FORMAT() - Formats how a field is to be displayed

Module-4 Topology The way devices on the network are physically connected is known as topology or The physical layout or the way in which network connections are made is called a topology. Types of Topology

Bus Topology In bus topology, all computers or network nodes are connected to a common communication medium. This medium is a central wire called a bus. In this data & address move from one end of the network to the other. Bus topology uses coaxial cable as a medium. Star Topology In star topology all the cables run from the computers to a central location, where they all are connected to a device called HUB. HUB provide a central connection point for all computers across a network.

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Data Flow Multiple computers can send and receive data at the same time.Each computer sends and receives data using its own cable. Ring Topology Ring topology looks like the bus topology with connected ends. Each computer is connected to the next computer in the form of ring. The message flow in one direction. It is also called endless topology. Mesh Topology A mesh network is a local area network (LAN) that employs one of two connection arrangements, full mesh topology or partial mesh topology.In the full mesh topology, each node (workstation or other device) is connected directly to each of the others. Switching techniques Circuit switching It is the simplest method of data communication. Here a dedicated physical path is established between the sender and receiver by means of the nodes. Message switching Message is a unit of information and can be of any length. In this method if a station wishes to send a message to another station it appends the destination address to the message .Then it is transmitted from source to destination by broadcasting or by store and-forward method. Packet switching Works similar to message switching. Here routing is done on packet basis not on message basis. Message is split into packets of a fixed size. Each packet contains A part of message Destination and source address Control information Message number etc.

Local Area Network (LAN) A local area network (LAN) is a computer network covering a small physical area, like a home, office, or small groups of buildings, such as a school, or an airport. Twisted pair cabling, and Wi-Fi are the two most common technologies currently in use. A local area network (LAN) is a group of computers and associated devices that share a common communications line or wireless link. 197

Wireless Area Network (WAN) A WAN spans a large geographic area, such as a state, province or country. WANs often connect multiple smaller networks, such as local area networks (LANs) or metro area networks (MANs). The world's most popular WAN is the Internet. WANs generally utilize different and much more expensive networking equipment than LANs. TRANSMISSION MEDIA Conducted or guided media use a conductor such as a wire or a fiber optic cable to move the signal from sender to receiver twisted pair wires- Consists of two insulated copper wires arranged in a regular spiral pattern to minimize the electromagnetic interference between adjacent pairs coaxial cables- Has an inner conductor surrounded by a braided mesh Both conductors share a common center axial, hence the term co-axial optical fiber- Relatively new transmission medium used by telephone companies in place of long-distance trunk lines Require a light source with injection laser diode (ILD) or light-emitting diodes (LED) Wireless or unguided media use radio waves of different frequencies and do not need a wire or cable conductor to transmit signals microwave communication- At microwave frequencies the waves cant bend or pass obstacles. So micro wave transmission is in line of sight. satellite communication- Communication satellite is a microwave relay station in space..can relay signals over long distances. broadcast radio- radio is omnidirectional and microwave is directional Radio is a general term often used to encompass frequencies in the range 3 kHz to 300 GHz. Infrared- Uses transmitters/receivers (transceivers) that modulate noncoherent infrared light. Transceivers must be within line of sight of each other (directly or via reflection ). Infrared does not penetrate walls.

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COMMUNICATION PROTOCOL In data communication , a protocol is a set of rules and procedures established to control transmission between two points ,so that the receiver can properly interpret the bit stream transmitted by the sender. Functions of data transmission protocol: Data sequencing Data routing Flow control Error control Precedence and order of transmission Connection establishment Data security Log information The different layers in OSI Protocol Physical layer Data link layer Network layer Transport layer Session layer Presentation layer Application layer

MODULE 5 World Wide Web and Business Community Internet E-Mail with TCP/IP World Wide Web and Business Community www represents the networking of internetworking resources and collection of internet sites.The main application areas where www is attracting businesses are as follows, 1.In the field of publicity,marketing and advertising. 2.In the field of online setting. 3.In the field of research and development. 4.In the field of communication. 5.In the field of business collaboration. The purpose of websites

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The majority of the sample companies use their websites to publish information about their companies and their Products or services without any price information. Use of multimedia The main attraction of www for the business community is to develop containing graphics and audio/video clips to make it effective.42 percent of the sample companies use text, graphics and photographs in their web pages and 27 percent use of sound or video in addition to text, graphics and photographs. E-Mail E-Mail short for electronic mail enables you to send your correspondence instantaneously anywhere in the world via the internet. Use of E-Mail 1 .No e-mail address is advertised on the website 2. E-mail enquiries are encouraged only about the web pages themselves. 3. E-mail enquiries are encouraged in relation to information about the company or its products or services. 4. Order for products or services are sent via e-mail. 5. Credit card information is sent over the internet via e-mail. Internet Features 1. 2. 3. 4. 5. 6. World Wide Web Direct communication Round the clock availability Central repository of data Search engines Advertisement 7. 8. 9. 10. 11. 12. E-Commerce Distance learning BBS and new services Wide area networks Shareware software

Key concepts 1. 2. 3. 4. 5. 6. 7. Direct communication Online shopping Distance education Knowledge base Banking Travel Bill payments 200

Internet protocols There are number of internet protocols used. The most commonly used protocols are: 1. Transmission control protocol/Internet protocol(TCP/IP) 2. Hyper Text Transfer Protocol(HTTP) 3. File Transfer Protocol(FTP) 4. Telnet TCP/IP is the communication protocol used to connect hosts on the internet. It is a collection of communication protocols, the main ones being TCP and IP.TCP protocol works in different layers. They are, 1. 2. 3. 4. Characteristics 1. 2. 3. 4. TCP enables data flow for monitoring It avoids network saturation It makes data to contain variable length segment which returns to the IP protocol It makes data multiplex where information coming from distinct sources can be circulated. 5. It enables successful communication between the client and server. TCP is layered over the following functionality: 1. Streams 2. Reliable delivery 3. Network adaptation HTTP HTTP is a protocol that transfers files using the internet. It runs on top TCP/IP that forms the foundation protocol of the internet. It assists in defining how messages are transmitted and formatted, and specifies the actions that web browsers and web servers must engage in while responding to the issued commands. FTP FTP is an application protocol that allows files to be exchanged between computers through the internet. It is the simplest protocol for downloading/uploading a file from/to a server, and is therefore also the most commonly used one. Telnet Telnet is a protocol that allows you to access a remote computer provided you havebeen given the permission to do so. It is typically referred to as remote login. Telnet is based on a different concept from HTTP and FTP.HTTP and FTP enable requests for specific files to be made only from remote computers;with tennet on the other hand ,you can log in as a regular user on a remote machine with the 201 Application layer Transport layer Internet layer Network interface layer

privilage that may have been granted to you on that computer with regard to accessing specific data and applications. IP Address structure An internet protocol is a unique address,which provides a universal address across the network.The IP address consists of four parts and each is separated by a dot.Format of IP address is as follows: xxx.xxx.xxx.xxx Each XXX is a number between 0 and 255 stored in 8 bits and can have 2* values.The entity contains two components as network identifier and host identifier

E-MAIL with TCP/IP When both sender and receiver are connected to the mail server via a LAN or a WAN, we need two UAs, two pairs of MTAs (client and server), and a pair of MAAs (client and server). This is the most common situation today. The user agent (UA) provides service to the user to make the process of sending and receiving a message easier.

There are 2 types of user agents : Command driven and GUI based The actual mail transfer requires message transfer agents (MTAs). The protocol that defines the MTA client and server in the Internet is called Simple Mail Transfer Protocol (SMTP). The actual mail transfer is done through message transfer agents(MTA). To send a mail ,a system must have a client MTA To receive a mail the system must have the server MTA The formal protocol that defines the client and server MTA in the internet is called Simple Mail Transfer Protocol.(SMTP) SMTP is used in 2 times

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 Between the sender and senders mail server Between the two mail servers SMTP simply defines how commands and responses must be send back and forth. SMTP uses commands and responses to transfer messages between an MTA client and MTA server. Each command or reply is terminated by a two character(carriage return and line feed )end-of-line token. Commands are sent from the client to the server. It consist of a keyword followed by zero and more arguments . SMTP defines 14 commands. First 5 are mandatory The process of mail transfer occur in 3 phases: Connection establishment Mail transfer Connection termination The third stage of mail delivery uses a message access agent; the client must pull messages from the server. Currently two message access protocols are available: Post Office Protocol, version 3 (POP3) and Internet Mail Access Protocol, version 4. Pop3 is simple and limited in functionality Client pop3 software is installed on recipient computer Server pop3 software is installed on mail server Mail accesss starts with the client, The client opens a connection to the server It then sends its username and password to access the mailbox User can then list and retrieve the mail messages ,one by one . Imap4 is similar to POP3 ,but more powerful and complex Features: User can check the email header prior to downloading 203

 User can search the contents of the email for a specific string of characters prior to downloading User can partially download email. Some websites such as Hotmail and Yahoo provide email service to anyone who accesses the site. Mail transfer and retrieval requires the use of HTTP. Here the transfer of mail from the sender to their mail server is through HTTP Transfer between two mail server is through SMTP Transfer of mail from the receivers mail server to the receiver is through HTTP

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INDIAN ETHOS AND VALUES

Module One Indian Ethos in Context Introduction Any serious review of management values in view of Indian ethos raises many intriguing challenges. Perhaps the most profound among them is to clarify the notion and the characterizing features of Indian ethos. As the opening chapter of this work, the following pages mean to accomplish this task. It is true that many contemporary authors prefer to highlight and draw from Indian ethos in management studies. The academic and professional value of this attempt can never be underestimated. However, seldom do many authors bother to clarify the notion of Indian ethos; rather, they take it for granted. Instead of a consistent analysis, often certain descriptions and sparse reference to ancient sources are given to characterize Indian ethos. But this approach may not satisfy contemporary Indian minds who are trained basically in and through discursive reasoning. Lack of a strictly systematic treatment of Indian ethos could be partially due to the traditional Indian way of reasoning. It seems that Indian psyche does not entertain the notion of the unity of time and place in an Aristotelian or Western academic style. Notions of unity and concentration on one kind of action may look foreign to our age old tradition. For example, in the great epic Mahabharata, every now and then characters change, stories change, some rishiappears, sub-plots develop in a way disturbing the narrative continuity of space and time.In the Ajanta paintings and similarly in the Jatakas,which form a part of Buddhist canonical literature, also there is no unity in the canvas of time and place. Therefore, in our contemporary context, in order to facilitate discussion on management values, we need to depend more on a discursive and logical style, but fully subscribing to the wisdom and wit of Indian ethos. The facet of Indian ethos portrayed in this chapter represents only one version of the same. Definitely, there is scope for different accounts and analysis of Indian ethos. This possibility reveals the richness and vastness of what we try to grasp in terms of Indian ethos. As it will be pointed out below, this situation is perfectly in harmony with the nature of Indian culture and ethos which allowed respectable space for heterogeneity of thinking, analysis, appreciation and belief systems. I Indian Ethos Indian ethos is a fluid concept. Ethos means the guiding beliefs, standards, values and ideals that characterize a group, a nation, or an ideology. Ethos represents the distinguishing character,

sentiment, moral nature, or guiding beliefs of a person, group, or institution. It refers to the spirit which motivates their ideas and customs. The ethos of a culture manifests itself through theirpractices, customs and beliefs. It describes their fundamental character or spirit. For instance, basically the ethos of the American people is that it is a free society. Ethos is not simply
the moral beliefs of persons or the cultural assumptions of a country. Rather, ethos exercises a binding 205

force on individuals belonging to a particular socio-cultural context, directing their overall attitude and worldview. Ethics and ethos are not mutually alien themes. In fact, the word ethics is derived from the Greek word ethos, meaning customary or conventional. In the preliminary sense of ethos, to be ethical means to conform yourself to what is typically done, to obey the conventions and rules of ones society and religion. Ethos suggests what is actually valued in a culture; but ethics suggests what ought to be valued often irrespective of cultural and national identity. It is the task of normative ethics to reflect on what should be done, rather than what is typically done. It is true that what is morally done can also be part of ethical discourse qualifying it be called descriptive ethics. Complex Textures of Indian Ethos Perceptions of culture, history, identity and ethos of any country are necessarily subjective and selective. There is no absolutely detached account of events; hence, there is no scientific history as such. Same is the case with regard to Indian history also. India is an immensely diverse country with many distinct traits, vastly disparate convictions, widely divergent customs and pluriformsocio-religious and political viewpoints. India has absorbed to its heart many strands of different cultures. In spite of and behind these there divergent socio-cultural, religious and political pluriformity,there remains a certain national/regionalconsciousness which seems to indicate the presence and force of its ethos. Having said this, it seems necessary to refer to two common misperceptions of Indian ethos:first, Indian ethos is essentially religious,and especially Hindu ethos;secondly, Indian ethos consists in its contradistinction with the Western ethos. Indian Ethos: Hindu Ethos? Once Hindu meant all the people living on this side of the Sindhu/Indus river. The word Hindu is the (mis)pronunciation of the Sanskrit word Sindu by the Persians, the historic local appellation for the Indus River in the northwestern part of the Indian subcontinent.In the fourth century BCE, when the Greeks conquered Persian empire, Hind became India. Originally, Hindu was a secular term which was used to describe all inhabitants of the Indian subcontinent (or Hindustan) irrespective of their religious affiliation. To identify Indian ethos as overwhelmingly religious ordeeply anti-scientific involves significant oversimplification of Indias past and present. But India has a long tradition of heterodoxy, openness, and reasoned discourse. In its religious core, India has been inclusive, tolerant, and multicultural. Not all the great figures who decided the destiny of India at crucial epochs of its long history were Hindus following its Varna system. For example, Chandragupta Mauryawas not a Hindu. He was from central India, from a tribe and he became the great Kshatriya.It shows that the Varna system was also flexible. Even Shivaji was not a Kshatriya. He was from a lower caste but he became king. Indian identity and ethos could be traced back to a variety of undeniable sources such as the Vedas, the Upanishads, the Buddhists and the Carvakas, the Ramayana and the Mahabharata, the intellectual exchanges in the first millennium between India and China, the liberal regimes of Ashoka and Akbar,

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the egalitarianism of Hindu Bhakti and Muslim Sufism, and in contemporary times the genius of men like Gandhi, Tagore and Aurobindo. In the opinion of AmartyaSen, Indians of any religious faith and background should have solid reasons to celebrate their historical and cultural association with for example Nagarjunas penetrating philosophical arguments, Harsas philanthropic leadership, Maitreyis or Gargissearching questions, Carvakas reasoned scepticism, Aryabhatas astronomical and mathematical departures, Kalidasas dazzling poetry, Sudrakas subversive drama, AbulFazls astounding scholarship, Shah Jahans aesthetic vision, Ramanujans mathematics, or Ravi Shankars and Ali Akbar Khans music, without first having to check the religious background of each.iIf we restrict Indian ethos to Hindu ethos, we will be reading Indian ethos only in terms of a predominant religious affiliation alone. But it is simply taken for granted that all Indians, as any citizen of any country, have multiple affiliations. From among modern examples, Gandhi actually refused to restrict Indian culture to Hindus. In his discussions with the British in the independence struggle, he did not want to talk for the Hindus particularly, which the British were ready to listen to. He wanted to talk for the dumb, toiling, semistarved millions. He even added that he could even speak for the Princes, the landed gentry, the educated class.ii Indian Ethos: A Western Picture? The second misperception about Indian ethos is derived from a contrast with the western culture and ethos. It is believed that, by making a contrast with the Western ethos, one may try to identify the core of Indian ethos. Frequently the core is said to be its spiritual aptitudes. AmartyaSen contends that this approach emphasizes the differencesreal or imaginedbetween India and the West.The real issue is that while focusing on Indias spiritual heritage, its rational contributions are simply overlooked. This kind of a portrayal is understandable, because the West was naturally drawn to what was unique in India. But that unique element does not exhaust Indian ethos. [Such] slanted emphases has tended to undermine an adequately pluralist understanding of Indian intellectual traditions. While India has ... a vast religious literature [with] grand speculation on transcendental issues ... there is also a hugeand often pioneering literature, stretching over two and a half millennia, on mathematics, logic, epistemology, astronomy, physiology, linguistics, phonetics, economics, political science and psychology, among other subjects concerned with the here and now.iii It is true that India has examples of different types of attempt at the solution to the religious problem. But they coexist with deeply sceptical arguments, sometimes within the religious texts themselves. Among Sensexamples is the song of creation of the Rig Veda, and the radical doubts expressed therein. Who really knows? Who will here proclaim it? Whence was it produced? Whence is this creation? The gods came afterwards, with the creation of this universe. Who then knows 207

whence it has arisen? Whence this creation has arisenperhaps it has formed itself, or perhaps it did notthe one who looks down on it, in the highest heaven, only he knowsor perhaps he does not know. It would be more prudent to describe Indian Ethos as national ethos.For, there has been a vibrant tradition of the pursuit of ideas across the spiritual, practical and scientific domains, which often is neglected by the western approach to Indian ethos. a serious neglect, particularly for a country in which some of the decisive steps in algebra, geometry and astronomy were taken, where the decimal system emerged, where classical philosophy dealt extensively with epistemology and logic along with secular ethics, where people invented games like chess, pioneered sex education and initiated systematic political economy and formal linguistics.iv Our national ethos is constituted and enforced by contributions of otherelements such as class, race, gender, profession, politics matter very much along with the ethos that we share. II Sources and Expressions of Indian Ethos S.K. Chakraborty argues that Indian ethos essentially at its best is Vedantic and in that respect, it is different from Indian culture in general. He qualifies culture as the colorful outward superstructure, but ethos forms the invisible foundation. All the ingredients of it have come from this geographical mass called India.v He attributes the right to become the foundations of Indian ethos only to the Vedas, Upanishads, the Smritis, the Puranas, etc. According to him, Rabindranath Tagore, Vivekananda, Aurobindo, Gandhi, etc. have taken this position. However, the attempt to attribute Indian ethos only to the Vedic line could be challenged on account of the arguments in favor of the history and culture of India which surpass these valuable sources. These sources do form one layer of the foundations of Indian ethos. But they do not exhaust the breadth and depth of Indian ethos. The message of the Gita also could be taken as a specific foundation of Indian ethos. Apparently a heterogeneous text, the Gita is a reconciliation of many facets and schools of Hindu philosophy of both Brahmanical (i.e., orthodox, Vedic) origin and the parallel ascetic, yogic tradition. It comprises primarily Vedic (as in the four Vedas, as opposed to the Upanishads/Vedanta), Upanishadic, Samkhya and Yoga philosophy. The Bhagavad Gita, meaning song of the Lord, refers to itself as a Yoga Upanishad and is sometimes called Gtopaniad. It is not clear when exactly the Bhagavad Gita was written. Astronomical evidence cited in the Mahabharata itself put the date at 3137 BCE, ancient Indian historical texts (Puranas) suggest a date of about 1924 BCE and modern scholars hold widely differing dates that occur after 1000 BCE. Gita portrays two view-points regarding a conflict situation. It is a dialog between the God Krishna and the hero Arjuna, taking place in a timeless moment on the battlefield before the ultimate struggle between good and evil. At Kurkshetrathe royal cousins, the Pandavs and the Kouravs, face each other for the decisive battle to end their long-running feud. The Bhagvad-Gita debates the rights and wrongs of conflict. Krishna advises Arjuna that he needs to concentrate only on his duty. In modern terms he opts 208

for deontology. But Arjuna raised his suspicions on the basis of the consequences he foresaw. He was more a consequentiliast in contemporary terms. But his doubt cannot be set aside, as the story of Mahabharatha proves at the end, though Lord Krishna had his preference for duty-bound approach.It speaks of the yoga of equanimity, a detached outlook. The term yoga covers a wide range of meanings, but in the context of the Bhagavad Gita it describes a unified outlook, of action, knowledge, devotion, and the ability to stay attuned to the glory of the Self (Atman), which is of the same essence as the basis of being (Brahman). The Gita has been rightly used as forming a solid basis of Indian ethos. There are many significant people who are said to represent Indian ethos in many ways. If you prefer forward looking, reformist dimension of Indian ethos, you need to respect Vivekananda, Mahatma Gandhi, etc. If you insist on the radical nature of Indian ethos, you may choose Sankara, Mira Bai or Aurobindo. Briefly, we may say that any text, person or mythic story that creatively influences Indian mind broadly and over a long period of time in one way or other can form a solid source or even expression of Indian ethos. In fact, extensive studies specifying the heterogeneous nature of Indian ethos are scarce. That is why often we are bound to return in this regard to certain religious sources alone. While recognizing this limitation, we may suggest some of the general features of Indian ethos. Featuresof Indian Ethos 1. The ethos that has developed in India is context-sensitive and not context-free. Ancient stories get their context with reference to the frame in which they have been placed. Indian texts are historically dateless, but their contexts, uses and efficacies are explicit. Even in Ramayana and Mahabharata, there are several episodes, each story encased in a meta-narrative. And within the text, one story is the context for another within it. 2. Ethos is not a homogeneous entity. There can be different expressions and layers within the same ethos. Heterogeneity of Indian ethos cannot be overlooked. Indian ethos houses not only Vedas and Upanishads; there are also narratives of the Dalits, and stories the Buddhists and Christians. There have been heterogeneous readings even of the epics from India. 3. Indian ethos is dynamic. Every country has its own culture and character based on the social, political and economic environment in which it operates. From that culture springs forth the national ethos, which prescribes a code of conduct for its citizens and creates the context for business ethics and values in that society. Indian culture is open to changes and the process of integration. SankaraaAdvaitic philosophy did it. Vivekananda broadened the concept of brother/sisterhood from its narrow sectarian outlook. Premises of Indian Ethos What are the constitutive premises of Indian ethos? They consist in certain profound convictions.

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1. Indian ethos insists on purification of mind (chittashuddhi) above all. It means one needs to purify his/her emotions, impulses, heart, rather than developing and sharpening ones intellect and skills. The presumption is that if one is not morally upright, his/her knowledge and skill would turn destructive and unwholesome. Indian ethos looks less favorably on techniques and performance than on right intention and genuine results. 2. Indian ethos, following Vedantic thought, holds that the subject is the cause and the object is the effect. Good or bad the acts of a person springs from his/her inner self. One conclusion, for example, is that if there are disorder and disturbance in a business firm, there will be people with internal troubles. So Indian style of management would ask you first to focus on men and women rather than setting right materials, machinery and money. For the health of business structures depends on the people who manage it.vi 3. Nishkama karma or detached work. It offers a psychological approach to work. Nishkam karma has been variously explained as duty for dutys sake and as detached involvement, which is neither negative attitude or indifference.We shall further explore this notion later. While emphasizing ethical business practices adhering to intrinsic human values and reducing stress at the workplace many people now tend to make use of nishkama karma from Indian ethos.vii 4. Work is not understood as drudgery or labor in Indian ethos. Work is equal to sacrifice. Thus it becomes pleasing to the Cosmic agents as sacrifice and worship. It presupposes a human-cosmos symbiosis. Therefore, no human work is against nature or the fine balance of the cosmic order. If artha and kama are pursued simply for their own sake, with egoistic self-interest, it culminates not in a sacrifice but in exploitation. Upanishads III, 14 says, From food creatures come into being; from rain is the birth of food; from sacrifice rain comes into being, and sacrifice is born of work.This presupposes a noble and profound cycle of interdependence which starts from work akin to sacrifice. If this rthm is broken somewhere, it results in a serious cosmic setbacks. We can understand this explanatory scheme of things in the Jewish-Christian injunction also, do not covet anothers property. For, it amounts to pursuing artha egoistically and it denigrates the element sacrifice in such greedy pursuits. 5. The foundational premise of Indian ethos is that a balance between four dharmas is possible. Dharma, Artha, Kama and Moksha are the four dharmas. There is no incompatibility between this worldly, material affairs and the other worldly life. Indian ethos did not have to strive hard to combine these two areas. It implies that there must be a balance between spiritual values and secular values. One of the implications is that doing business will not stand extraneous to ones life of dharmas. III How can Indian ethos serve contemporary business? India is widely recognized as one of the fast bourgeoning economic forces in the world. Hosts of business schools are producing energetic brand of young managers. But how can Indian ethos serve them to become better managers and help them deal with moral complexities of ordinary business life? 1. Indian ethos provides an ethical worldview to business people. Indian wisdom indicates that productivity of human being is more important than the productive capacity of the external, material and 210

organizational structures.Therefore, a business persons primary focus must be on management of the personnel. In other words, it begins with self-management. Because, unless the manager is able to manage him/herself, s/he cannot manage others. Western model of management, seldom does speak about selfmanagement. It is particular about managing others in the broad (men, women, materials, money and machines). However, recently, there have been attempts in Western business education to draw from spiritual resources also. 2. Indian ethos gives great emphasis on values and ethics. For, Indian ethos nurtures a world-view which is value based. That India has not invaded another country in its multi-millennium long history indicates that India does not believe in external prowess. Indian ethos has not considered knowledge as power. Rather, character is the real power and wealth. Therefore, Indian ethos emphasizes much more the inner resources of personsthan outer resources. Thats why according to tradition Indian kings always revered rishis in their rule. This basic ethical spirit of Indian ethos can inspire business persons and firms to adhere to their traditional ethical orientation. 3. Indian ethos can help business persons determine their priorities. It has to take place on different levels. For instance, at the level of objective of business, one has to set the priorities: economic gains, customer satisfaction, employee-welfare, social responsibility, etc. All of them can go together. But at times, prioritization of these objectives would become mandatory in conflict situations. One of the issues subjected to corporate governance is executive remuneration. In recent times it has been charged in different courtiers that senior executives are disproportionately paid. The issue at stake is the widening inequalities between the employees and managers.viiiThis issue can be addressed according to the priority which a firm maintains in corporate governance. Indian ethos will not give a firm clear directive as to what is to be done. But it will provide the ethical spirit with which such issues are to be addressed. 4. Prevalence of Indian ethos can improve work culture in organization. There are certain fundamental assumptions regarding work in Indian ethos. For instance, strength and cooperation for excelling in work comes from divine power. Therefore, all kinds of work are an opportunity for doing good to the world and thereby ensuring our own material welfare and spiritual good. That means, according to Indian ethos, there are certain strong drives active within Indian ethos for self-motivation and self-development which will in turn ensure an excellent work culture. Whether such a work culture actually prevails now in India in general is a different question. 5. Indian ethos would help us keep a fine balancing of different management values in the organization. Competition, self-interest, relationships, stakeholder rights, advertisements, protection of nature, philanthropic works, etc. all are valuesin management systems. But each of them can become a disvalue unless carefully tempered by an integral value system. Indian ethos in business context shall offera check and balance in protecting these values and business interests. 6. Enhancing owner value or in a much narrower sense making profits, is an obvious aim of doing business. Indian ethos is not against making profit.But profit must be made in an ethical way. Rigvedahas

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a general principle which says: Ritamshansanta, rijudee-dhyana. It means, praising the Eternal Law and thinking straight. This general principle is applied to making money and thus Rigveda says: Let a man think well on wealth, and strive to win it by the path of Law and by worship and let him take counsel with his own inner wisdom, grasp with spirit till greater ability. Therefore, it would be wrong to conclude that Indian ethos encourages only spiritual values and it looks down upon monetary gains. 7. Indian ethos establishes certain values highly effective for business relationships in terms of employees, employers, clients, shareholders, stakeholders, agents, etc. For instance, respect to people is a profound value of Indian ethos. The basic reason is that people command respect by virtue of their shared divinity. There is an ancient exhortation: ParasparDevoBhava: regard the other person as a divine being. For, each of us shares in the same divine consciousness. What this principle can do is to establish a sort of basic respect for the human person. 8. Indian ethos nurtures an overall spiritual outlook. This is found expressed in certain sayings as well as in some practices. AtmanaVindyateViryam: strength and inspiration for excelling in work comes from the Divine.Teshamsukhmtesham shanti shaswati: Infinite happiness and infinite peace come to them who see the Divine in all beings.It is also good to remember that the integral model of man exalted in Indian culture was that of rishi. Rishis were supposed to be eternal pilgrims, searching for higher knowledge always; they enlightened others; they saw reality in its totality. It is in this context that even kings and emperors were attributed the title rajarshis. This indicates that certain ideals of rishis are found expressed in their royal office.ix 9. Indian ethos can offer creative and alternative metaphors for ethical business. For instance, there are proposals that managers of firms will resemble rajarshi; they will combine kingly (leading) role with that of rishi (ascetic). Chakraborty loves to speak about business ashram which according to him, can claim credibility to Indian mind. The root meaning of ashram is a place to labor (shram) for the fulfillment of a vow (vrata). The metaphor of business ashram implies many things as far as the orientation of business is concerned. It would naturally emphasize products with longer life cycle, as against the use and throw model. He argues that organizations should contract rather than expand endlessly. For more attention would be on localized, decentralized economic activities and production. It will save a lot of time from long distance, high speed travel. Relationships in organizations are bound to become more personal and friendly and less aggressively competitive. It will create an atmosphere where local needs are met with local resources. Decisions will be taken in view of their overall spiritual, ecological, material and psychic impact on people. Sustainable life style will be promoted by business, by insisting on energy saving schemes. Standard consumption will no longer be the standard of living. It will focus on the inner freedom and quality of life. In the work place better appreciation will be made of highest ends of the workers such as fulfilling psycho-spiritual needs, rather than highlighting material gains alone.x

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Limitations of Indian ethos in business There are also a few limitations about which we must be aware while extolling Indian ethos as the substratum of ethical business in India. 1. Perhaps, the foremost difficulty is that the foundational textual sources of Indian ethos do not come purely from a business or economic context. Most of them speak about management of country (politics) or management of the self. Taken from an extra-business context, such texts need careful interpretation and consistent adaptation to the modern business world and its issues. 2.Contemporary business is condemned to confront moral dilemmas. Indian ethos may not help us resolve moral dilemmas in business. Some of the issues which business face cannot be resolved easily. For, while trying to save a value, one might be destroying another, perhaps, a more important value. For instance, consider issues such as downsizing the staff, pollution control, disposal of toxic waste, depletion and allocation of scarce resources, cost containment, changes in law and technology, employee rights, discrimination against women and minorities, and product safety. When one tries to deal with one of these effectively, simultaneously s/he will be aggravating or creating anew another problem. Issues such as the above said are complex and addressing them would lead us often to ethical dilemmas that are difficult to resolve. Because competing claims of equal force present themselves simultaneously.The resolution of an ethical dilemma requires not only interpersonal and negotiation skills but clarity of vision about ethical values. One must be able to prioritize among values as far as possible. S/he must visualize the good and evil associated with each open options. General insights of Indian ethos may not be sufficient in many such moral dilemmas. 3. There are moral issues in business which can be settled only in a technical sense. For example, take the prospect of whistle blowing. Despite its apparent goods, whistleblowing begs ethical justifications. Because the prospect of whistleblowing leaves a number of questions open: under what conditions is whistleblowing the right thing to do? When is it in the public interest to do so? Should an employee not be loyal to his/her firm? What should employees do when they confront conflicting loyalties among personal, organizational, and societal values?xi One may not get criteria to evaluate the chance or act of whistleblowing directly from Indian ethos. 4. Recourse to Indian ethos may look like simply religious and spiritual. Proposals of business ashrams made by some authors may not look attractive in a global market of fierce competition. It may give an overall sense of self-control, generosity, thrift etc. many of such values are apparently not conducive to successful business. 5. The different business constituencies of a corporation include groups such as managers, employees, suppliers, customers and naturally the investors. One of the inevitable consequences of the corporate existence of any business concern is the possible conflict of interests of various stakeholder groups. In the case of non-business, non-profitable corporations the scope for conflict of interests could less frequent and less fierce. As far as the potential conflict of interests in business corporations is concerned, two important questions usually surface: in whose ultimate interest the corporation would be run? Who will

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impartially safeguard the due interests of various groups? Answers to these questions concern the area of corporate governance. Add: This gave birth to FIVE Mahavakyas (Great utterances) of Upanishads (Indian Scriptures) ~ 1. AyamAtma Brahma - Individual soul is synonymous with the Universal Soul. 2. AhamBrahmasmi - I am Brahman. 3. SarvamKhaluIdam Brahma - All that exists are existing in Brahman. 4. Prajnanam Brahman - Brahman is the one all-pervading consciousness. 5. Tat TvamAsi - You are That. The Rigveda, mistakenly regarded as of only antiquary value, has this sound mantra for value-laden business that Chakraborty reminds us of: Let a man think well on wealth and strive to win it By the path of law and by worship. And let him take counsel with his own inner wisdom, Grasp with spirit still greater ability. Hardly a world-denying philosophy! And the epic of epics has this exhortation by its creator, Vyasa that those who would create wealth and their educators would do well to ponder on: I lift up my hands and I shout: From dharma flow wealth and pleasure; Why is dharma not practised? Review Questions 1. 2. 3. 4.
i

Give a brief account on Indian ethos. What are the salient features of Indian ethos? How do you distinguish between Indian culture and Indian ethos? How can Indian ethos promote ethical business in India?

AmartyaSen, Argumentative Indian ( ).

Indian Round Table Conference, Second Session, 7 th September, 1931-1st December 1931: Proceedings (London: Her Majestys Stationery Office, 1932), as cited in AmartyaSen, Identity and Violence (London: Penguin, 2006) 166.
ii iii iv

AmartyaSen, Argumentative Indian ( ).

AmartyaSen, Argumentative Indian, 316. S.K., Ethics in Management (New Delhi: Oxford, 1995) 4. S.K.Chakraborty, Ethics in Management, 8-9. Brij Kumar, Brij Nino Kumar, Horst Steinmann, Ethics in International Management(New York: Walter de Gruyter, 1998). For details see, Gler M. Darman, Corporate Governance Worldwide: A Guide to Best Practices for Managers(Paris: ICC Publishing, 2004).

v vi

vii

viii ix x

S.K.Chakraborty, Values and Ethics for Organizations (New Delhi: Oxford Univ. Press, 1998) 52. S.K.Chakraborty, Ethics in Management, 27-29.

R. Duska, Whistleblowing and Employee Loyalty, T. Beauchamp & N. Bowie, eds., Ethical Theory and Business (Upper Saddle River, NJ.: Prentice-Hall, 1997).
xi

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Module Two Indian Business Management Business Management Management in India is an amalgam of practices borrowed from the West-and more recently from Japan-overlaid with age-old Indian values and norms that the still extant. With an in-depth historical perspective and a thorough analysis of four types of Indian organizations-traditional family-owned private sector; public sector, government departments and multinationals. Scope for Indian Model of Business Management Indian Management as a distinct field of study is still in its infancy. Just as Japanese Management with its emphasis on total quality emerged, now Indian companies with their proven competitiveness, have caused the emergence of Indian management. Now it has begun to gain acceptance and currency. In the first phase of management, western concepts were borrowed and adapted to the Indian situation. With the establishment of the IIMs such need was felt. Case studies were developed from Indian context. For this end, tools and techniques from Japan and the West were used heavily. In the second phase, contradictions in the first phase were exposed. Management theories conducive to Indian psyche were sought. Scholars began to explore ancient Indian literature; they studied stories of successful business in India. During this phase stress was laid on exposing Indian ethos, Indian culture and Indian perspective of management. In the third phase, it has moved a step further. Indian ethos is a knowledge seeking ethos which is in fine tune with knowledge economy.xi During this phase, a new blend of Western and Indian notions has been introduced, taking into account the ground realities in the field. This is expected to develop into a global standard in due time.xi Why do we need our own Management Style? 1. Social Factors affecting Management System in India. Many of them are unique. Unseen in other places. Management system has to respect these features in building indigenous style. Trends in employment, job scenario in India Population growth Trends observed in Indians settling abroad Womens issues and issues focusing on womens rights Shift towards knowledge economy.
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Influence of caste, religion and political affiliation in work place. 2. Social structure: As has already been stated, India is an enormously hierarchical society and this, obviously, has an impact on management style. It is imperative that there is a boss and that the manager acts like a boss. The position of manager demands a certain amount of role-playing from the boss and a certain amount of deferential behaviour from his subordinates. The boss is definitely not expected to perform any seemingly 'menial' tasks such as making coffee for everybody or moving chairs in a meeting room! Anglo-Saxon concepts of egalitarianism where the boss is the primus inter pares are virtually incomprehensible in a society still dominated by the historical conventions of the caste system. 3.Dualism resulted from grafting The management concept in the west developed as a result of evolutionary process, based on the changing values systems of the people - the social, political, and economic environment as well as educational and cultural milieu. However, in India, historically we never evolved our own concepts, keeping the Indian scenario in view. We found it convenient to transfer management technology, just as scientific technology. As a result of these grafting process of management, we have created more confusion in management thinking. Indian Model of Management Indian model of management practically means a management approach based on Indian ethos. It does not mean that it would be style of management denigrating all aspects of western management. Characterizing features of Indian model of management 1. Emphasis on human values. They include ethical, spiritual and religious values. They are supposed to serve as a foundation for healthy business management. As we have already indicated, this approach does not focus basically on any management techniques to produce the desired results. Rather attention is paid to the person who works, manages, invests, plans, organizesThe presumption is that such value-driven persons will naturally contribute to business causes to the maximum. 2. Management based on holism. It is much wider than the systems approach much favorable to the western model. Holistic approach indicating unity between the Divine (The Divine means perfection in knowledge, wisdom and power), individual self and the universe.Holistic approach
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considers human being in his/her totality, as an integral being of body, soul and the intellect. It is in this context of holistic approach that meditation is emphasized. The presumption is that work and career must help the person for total human enrichment and quality of life. There must be harmonious use of these in business contexts. It is because of this holistic approach that ethics becomes unavoidable. For in order to make use of the human person in totality, we need not only rationality but morality as well. If business concerns disregard holism, even affluence can create problems. For example, young managers earning attractive sum of rupees would be ill-directed in the use of their money. While addressing one problem, namely economic need, it would be opening many other problems. Holism also has to do with our essential unity with the society and nature. If business disregards holistic approach, it will not find any justification or scope for social responsibility of business. Devoid of holistic attitude, nature will simply remain as a resource to be used and exploited to the bottom level. 3 IMM emphasizes the person. S/he is taken as resources with enormous potential, energy and talents for perfection as human being. Not only objects, materials, machines, money but persons are also equally important. Emphasis laid person helps management to tap the inner resources of the person than outer resources (skills). Inner resources means the character and virtues of the person. Brain-stilling For rational and enduring decisions, silent mind is a necessity. A perfectMounum(calm mind enjoying tranquility) is necessary. Brain-stilling or meditative silence isthe most reliable method to discover solutions to problems and difficulties which seem to bedifficult to be tackled by reason and intellect because through this one can come intocontact with the inner mind or higher consciousness called Chetana. 4. IMM nurtures a specific kind of work ethos. We shall talk more about work ethos later in this chapter itself. The specificity of Indian work ethos is that it places work in a broader context of spirituality and integrated life vision. In other words, work is not an isolated area of human life. Therefore, Indian ethos asks certain fundamental questions and offers answers. For example, why work?The answer: to purify the mind and the heart (Chittashuddhi) and to become wise. What is work? It is nurturing each other. It is a form of Yajna or sacrifice. Work equals to the worship of the Divine.How to work?With the spirit of renunciation, i.e., Tyagand to serve others without self-interest. What must be the spirit of work?Excellence and perfection in work.The ultimate paradigm for Indian work ethos is Karma Yoga (selfless work).It serves private benefit in the form of self-purification and public benefit. YogahKarmasuKaushalam- Excellence at work through self-motivation and self-development with devotion and without attachment. Co217

operation is a powerful instrument for team work and success in any enterprise involving collective work. Never decide anything, never speak a word, never throwyourself into action without stepping-back. The stepping back from a situation for a whileenables one to control and master a situation. 5. IMM pays attention to management with reference to interiority. Therefore, emphasis is laid on integrated growth, harmony, happiness and health. In other words, it begins with the management of the self, rather focusing on managing others. Other things such as, machines, materials and methods are taken as conscious partners in this process. In decision making process, intuition is given weight just as information. Intuition is the act of coming to direct knowledge or certaintywithout reasoning or inferring. It is immediate cognition by the inner mind and when fullydeveloped, is efficient and effective for taking prompt and sound decisions. Intuition skillsenable one to cope with confidence the fluctuating environment and rapid changes. Faith isa prerequisite to develop and realize the power of intuition. Self management or management by consciousness. Whenthe soul manages the other four members of the human being, namely, the body, mind,intellect and the heart, the conflict these four have amongst themselves can be resolved.This is management by consciousness. The objective of self management is to first knowand manage oneself and then manage others. 6. IMM respects ethics and values in all domains of management, especially in problem solving and conflict management. The commonly adopted means for conflicts resolution is integration and synthesis on stressing super ordinate common goals. Focus is to maintain harmony and unity. At times, self introspection and stepping back would give hints for problem solving. 7. IMM fosters certain basic management concepts. They include the following: Other than saying that management means getting things done, IMM holds that it meanshelping others to produce extraordinary results. Productivity of the organization is people centred, rather than output centric. Prime concern of the firm is to produce performers, not realize targets.It helps the subordinates to develop leadership quality. High emphasis is placed on self-motivation; subordinates encouraged to be creative and given due autonomy. 8. IMM encourages integral approach to management. That means, it respects realistically both sides of the coin. For example, it pays equal importance to rights and duties. It places profit as one of the chief aims of doing business; while it never compromises service to and satisfaction of all stakeholders, employees, customers, shareholders and citizens. Coordinating private and public benefit. Economic gains are attempted through cooperation by playing complementary role, not by extraction and exploitation.With regard to social responsibility, some sort of
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preponderance is given on giving not on taking. Duties given great importance and rights assume secondary value.Equal emphasis on both skills and values.The person behind the machine is given due regard. Organization values not only certifications of product quality such as ISO, TQM, QC but alsohuman quality, values, character, mind enrichment. 9. Human Resource Management of IMM is people specific. It does not offer an HRM program applicable to all people.It respects the basic division of people made by ancient Indian scriptures into three categories. They are Tamasik (people with shady character), Rajasik (the ambitious) and Satwik (the virtuous). Dealing with these people requires different approaches. Traditionally in managing others four different methods are used. But they are to be applied in different ways to these three categories of people. It is as follows:

Method Saam Daan Bhed Dand

Tamasik Guide Reward Criticize Control

Rajasik Inform Empower Challenge Warn

Satwik Consult Recognize Silence Monitor

10.IMM has a specific style of performance assessmentsof the firm and employee.There are many parameters offered to measure performance of the employees, managers and the organization as a whole. Common good is held in high esteem as part of common vision of business. Solving issues at human resource level, rather than at material, structural and external levels. Efficiency and profit might be sacrificed for moral uprightness. Competition with ones own performance to reach excellence, other than competition with others. Instead of meeting targets, people are inspired to perform better. Long term and sustainable approach to growth and achievements. Excellence sought for mutual benefits and common good. Balance is struck between business success and mental peace.xiHealth of the company is assessed in terms of people oriented performance and respect towards environmental values. Social costs also would be included in balance sheet. Social costs will be internalized. Trust of customers and society are also points of assessment.

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Work Ethos

One of the prominent aspects of Indian management is the emphasis laid on a healthy work ethos. At the core, it refers to certain behavioral norms of employees, managers and executives in work situations. Work ethos indicates basically how the workers and the firm as a whole deal with different kinds of work. Work ethos in general suggests the organizational culture that prevails in a work context. It reveals how workers deal with the objectives of their work in a given time and place. Given a good work ethos, any firm is surely to succeed in realizing its business goals. Therefore, work ethos forms one of the important aspects of Indian ethos in business management. What Does Work Ethos mean? Work ethos has got different expressions and demands at various levels. 1. At the level of employees a) b) c) e) f) g) Discipline Punctuality. Behaving properly with superior, colleagues and subordinates. Not wasting time during working hours. Dignity in relating to peers, semorn and subordinates, To do things those are morally good or right.

h) Doing ones duties with a kind of religious like fervor. One brings out his best in his work place. loyalty and sense of belonging, by his behaviour, to the organization. One should protect the interest of the organization 2. At the level of management a) Commitment and accountability The workers should take full responsibility for the task assigned to them and furthest efforts to achieve what is expected from them. b) Loyalty. Wok ethos regulates te relation with the firms. Under usual circumstances it calls for loyalty to the firm from workers. But under extraordinary situations, loyalty to the firm could be superseded by other values such as concern for common good. It is a context in which whistle blowing by employees could be justified.
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d) Sense of Belongingness The worker should exhibit by his behaviour a sense of belongingness to the organization. A feeling of respect should be there for the organization. One should maintain good relationship with peers, sub ordinates and superiors and treat them well. f) No adverse comment about the organization in public. In work ethos, we are supposed to cut a harmonious balance among our commitment to work, home, and society. That means, we need to be moderate in actions and spending our energy. He who is regulated in his habits of eating, sleeping, recreation and work can mitigate all material pains by practicing the yoga system. (Gita 6.17). Merits of Work ethos Work ethos active in a context has much to do with the performance of workers, degree of productivity, quality of products, rate waste production, and the career satisfaction of workers. Attention to work ethos will also contribute to the total meaningfulness of workers life. For, it would create a sense of personal fulfillment and social good. In addition to these elements, work ethos presupposes the quality of team work. A team with poor work ethos is likely to be a professional tragedy. A team motivated by an excellent work ethos will generate innovative ideas and solutions. high morale. If there is no healthy work culture, it is doomed to create wastage, poor quality products, low rate of productivity, infamy to the firm and lesser competitiveness. xi What the Firm has to do? Lack of commitment, discipline, poor working conditions, recognition by management, moral standards. So practically, it reveals that work ethos is not merely the contribution of the employees; it has also to do with the contribution of the management. Expressions of poor work ethos: The following factors are responsible for poor work culture in a business organization:1. Lack of commitment Lack of commitment refers to the disinterest shown by worker to the work This creates poor work culture in the organization and results in poor quality of (product and lower productivity. Dedication towards work should be visible by his behaviour. 2. Lack of discipline Discipline includes regularity, punctuality such as to come in time to work place, to complete the task in given time, to follow rules and regulations if any, do not waste time during working hours etc. Hence, lack of discipline will create poor work culture which may cause delay in operations. 3. Poor working condition Poor working conditions includes unhealthy working climate, lack of pure drinking water, lack of ventilation, lack of canteen facilities, lack of safety devices

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and norms, industrial pollution etc. These are the constituents of poor working conditions in an organization. 4. Political interfere nee Most of the unions in the companies are affiliated to some political party. Political leaders, sometimes, destroy the peace and harmony in the organization for the sake of power and ego only. This is one of reasons that causes industrial conflict 5. Decline in moral standard Moral standards provide tool for judging the moral value of a decision. They provide the basis for deciding whether an act is right or wrang. I f there is decline in the moral standards, the culture of the work in an organization becomes poorer. How to improve work culture? Following are the other dimensions of work ethics 1. Protecting the interest of the organization: interest of organization must be on the top agenda of employees. Their activities must focus on the protection of interest of the organization. Workers can protect the interest of their organization through higher productivity and quality of a product. They should make then best efforts in this regard. 2. Work ethics through appropriate system Clear cut policies, rules and regulations, reward system etc. are supportive in establishing work ethics. Clarity of these will make work-ethics more purposeful. 3. Work ethics in terms of proper communication system Communication system is said to be life line of an organization. Proper communication channel will promote work ethics in the organization. Any misunderstanding, mistrust, suspicion etc. may be eliminated through communication system. The management has to ensure just wages as per the actual contribution of the worker. This in turn necessitates proper job evaluation, periodic training. There shall not be any exploitation of the workers in terms of payment and work hours. In addition to this, workers also deserve perks and bonus and recognition, etc. 1. In order to improve work ethos, wages should be linked with productivity. "Higher wages for higher productivity should be the policy of the organization. 2. In order to reduce absenteeism, attendance bonus should be introduced. 3. In order to increase efficiency of workers, they should be properly rewarded. In other words, efficient workers should get incentives. 4. Workers should be given opportunity for participation in management decisions.
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5.

There should not be political interference in the day today operation of the business.

Indian Heritage in production and Consumption Salient features of Production & Consumption in Indian Heritage 1. From the point of view of economists, production from local resources for local needs is the most rational way of economic life. In the beginning, humans have a tendency to produce goods and products according to their basic requirements or we can say needs. 2. Use of Resources: - Indian Heritage advocates the prudent and economic use of resources in the development of man but does not advocate the irresponsible and indiscriminate use of resources. It prefers the optimum use of resources and conservation of natural resources because they are available in limited quantity.Needs, wants and desires are the part of one's life. And production is required for fulfilling these needs, wants and desires of human beings. With the development of human beings ways of production have also changed in the modern world. Now a days, many natural resources or non-renewable resources are used in excess to produce goods and services. Productive resources should be diverted to produce most essential goods. The resources used m the production of alcohol, harmful chemicals and arms should be used for the production of food, clothing and house building. 3. Impact of Spiritual Consideration In early times, those was a coordination between Artha (money) and Karma (desire). During that time, wealth creation was important but was not the focus, so the focus was on striking a proper balance between the amount of efforts and the amount remuneration attached to it. 4. Role of great economists in term of their thought on production and consumption can not be ignored. Great intellectual gurus like Mahabna Gandhi. Vivekananda and Buddha believed in one principle of 'more of giving and less of grabbing'. 5. Increase in per Capita income. A performance of the plan is judged by the criteria of how quickly a country is able to increase its per capita income. Indian Heritage System did not pay much attention to increase in per capita income the prime focus was on spiritual growth. But it needs to bed one. Nishkama karma theory is found first in chapter II, verse 48 of the Gita.

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Module Three

Ethical Values in Management

Values& Ethical Values Ethical values suggest that a given mode of conduct or end-state of existence is personally or socially preferable to an opposite mode of conduct or end-state of existence. Ethical values indicate the worth or merit of an action or a person by virtue of its moral rightness or wrongness. Therefore, practically, as we have already indicated, for decision makers ethical values serve as the point of preference. They enjoy a certain amount of prescriptive force. They ask you to do something or make a choice in a particular way. It is true that humans can reject them. But values will attract, force and even admonish people, once they have been rejected. Ethical values can even cause a sort of moral indignation in a person against disvalues found around us. Ethical values tend to promote and ensure human well-being. But it is promoted by ethical values is not personal and selfish well-being.No one persons well-being is to be counted as more worthy or valuable than any others.Ethical values promote human well-being in an impartial way. Long term effectiveness of business in every respect depends on moral values that business upholds. Values can affect our behavior, beliefs, personality. Values indicate a judgmental element. There are fixed, unchanging values; they are stable. Similarly there are also changing values. There is a hierarchy of values. There can be value conflicts actual practice of values. Between individual and organization and among individuals and within oneself. Values are important as far as business is concerned. For, the managers value system is to determine in many a context decisions in a business context. Laws do not cover all aspects of business life. Value system indicates a hierarchy based on ranking of an individuals values in terms of their intensity. Terminal values are desirable end-states of existence; the goals that a person would like to achieve during his/her life time. Instrumental values are preferable modes of behaviour or means of achieving ones terminal values. Values are called gunas. From values originate value statements are grounded in values and define how people want to behave with each other in the organization. Values v/s Skills
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We need to make distinctions between and skills. 1. To become, we need values. To do, we need skills. 2. Becoming (needing values) must precede doing (needing skills). Values should act as the basis of the skills acquired. 3. Values are the means of perfection. Skills must have sound system of values as the base. Otherwise, one can manipulate skills for ulterior motives. 4. Values are internal, dealing with internal development of a person, purifying mind and heart. Skills on the other hand only make a person proficient. Values are themeans of perfection of personality. 5. The field of values is governed by union, holism and relatedness. 6. Values bring about excellence and universal good. Skills see us through mechanics of management. 7. Skills are not enduring, values are. 8. Skills change with passage of time. Policy is flexible, principles and values are not. We have permanent fundamental values. Skills must pass through the corridors of values and the corridors have to be kept not dark and untidy, but well lit and clean. We should not get the impression that acquiring skills is insignificant, but onlyacquiring skills without reference to values would be unhealthy and dangerous. Of course, values are more important that skills. The strength of skills cannot replace the functions of values. For they refer to the inner core of the persons and integrity of the firm. Economic values are actually means; moral values are often ends in themselves. What do Ethical Values Serve in general? Ethical values help us preserve ourselves, society and nature in their integrity, leading to its ultimate fulfillment. Disrespect to values means doing violence to others or denying their rights to certain moral good. For example, when a person tells lies, s/he denies a truth to someone who has a right to it. The quest for values is innate in humans. They need not be taught; but their demands need to be taught. People know naturally that they are to respect to truth; but what truthfulness means especially in a complex situation perhaps needs to be taught. There are many such situations in business life.
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Economic values are instrumental in the sense they serve as means to realize certain goals. The worth of economic values can be assessed and measured. But ethical values cannot in that way be measured. They need to be given expression in the form of ideals, spiritual principles, beliefs, etc. upon which we base our practical living. Value communication takes place by education, parenting and formation at home, training programs, mass media, cultural tools such as narratives, social mores, rules and regulations, religious thinking, prevailing ethos of a nation, etc. Examples of Values in Business The following are examples of values: Ambition, competency, individuality, equality, integrity, service, responsibility, accuracy, respect, dedication, diversity, improvement, enjoyment/fun, loyalty, credibility, honesty, innovativeness, teamwork, excellence, accountability, empowerment, quality, efficiency, dignity, collaboration, stewardship, empathy, accomplishment, courage, wisdom, independence, security, challenge, influence, learning, compassion, friendliness, persistence, optimism, dependability, flexibility, etc. Values for Managers Integrity of character. It refers to uprightness, being undivided between ones convictions and actions. Impartiality. This is more an attitude than its outward expressions. It demands one to look at thing with fairness and without prejudice or bias. Social responsibility. According to some schools of thought (Milton Friedman for example), business has no social responsibility except to make profit respecting the given rules. But there are many reasons to hold that managers are to respect not only the interests of the stockholders but the claims and interests of all stakeholders, including nature, in doing business. Accountability. Managers are held accountable before a number of people such as stochkolders, employees, customers, the government, etc. discipline/order, generosity,

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Transparency. Good business cannot but be transparent to the concerned parties. Business organizations nowadays design ways and means by which business transactions are kept transparent in the due forum.xi There are many values rooted in Indian scriptures. They include respect for individual, work is worship, ethical integrity, self-discipline, customer satisfaction, detachment, mutual cooperation, etc. Why to Identify and Establish Values? Effective organizations identify and develop a clear, concise and shared meaning of values/beliefs, priorities, and direction sothat everyone understands and can contribute. Once defined,values impact every aspect of your organization. You must support and nurture this impact or identifying values will have been a wasted exercise. People will feel fooled and misled unlessthey see the impact of the exercise within your organization. Ifyou want the values you identify to have an impact, the following must occur. People demonstrate and model their values in action in their personal work behaviors, decision-making, contribution, and interpersonal interaction. Organizational values help each person establish priorities in their daily work life. Values guide every decision that is made once the organization has cooperatively created the values and the value statements. Rewards and recognition within the organization are structured to recognize those people whose work embodies the values the organization embraced. Organizational goals are grounded in the identified values. Adoption of the values and the behaviors that result is recognized in regular performance feedback. People hire and promote individuals whose outlook and actions are congruent with the values. Only the active participation of all members of the organization will ensure a truly organization-wide, value-based, shared culture. Values are the embodiment of what an organization stands for, and should be the basis for the behavior of its members. However, what if members of the organization do not share and have

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not internalized the organization's values? Obviously, disconnection between individual and organizationalvalues will be dysfunctional. Why should business be value-ridden? To protect its own economic interests on a long term basis. To gain public support and trust. To meet stakeholder expectations. To prevent harm to the public. To command loyalty from its employees. To protect itself from unethical employees. To enhance reputation and public image. To attract competent employees and stakeholders. To generate strong team work within the organization. To help improve society. It will bring in fairness and equal rights and respect for human dignity; laws and regulations came to be institutionalized. That has contributed in a great deal in the production of goods and provision of services. Ethical Values Indian Insights A broad definition of values, derived from an insight into ancient Indias psychophilosophical wisdom literature is: Values are states of feelings/emotions that underpin the content of a choice/decision and determine the manner of using the intellect/reason for justifying and implementing that choice/decision. There are a few characteristically Indian values useful for managers. It does not mean that these values are absolutely foreign to others. It means only that these values are held in high esteem in India. 1. 2. 3. 4. 5. 6. Synthesis rather than analysis. Emphasis on duties than on rights. Self control rather than control from outside. Focus on spiritual gains than on material rewards. Flexibility of order. Attention to team achievement not individual gains.
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7. Harmonious life with nature than dominating it. 8. Spirit of sacrifice, than fighting.xi Values in the Context of Global Changes In fact, the global identifying in value is not only a result of western infiltration, but a basic demand of human globalization as well. The world today is no more a confined and isolated one like a thousand years ago, but a world in which people relate to and influence each other. Actions of any individual and any group, especially actions of a state, which is a special group, could make active or passive effect on other individuals and groups. In this situation, if there is no universally accepted and generally conducted rules, humans being may get into a widespread warfare. Moreover, a conflict may take place between human and nature, and the nature may become human graveyard instead of homeland. In order to live a better life, people all over the world must abide by some universally accepted and generally conducted rules, otherwise human being will be ruined in the struggle between each other and in the barbaric plundering from nature. Therefore, human value identification is unavoidable for human development, and it corresponds to the globalization or cosmopolitanism. To select what value as the base and direction depends on human available choices. If western value is the most advanced value system available, it is certainly selected by people all over the world. First, economic laws can be misinterpreted and misused by man. Therefore, moral values and moral behavior are essential for the functioning of the market. Adam Smith insisted on the role of moral sentiments. The churches believe that they are one agent in the foundation and communication of moral values. There are many pressing contemporary issues which make the concerns of global ethics very relevant. For example, female genital mutilation is widely condemned as a violation of internationally protected human rights. However, it continues to be an integral part of many African, Asian, and Middle Eastern cultures. More generally, equality for women is an internationally proclaimed human right and is set forth in many treaties, including the Convention to Eliminate Discrimination against Women, which prohibits distinctions made on the basis of gender. However, many cultures continue to deny women equal rights. Women are not even permitted to leave the house unless in the company of a male relative. There are countries where female infanticide is practiced; in certain regions, unmarried women suspected of bringing dishonor to their families by losing their virginity are put to death. In some countries, all religious practices have been forbidden. Individuals can be punished simply for holding and
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manifesting their religious beliefs. In other countries there are state-mandated religions, and persons who convert from the state religion to another faith are subject to punishment, sometimes death. Some countries punish criminal offenders by stoning them to death, or amputating their limbs. These practices are considered ethically quite legitimate in those places on the basis of certain culturally specific ethical norms. For others, they seem gross violation of core ethical values. (my own article)
Relevance of Values in Business Management 1. Ethical evaluation is part and parcel of everyday business activity or managerial choices. Most business activities, choices, decisions and judgments cannot but be performed without ethical judgements: hiring and firing employees; choosing suppliers, setting prices, establishing objectives, determining dividends, setting schedules and establishing contracts, etc. are done within an ethical framework. In addition to these, there will be occasional, spectacular events such as corruption or frauds whose morality is rather obvious. One may also confront ethical dilemmas where it would not be easy to determine the best course of action. In a dilemma, one may find him/herself caught between the horns of apparently two incompatible objectives. For example, the demand to improve quality and lower the cost of production simultaneously; concern for better productivity and simultaneous concern for personnel pose dilemmas. Introduction of a new technology in a production unit naturally turns part of the existing staff superfluous. How to deal with this situation satisfying the economic performance of the company but without sacrificing the companys social responsibility to its staff?xi 2. Ethics is basically meant to protect the vulnerable. In business there are a number of vulnerable areas or relations of power-imbalances. For example, the relation between the buyers and sellers, employers and employees, business people and the community as a whole usually is not perfectly balanced. Business organizations themselves confront vulnerable situation; for they cannot avoid dealing with power structures. Often one of the parties would be vulnerable to exploitation or violation of rights. In business people interact with one another not as family members, friends or neighbours, but as buyers and sellers, employees and employers. This is a relationship modulated by formal terms which include bargaining, persuasion, marketing tactics, competition, etc. Nothing personal plays its role usually. So special care is due in business to protect the rights of all, especially the vulnerable parties. The rules that ought to govern these kinds of economic relations are not just legal or political, but ethical also. Because with legal and political rules alone one cannot ensure fine business relations. For some aspects of a business relation, for example the relation between a manager and his/her secretary may not be subjected to legal restrictions. 3. Business is affected by extra-economic concerns also. It is not driven by economic motives alone, but also by social, political, cultural, technological changes and the corresponding changes in the outlook of business stakeholders. For business is only a subsystem within the larger social system. If business is affected by extra-economic concerns, the relation between the economic goals of business and the social performance of business could open many ethical questions. For trying to maximise economic gains may conflict with the social performance of business. Business ethics makes helps one to make a trade-off between these two goals.

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4. The claims of shareholders make ethics vital to business conduct. Shareholders mind also the ethics of the companies that they own. They take their investment decisions considering the companies ethical stance to various issues, not merely their financial performance. For example, what is the nature of relationship of a company to a particular group of stakeholders? What are the rights of the stakeholders? How far is the company responsible to them? How far should the managers act for the interest of the stakeholders and safeguard self-interests, their pay, packages and termination in merger or acquisition of companies? What about the employees who lose their job due to the merger of companies? How far is a firm responsible for job reassignment or retraining for alternative assignments?xi 5. A firms relation to its employees opens a large vista for ethical reflections. One of the major issues that employees face is discrimination based on sex, race, nationality, religion, age, etc., in hiring, pay, promotion and termination. There can be reverse discrimination against majority groups or against groups left unprotected by law. In certain situations sexual discrimination may assume the form of sexual harassment which then becomes a graver issue. Employees right to privacy also poses many ethical problems.It is argued that thattesting for drug use tends to violate employees' right to privacy. On the one hand, the employer has to ensure a drug-free workplace, lest to sacrifice high quality products, among other reasons. On the other hand, drug testing may appear to destroy an employees right to privacy. Employees political activities, life style, sexual preferences, etc., may become areas where employees privacy is challenged, especially if such things are somehow related to ones job performance. One may ask further questions in this context such as, can the employer regulate the hairstyle of the employee? How far can s/he control the dress codes of the employees? Company laws and customs may help a manager to judge a situation like this. But the justification for the regulations, which a company takes, could be debated. 6. The range of business ethics covers employer-employee relationship. Issues in this realm include employers relation to union organisations of the employees, whistle blowing, large-scale lay offs, and plant-closing situations. It can be debated ethically whether the employees can have a say with the management in decisions that affect their jobs. 7. Relationship of a company to its customers offers prospects for ethical discussions. Product liability is one of the issues that surfaces in this realm. Product liability means a companys responsibility for any harm caused by its product or services. It is true that there are laws to safeguard the interests of the customers. But the laws need not help them in all situations. There is also an implicit understanding in business transactions, usually expressed in the Latin adage: caveat emptor. It means that let the buyer beware. The purchaser has to beware of the quality of the product unless they cover the producers warranty or guarantee. However, it cannot function as the sole guiding principle in business transactions. Hence, the relation of a firm to its customers is of paramount importance. 8. Business advertising and promotional tactics raise ethical concerns. Nobody can sensibly underplay the role of advertisements for successful marketing. But the field of advertisements do witness unethical practices such as fraudulent, dishonest, sexually explicit and racially offensive advertising. Advertisements may target vulnerable people such as children who lack experience and maturity to evaluate a product. Advertisements for items like cigarettes, alcoholic beverages and handguns, etc. raise ethical concerns as to their propriety. The marketing tactics used by a firm also may come under fire: Nestls infant formula was criticised and opposed in Africa for indiscriminate free sampling, dressing the 231

sales force in nurses uniform, etc. These were alleged as means to exploit vulnerable people. Subsequent its products were rejected for eight years.xi 9. The relation between business and environmental destruction raises many ethical debates. It is widely accepted that there is a strong nexus between business and environmental hazards. Obviously, the production, transportation and use of items such as automobiles, nuclear energy, chemicals and electronic gadgets, including computers lead to the pollution of air, water and the land. Ethical deliberations have to inform companies about the responsibility that they must bear for the clean up of polluted water and dump sites. Reviewing the existing scenario business ethics has to address question such as should a firm redesign its products to convert them nature-friendly? What precautions should be taken when using nonrenewable energy sources? What about the responsibility of business community towards forestry, mining, protection of endangered species, animal rights? Can they indiscriminately use laboratory animals to test the safety of drugs and cosmetic products?xi 10. Business done in a globalised world cause ethical issues of transnational relevance. When multinational companies engage in business, it may generate unique ethical issues. A firm will have to be sensitive to the host countrys existing customs, practices and values. At the same time, following the practice of the host country might contradict the accepted ethical codes of that firm. For example, in some countries, giving and taking bribes or commissions may be a normal part of the deal. But the same practice may be blatantly unethical in their home country.xi Can a company remain blind to the human rights violation that takes place in the host-country and take advantage of it? Child labour might be rather normal in a host country. Should a company accept the same practice or avoid all child labourers from its facilities? Avoiding child labour may amount to denying the only available source of income to some poor families. Is a multinational company bound to contribute to the development of the poor host country? What about the morality of the legal exportation of toxic chemicals and drugs banned in ones home country to poor countries? 11. The increasing use of technology adds a relatively new area for ethical inquiry in business. Information technology (hereafter abbreviated as IT) and genetically modified food deserve special mention in this regard. IT is not a single technology; it is a combination of four technologies, namely, tools to access information, telecommunication linkages (networks), information processing hardware and software, and storage media.xi The use of IT unleashes questions of privacy and confidentiality in business, among other issues. The business of genetically modified food opens many ethical questions including whether a firm can introduce a terminator seed that would make crops sterile, forcing farmers to buy fresh seed every year. It has to be discussed whether any business firm can patent genetically modified plants, animals and bacteria. The business of genetic engineering involves a reduction of biodiversity as well as abuse of international political power, often widening the gap between the developed and developing countries.

Module 4 Total Quality Management

Total quality management (hereafter abbreviated as TQM) is an approach to the art of management that originated in Japanese industry in the 1950s. It steadily gained popularity in the West since the early 1980s. At its core, Total Quality Management (TQM) is a management approach to long-term 232

success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services and the culture in which they work. The methods for implementing this approach come from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran. The term Total Quality Management has lost favor in the United States in recent years: Quality management is commonly substituted. Total Quality Management, however, is still used extensively in Europe. TQM refers to a philosophy that makes quality the driving force behind all managerial endeavors such as leadership, design, planning, and improvement initiatives. The expression total quality conveys the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs. This organizational culture requires quality in all aspects of the companys operations right from the first time operations. TQM could be adapted to government and social service organizations also, beside business endeavours, if sufficient modifications are made.xiTQM is not merely a technique; rather it has become a philosophy of excellence adopted by business firms. In that level, TQM becomes an ethical tool which ensures organizational and corporate excellence. Dr. W. Edwards Deming, American statistician, had guided the Japanese industry to recover itself after World War II, using statistical methods to improve the quality of products. The Japanese industry listened to Deming. But American industry followed the traditional management methods which, however, were unchallenged so long as there was little competition. Deming urged industrial leaders in Japan to find out what their customers wanted. It must be complemented by improving the design and production process until the quality of their product becomes superb. He initiated a new style of management that shifted the focus from profits to quality. According to him, employees could learn how to monitor, control and continually improve their work processes and systems. It required the application of a scientific approach to management. Deming reasoned that products and services were improved by improving the way the work gets done (the methods) instead of concentrating on the net results (the products).xi According to Deming, the traditional model of management is guided by objectives. Its functional success is dependent on a series of commands which help to convert objectives into work standards. In this method, the performance of employees is guided and evaluated in terms of numerical goals. As a result, workers, managers and supervisors focus on protecting their job
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by fulfilling the assigned tasks. In other words, to look good they overlook the concern for customers or the long-term success of the organization. Employees working madly to meet quotas lose sight of the larger purpose of work. For instance, it may happen that the salesmen promote business to such an extent that production cannot keep pace with it. In TQM the roles of workers and managers have to be redefined. A managers role is to enable employees to do the best job possible by foreseeing and eliminating obstructive elements on the way. Workers learn to apply the expertise they have gained working with processes and customers on a daily basis. Making use of the wisdom of Deming the Japanese industry thrived competitively within four years. And later the US industry also came to adopt and make use of TQM extensively.

What is Distinctive about TQM?

1. TQM is primarily customer-oriented. It means that greater concentration is laid on customer satisfaction with a focus on understanding customers needs and expectations. To serve this end, all members of a business organization strive hard systematically to improve the organization. All employees offer continued cooperation in this attempt across functional and hierarchical boundaries. 2. TQM practically means a drastic change in an organizations culture. It implies that TQM, in order to be successful, demands changes in the norms, values, and belief systems of an organization. It calls for transformation in the decision making processes and power bases. Change in the technology of a firm will do no good, unless decision-making bodies choose to undergo changes.xi And the expected changes are large-scale, long term and integral. So the results of TQM can be ensured only when radical changes take place in the whole culture, including the way of doing work in an organization.xi 3. TQM demands a novel management style. TQM at first glance may appear as a change in an organizations technology and its way of doing work. But it has much to do with the management aspect of business. For instance, in the service sector, TQM affects the way clients are processed, how the service delivery methods are applied to them and how ancillary organizational processes such as paperwork, procurement processes, and other procedures are managed. A core concept in implementing TQM is Demings 14 points, a set of management practices to help companies increase their quality and productivity:
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1. Create constancy of purpose for improving products and services. 2. Adopt the new philosophy. 3. Cease dependence on inspection to achieve quality. 4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier. 5. Improve constantly and forever every process for planning, production and service. 6. Institute training on the job. 7. Adopt and institute leadership. 8. Drive out fear. 9. Break down barriers between staff areas. 10. Eliminate slogans, exhortations and targets for the workforce. 11. Eliminate numerical quotas for the workforce and numerical goals for management. 12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system. 13. Institute a vigorous program of education and self-improvement for everyone. 14. Put everybody in the company to work accomplishing the transformation. Nine Wastes To Be Eliminated 1. Work-in-process. Stocking items not immediately needed 2. Quality. Producing defective products. 3. Facilities. Having idle machinery and breakdowns, taking too long for setup. 4. Expenses. Overinvesting for required output. 5. Indirect labor. Excess personnel due to bad indirect labor system. 6. Talent. Employing people for jobs that can be mechanized or assigned to less skilled people. 7. Motion. Not working according to the best work standards. 8. Product Design. Producing products with more functions than necessary.

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9. New-product run-up. Making a slow start in stabilizing the production of a new product.

TQM and the Ethics of Management 1. If properly understood and applied, TQM can serve as a useful framework to include ethical values in decision making procedures of business corporations. It offers a way to improve the performance in ethical matters and provides a criterion for evaluating the quality of the organization in its strategies, policies and operations. Because as we said already, TQM incorporates the concepts of product quality, process control, quality assurance and quality improvement. Besides it takes into consideration the performance of the firm on the whole, during the entire process and through the entire organization including also suppliers and cooperators. Such compressive patterns of business operations will necessary include an ethical framework. This claim will be substantiated subsequently. 2. TQM is built on the foundations of ethics, more precisely of integrity and trust. TQM fosters openness, fairness and sincerity and allows involvement by everyone. These three elements are interconnected, though each element offers something distinctive to the perfection of TQM. Integrity implies honesty, morals, values, fairness, and adherence to the facts and sincerity. Customers expect and deserve to receive integrity in business dealings. TQM will fail if integrity is lacking in business transactions. Trust is closely associated with integrity. Devoid of trust in business activities, TQM will not survive. Trust operates in a firm very constructively: it fosters full participation of all members; it invites empowerment of the employees; it encourages commitment; it allows decision making at appropriate levels in the organization; it fosters individual risk-taking for continuous improvement and it helps employees to focus on improvement of process. In these ways, trust builds the cooperative environment essential for TQM.xi 3. As noted already, the fundamental feature of TQM is that it leads a firm to excellence through quality products, services and processes. Quality in TQM cannot be restricted to products and services. What counts most important is the quality of utility or value for customers. It is achieved through various ways such as intense human resource development, the use of Quality Circles, etc.xiIn this sense, ensuring quality is the prime concern of all in a business firm.xi
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Given the top most value to entailing overall quality, TQM is necessarily bound up with ethical practices in a firm. Because superior quality goods shall be the outcome of quality management, workforce, organizational practice, etc. Without ensuring these in advance, one cannot expect to have quality goods. Naturally, this requires teamwork and team spirit or a favorable organizational environment. When any of these factors fail, it will affect the quality of the net product and the firm in the long run. It is in this wide sense that quality management is qualified as total. High quality can never be ensured with a band of dissatisfied and disoriented employees. A firm needs a total revamping of its workforce to the single aim. The whole firm will have to learn about quality of life, how it can be entailed by job satisfaction. All these are closely related to ethical practices. 4. We have already explained that TQM is customer-oriented in the sense that its ultimate goal is to satisfy the customer. However, there is an inherent problem in this apparently clear goal. That is, the expectations and needs of the customer may not always be clearly expressed or well defined. It could be very difficult to measure customer expectations. They are very much subjective. Japanese author YojiAkao addresses this issue by distinguishing two basic classes of customer wants, as follows. First, what customers say they want. What is most important is to explore the meaning of what customers say with the regard to the intended use of the product or service. Neglecting to explore how the customer intends to use the product or service can lead to poor designs or mistaken decisions. Secondly, pay attention to the customers expected quality of goods. The greatest problem is that customers do not always verbalize their expectations in the most important points, rather they take them for granted. For example, the expectation that a product must be safe. Customers will be thoroughly dissatisfied if the product or service does not meet these assumed expectations. Once the expectations are built into the product customers will hardly notice it. These expectations are so integral to the nature of the product that they take them for granted. Customer satisfaction in the service sector is all the more complicated to measure. However, one may suggest three criteria to measure them, as follows. 1. How a customer compares the expectations s/he had about the service before receiving it with the actual experience s/he has after receiving the service.
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2. Evaluation of quality both of the service process and service result. For example, in the restaurant business, the quality of the treatment of customers by waiters can diminish or enhance the quality and presentation of the food. 3. The promptness and accessibility of regular service and the level at which problems are handled. Obviously, neglecting the needs of the employees for respectful treatment, supplies, and resources will reduce the quality of service. Indian Insights to Total Quality Management Indian perception of total quality management begins with a focus on mind. Sashkin and Kiser have defined TQM as Creating an organizational culture committed tothe continuous improvement of skills, teamwork, processes, product and service quality,and customer satisfaction. TQM stresses three principles: customer satisfaction, employeeinvolvement, and continuous improvements in quality, which some refer to as the qualitytrilogy. TQM is also said to be based on four fundamental commitments: 1. Commitment to the customers total satisfaction 2. Commitment to understanding and improving the organizations processes 3. Commitment to employee improvement 4. Commitment to data-based decision making Shared vision and values provide the foundation for making these commitments. Becausethe four commitments often require behaviour that is not customary to managers, in mostorganizations, unusual steps must be taken to ensure that workers and customers do notperceive the commitments as hollow promises.It is pertinent to note here that it is values and the value system that gives real meaning toTQM efforts. It provides the substratum or a solid foundation for TQM and elevating thecapacity of people and organizations to produce extraordinary results on the basis ofavailable material resources. In many ways, it teaches a worker to control the temptation ofjumping into who is wrong? rather than concentrate on what is wrong?, which is a coreidea of TQM. Indian focus on total quality also mentions certain personal aspects of human resources. For instance, they must focus on human happiness. Material progress alone should not be the goal of doing business. Practically it implies that human beings cannot be managed merely as workers or money makers or just as another of production factors.

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Make management a personal act, rather than an indirect technology driven activity. Humans cannot be treated as mere means for material ends. It can cause heavy fragmentation not only in the work field but also in personal life of the workers. Technology in its turn would remain antihuman and anti-nature. Very often contemporary firms do not follow the impact of the professional life on their personal life. Many are reported to suffer from psychic disorders and personal disorientation. Transcultural Values Globalization: Globalization affects a managers people skills in lot many ways. At the managerial level you have to work with people who are born and raised in different cultures. What is right according to you may be is wrong according to them. So managers have to become capable of working with people from different Cultures and because values differ across cultures, an understanding of these differencesshould be helpful in explaining and predicting behavior of employees from different countries Trans-cultural values are those beliefs that people across the world are associating themselves with. These beliefs have come in various people because of social changes brought by globalization, increased mobility and ethnic intermingling. As you work with people from multicultural backgrounds, you will find that these differences raise barriers to trans-cultural communication. Fear: Each person perceives the other person as different and, therefore, dangerous. Usually as people become better acquainted with each other, the fear gradually dissipates, only to be replaced by dislike. Dislike: Group members have a tendency to dislike people who behave or communicatedifferently from what is considered the norm in that culture or group. For example, aworking class black person might dislike a middleclass whiteperson because white people tend to be less vocal and expressive than many black people, and thus appear insincere and weak. Distrust: People from different cultures are often suspicious of each others actions and motives because they lack information. Unfortunately, unless there is pressure to change their attitudes, some people never do progress beyond fear, dislike, and distrust to the next stage of acceptance. Acceptance: Usually if two people from different cultures share enough good experiences over a period of time, they will begin to accept each other rather than resent each other. Respect: If individuals from diverse cultures are open minded, they would allow themselves to see and admire qualities in one another.

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Trust: Once people from diverse cultures have spent enough quality time together, they usually are able to trust each other. Like: For people to like each other, they must share many things in common. To reach this final stage, individuals from diverse cultures must be able to concentrate on the human qualities that bind people together, rather than the differences that pull people apart. Racism Individual racism: Individuals are discriminated against because of their visible biological characteristics; for example, black skin or the epicanthic fold of the eyelid in Asians. Cultural racism: An individual or institution claims that its cultural heritage is superior to that of other individuals or institutions. Institutional racism: Institutions (universities, businesses, hospitals) manipulate or tolerate policies that unfairly restrict the opportunities of certain races, cultures, or groups. One of the flaws in the profession is an unwillingness to recognize that racism is endemic. Th is unwillingness results in a lack of discussion about racism and leads to responses thatexacerbate the problem. Bias and Ethnocentrism Whatever their cultural background, people have a tendency to be biased toward their own cultural values, and to feel that their values are right and the values of others are wrong or not as good. Many people are surprised to discover that the values and actions people so admire in their own culture may look them upon with suspicion from other cultures, which are equally biased. The belief that ones own culture or traditions are better than those of other cultures is called ethnocentrism. The person who is ethnocentric tends to antagonize and alienate people from other cultures. Cultural biases can distort your perception of other peoples values and behavior, and thus damage your ability to communicate. To overcome your biases, you must first acknowledge that they exist. Stereotyping A cultural stereotype is the unsubstantiated assumption that all people of a certain racial and ethnic group are alike. For example: All sindhis are businessmen. A son of a doctor is a doctor. Stereotyping is particularly destructive when negative traits or characteristics are imposed on all members of a cultural group.

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Ritualistic Behavior A ritual is a set procedure for performing a task. Every culture has its own ways to perform a task. It might happen that different people may do same things differently. For example we can see that management style of U.S.A differs from Indianmanagement style, this happens just because of rituals taughtto Indians by their family members and the society. Language Barriers Language provides the tools (words) that allow people to express their thoughts and feelings. Thus, language barriers present a grave threat to transcultural communication among different individuals. Conflicting Perceptions and Expectations When people from different cultures try to communicate, their best efforts may be thwarted by misunderstandings and even serious conflicts. Misunderstandings due to cultural differencescommonly arise in situations involving food and drink. To prevent conflicts and misunderstandings, make sure that the message you send is the same message that the receiver receives. When there is a language barrier, you will need to work closely with an interpreter. Module 5 Unity In Diversity

"A man who believes in himself and not circumstances is the real winner SWAMI VIVEKANANDA

Please go through below mentioned facts, which will make you proud to be 1. Who is theco-founder of Sun Microsystems? Mr. Vinod Khosla 2. Who is thecreator of Pentium chip(90% of the today's computers run on it)? Mr. Vinod Dham 3. Who is thethird richest man on the world?
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According to the latest report on Fortune Magazine, He is Premji who is the CEO of Wipro Industries. The Sultan of Bruneiis at 6th position now. 4. Who is thefounder and creator of Hotmail(World's No. 1 web based E-Mail program)? Mr. Sabeer Bhatia later on sold to Microsoft. 5. Who is the president of AT & T-Bell Labs (AT & T-Bell Labs is the creator of program languages such as C, C++, UNIX to name a few)? Mr. Arun Netravalli 6. Who is theGM of Hewlett Packard? Mr. Rajiv Gupta 7. Who is the newMTD(Microsoft Testing Director) of Windows 2000,responsible to iron out all initial problems? Mr. Sanjay Tejwrika 8. Who are theChief Executives of Citibank, Mckensey & Standard Charted? Mr. Victor Menezes, Mr. Rajat Gupta and Mr. Rana Talwar

We Indians are the wealthiest among all ethnic groups in America, even faring better than the whites and the natives: There are 3.22 Millionsof INDIANs in USA (1.5 % of population). YET, 38% of doctors in USA are INDIANs. 12% scientists in USAare INDIANs. 36% ofNASAscientists are INDIANs. 34% of Microsoftemployees are INDIANs. 28% of IBMemployees are INDIANs. 17% of INTELscientists are INDIANs. 13% of XEROXemployees are INDIANs.

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Quotes about India: "We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made" Albert Einstein.

"India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend and the great grand mother of tradition" Mark Twain.

"If there is one place on the face of earth where all dreams of living men have found a home from the very earliest days when man began the dream of existence, it is India" French scholar Romain Rolland

These facts were recently published in a German Magazine, which deals with WORLD HISTORY FACTS ABOUT INDIA India never invaded any country in her last 1000 years of history. India invented the Number system. Aryabhatta invented zero. The world's first university was established in Takshilain 700 BC. More than 10500 students from all over the world studied more than 60 subjects. TheUniversityof Nalanda built in the 4th century BC was one of the greatest achievements of ancient India in the field of education. According to the Forbes magazine, Sanskrit is the most suitable languagefor computer software. Ayurvedais the earliest school of medicine known to humans. The art of navigationwas born in the river Sindh 5000 years ago. The very word "Navigation"is derived from the Sanskrit word NAVGATIH. Budhayana first calculated the value of pi,and he explained the concept of what is now known as the Pythagorean Theorem. British scholars have last year (1999) officially published that Budhayan's worksdates to the 6th Century, which is long before the European mathematicians. Algebra, Trigonometry and Calculus came from India. Quadratic Equations were by Sridharacharya in the 11th Century. The largest numbers the Greeks and the Romans used were 106 whereas Indians used numbers as big as 1053. According to the Gemological Institute of America, up until 1896, India was the only source of diamonds to the world.
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 USA based IEEE has proved what has been a century-old suspicion amongst academics that the pioneer of wireless communication was Professor Jagdish Bose and not Marconi. The earliest reservoir and dam for irrigation was built in Saurashtra. Chess was invented in India. Sushruta is the father of surgery. 2600 years ago he and health scientists of his time conducted surgeries like cesareans, cataract, fractures and urinary stones. Usage of anesthesiawas well known in ancient India. When many cultures in the world were only nomadic forest dwellers over 5000 years ago, Indians established Harappan culturein Sindhu Valley (Indus Valley Civilization). The place value system, the decimal system was developed in India in 100 BC. India conquered and dominated China culturally for 20 centuries without ever having to send a single soldier across her border" Hu Shih(former Chinese Ambassador to USA) If we don't see even a glimpse of that great India in the India that we see today, it clearly means that we are not working up to our potential, and that if we do, we could once again be an ever shining and inspiring country setting a bright path for rest of the world to follow. You may further refer the assignment book (the first two assignments on IEV) for probable questions and answers from Module 5.

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