CLUE WORDS /KEY WORDS FOR CRACKING THE CASE STUDIES

CLUE WORDS /KEY WORDS FOR CRACKING THE CASE STUDIES

DECENTRALISATION:

selective dispersal of authority at various levels (more than 1 levels of management).

It’s an optional and conscious policy decision of the management. 

DELEGATION: 

Transferring of authority and responsibility at only one level.

It is compulsory to reduce the burden of the superior.

Divisional structure: 

• Diversified products 

• Separate divisions

• Product specialisation 

Functional structure: 

• Diversified activity 

• Separate departments 

• Occupational specialisation 

Financial planning:

• Financial blue print of an organisation’s future operations. 

• FP ensures enough fund are available at right time.

• See to the excess fund is not raised because it will add to the cost.

Financial decisions:

• Solution to 3 major issues 

Investment decisions:

• Decision related to how the firm’s fund is invested   in different assets. 

• A long-term investment decision is called capital budgeting.

Capital budgeting:

• It affects the size of assets, profitability and competitiveness of a business.

• It is irreversible in nature 

• It involves huge cost 

Short term investment:

• This will affect the liquidity as well as profitability of a business.

• It is also called as working capital requirement.

• Concerned with decisions about the levels of cash.

• Inventory management, receivables management are essential ingredients of sound working capital.

Financing decision:

• This decision is about the quantum of finance to be raised from various long-term sources.

• It involves identification of various available sources.

• The main sources of funds for a firm are shareholdersfunds and borrowed funds.

• Fund to be raised from borrowed form and equity.

Dividend decisions:

• Portion of profit which is distributed to shareholders.

• Distribution/ appropriation of profit.

• How much to be distributed how much to be retained.

Capital structure:

• Mix between owner’s fund and borrowed find 

• Proportion of the use of different sources in raising funds.

Financial market:

• A financial market is a market for the creation and exchange of financial assets.

Functions of financial market: 

• Mobilization of savings and channelising them into the most productive uses:

Transfer of savings of household to business firms 

• Facilitate price discovery:

Price of financial assets determined through demand and supply.

• Provide liquidity to financial assets:

Shares, debentures easily converted into cash.

• Reduce the cost of transaction:

Common platform for buyers and sellers.

Saving time, money and effort of buyers and sellers.

FUNCTIONS OF MARKETING:

• Gathering and analysing market information:

Market research about customers and target market.​

Finding out the needs and wants of customers.

• Market Planning:

Setting a sales objective. (sales forecast -10 % )

Plans for increasing production, sales and promotion of the product 

Finding out the course of action to achieve the marketing objective.

• Product designing and development:

Decision related to 

• Quality, shape, size, technology, design of the product and packing 

Standardisation and grading:

• Producing goods at a predetermined standard.

• To achieve uniformity and consistency in products.

• Grading refers to classifying the product into different groups on the basis of quality 

• shape and size.

Packaging and labelling:

• Process of designing the package or container. -packaging 

• Process of designing the wrapper and concerned with information to be put on the label. 

Branding: 

Giving a brand name to differentiate a product to get loyal customer and promoting a product.

Customer support service:

• After sales service, procuring credit service handling customer complaints and customer information.

Pricing of products:

• Determining price for a product.

Promotion:

• Providing information about the firm’s product and its features, uses and price.

Physical distribution:   

Covers all activities required to physically move gods from manufacturer to the customer ​

It includes transportation, warehousing, material handling and inventory control.

Order processing:

Speedy processing of order 

Delay in order processing would result in customer dissatisfaction with the danger of loss of business and goodwill.

Transportation: 

Place utility 

Warehousing:

Time utility 

Personal selling:

“You don’t close a sale; you open a relationship if you want to build a long-term successful enterprise.

“Most people think selling is the same as ‘talking’. But the most effective sales people know that listening is the most important part of their job.  

 

Trading procedure:

Step :1 selection of a broker 

Pan (permanent account number) 

Client registration form *

Step :2 opening a demat account 

Demat account: holding shares in electronic form.

Step 3: Placing the order 

Order conformation slip *

Step: 4 connecting with the main stock exchange 

Step: 5 Executing the order 

Trade confirmation slip *

Contract note: (T- DAY)

Legal document in case of default 

It has the details of trade time, broker details, shares details UNIQUE ORDER CODE**.

PAY-IN -DAY (T+1 DAY):

Money transferred from client -broker -stock exchange 

PAY -OUT- DAY (T+2 DAY) :

Shares transferred from stock exchange -broker -demat account of the client.

 

TRANING: 

“If you wish to plan for a year, sow seeds.

If you wish to plan for 10 years plant trees.

If you wish to plan for a lifetime develop people” – concept is training and development.

Training:

Enhancement of a specific skill/ability.

Shor term process.

Development: 

On -going process

Growth of an individual in all respects.

It includes training.

Vestibule training:

Handling Sophisticated machinery/process

Dummy/duplicate models

Apprenticeship training:

Training will be given under master expert 

Stipend 

Staffing process:

Estimating manpower requirements:

How many persons we need but also of what type.

Workload analysis: 

Would enable an assessment of the number and types of human resources for the performance of various jobs and accomplishment of organisational objectives 

Workforce analysis: 

Number and type available.

 

Recruitment:

Process of searching prospective employees and stimulating them to apply for jobs in the organisation.

The essential objective is to create a pool of the prospective job candidates.

Positive process.

Selection: 

Process of choosing from among the pool of the prospective job candidates developed at the stage of recruitment. 

Enhances self-esteem.

Involves teste and interviews.

Negative process  

Placement and orientation:

Orientation: Process of familiarising the employees with the rules and policies of the organisation.

Placement: refers to the employee occupying the position or post for which the person has been selected.

 

Training and development:

“What people seek is not simply for job but a career. thebest way to provide such an opportunity is to facilitate employee learning.”

If employee motivation is high, their competencies are strengthened they perform better thus contribute more to organisational effectiveness and efficiency.

Performance appraisal:

Evaluating an employee’s current and or past performance as against certain predetermined standards.

It includes defining the job, appraising performance and providing feedback.

Promotion and career planning:

Promotion is an integral part of people’s career.

Managers need to design activities to serve employees long term interest also.

Encourage Employees to grow and realise their full potential.

Being place in positions of increased responsibility.

Compensation:

Price of job needs to be determined.

It refers to all forms of pay or rewards going to employees. 

Motivation: 

Stimulating people to take up work voluntarily.

Leadership:

Is the process of influencing the behaviour of people by making them strive voluntarily towards achievement of organisational goals.

Autocratic leader:

Give orders

Expects his subordinates to obey 

Dogmatic 

One -way communication 

Effective in getting productivity 

Reward or punish both can be given depending upon the result.

Democratic leader: 

Develop action plans in consultation with his subordinates.

Encourage subordinates to participate in decision -making.

Support subordinates to perform their duties and accomplish organisational objectives.

Laissez faire or free -rein leadership:

Does not believe in the use of power unless it is absolutely essential.

High degree of independence to formulate their own objectives.

Allow group members to work on their own tasks resolving issues themselves.

Support and supply them required information.

  

Coordination: 

Binding, integrating, unifying and synchronising group effort/individual effort.

“ this provides the requisite amount ,quality, timing and sequence of efforts which ensures that planned objectives are achieved with a minimum of conflict.”

Deviation: difference between actual performance and pre-set standard.

Importance of business environment: 

It enables the firm to identify opportunities and getting the first mover advantage:

Opportunity is positive external trend or changes that will help the firm to improve its performance.

Firm first to exploit the opportunity instead of losing them to competitors. opportunity.

It helps the firm to identify the threats and early warning signals:

Threats refers to the external environment trends and changes that will hinder a firm’s performance.

Entry of a new competitor.

It helps in tapping useful resources:

Business assembles various resources (finance, physical and human resource) from its environment.

Enterprise designs policies that allow it to get the resources that it needs so that it can convert that resources into outputs.

It helps in coping with rapid changes:

• Turbulent (fluctuating, not stable) market condition.

• Less brand loyalty

• Division and sub-divisions (fragmented)

• More demanding customers 

• Rapid changes in technology.

• Intense global competition 

It helps in assisting in planning and policy formulation:

Deciding the course of action, training guidelines for decision making to be taken due to rapid changes in business environment.

It helps in improving performance:

Makes a difference in their performance compare to their competitors 

Features of business environment 

 

Totality of external forces:

Aggregation of political, economic, social, technological and legal.

Specific and general forces: 

Specific includes suppliers, customers, investors, competitors.

General force -includes political. social, economic, technological and legal

Interrelatedness: 

Different elements interrelated.

Because of changes in one element led to changes in other elements which may positively or negatively affects the business. ​

Dynamic nature:

New entry of competition 

Technological change 

Change/shift in preference of the consumers.

Uncertainty:

• Changes which are difficult to predict 

• Especially happens in technological and fashion industry.

Complexity:

Business environment consists of interrelated forces which arise from different dimensions which may affect the business simultaneously but difficult to comprehend/understand. 

It is difficult to know the extent of the relative impact of all dimensions.

Relativity:   

Dimensions differs from country to country, place to place.​

 

Current assets:                                        current liability 

*Bills receivables                                *creditors 

*Cash in hand                                      * bills payable 

*Cash at bank                                      *outstanding expense   

*Inventory 

*Sundry debtors

*Prepaid expense  

FLOATATION COST:

*Underwriting commission 

*Application form 

*Advertising 

Types of plans: 

How to identify different types of plans? Look for these words in the case study.

Objectives:

• Defined as ends which the management seeks to achieve by its operations 

• End result of activities.

• What you would like to achieve.

• End point of planning /guide for planning 

• Set by top management 

• Define future state of affairs which the organisation strives to realise 

• Measured in quantitative terms 

• Ex : organisation have an objective of increasing sales by 10%

• Objectives will always be expressed in numbers

Strategy:

• Broad contours 

• Plan Comprehensive for accomplishing objectives. 

• Strategies take the course of action taken to form the identity against the competitors.

• Future decisions defining the organisation direction and scope in the long run 

• Determining long term objectives.

• Adopting particular course of action 

• Allocating resources necessary to achieve objectives 

• Who are the customers?

• What is the demand for the product 

• Which channel of distribution to use 

•   What is the pricing policy

• How do we advertise the product

Policy:

• General statement that guide thinking or channelise energies towards a particular direction.

• It provides a basis for interpreting (giving meaning) to strategy.

• Guide to managerial decisions and actions in the implementation of strategy.

• It is the general response to a particular problem or situation.

• It gives broad parameters within which a manager may function.

• Ex: pricing policy, credit policy, purchase policy  

 

Procedure:

• Routine steps on how to carry out activities.*

• It details how a work to be performed.

• Specified in a chronological order.

• Meant for insiders to follow 

• Specified steps followed in particular circumstances *

• Sequence of steps or actions to be taken is generally to enforce a policy*.

Method:

• Prescribed manner in which a task has to be performed considering the objective. *

• Tasks comprising one steps of a procedure and specifies how this step is to be performed.

• It varies from task to task

• It saves time, money effort and increase efficiency.

• Ex: imparting training to supervisory level, orientation programme for higher level management, lectures and seminars*.

Rule:

• Simplest type of plan.

• It reflects a managerial decision that a certain action must or must not be taken.

• Ex; cigarette smoking is prohibited inside the campus.

Programme:

• Detailed statement about a project which outlines the objectives, policies, procedure ,rules ,tasks, human and physical resources required and budget to implement any course of action .

• It includes entire gamut of activities as well as the organisations policy.

Budget:

• Expected results expressed in numerical terms.

• It quantifies future facts and figures 

• It helps to compare actual figure with expected figure 

• It helps in controlling and forecasting 

• Ex: sales budget number of workers employed in a factory, cash budget

• Fundamental instrument of planning.

 

Formula:

RETURN ON INVESTMENT =     EBIT   X 100

                                                   TOTAL FUND RAISED 

RETURN ON INVESTMENT > RATE OF INTEREST – FAVOURABLE FINANCIAL LEVERAGE (TRADING ON EQUITY)

RETURN ON INVESTMENT < RATE OF INVESTMENT -UNFAVOURABLE FINANCIAL LEVERAGE 

EPS (EARNING PER SHARE) = EARNINGS AFTER TAX / NO OF SHARES 

Interest coverage ratio = EBIT /INTEREST 

DEBT COVERAGE RATIO = PROFITAFTER TAX +DEPRECIATION +INTEREST +NON-CASH EXPENSES

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PREFERENCE DIVIDEND+ INTEREST +REPAYMNET OBLIGATION

 

 

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