My easy MBA

Difference Between Word of Mouth & Viral Marketing

2012-02-04T20:27:00.000+05:00

Word-of-mouth is when a company does something that tells consumers and their nine fifty to five friends. Word of Mouth Marketing is to influence the echo. The initial sound is loud and then it fades into the background.

Viral marketing, as opposed to word-of-mouth is a cumulative effect. One consumer said five or ten people can say that five to ten people, an additional five to ten people. The driving force behind most viral campaigns is consumers' propensity to bear. It's like a virus that infects more people permanently and spreads effortlessly over marketing.

The confusion probably comes from their common potential to drive exponential growth rates through the use of existing users

While the two are similar, as you can see they are not the same.

The main difference is that this strong word of mouth is mainly due to a compelling customer experience while viral marketing is more "deals" are a product designed to spread.

Word of Mouth Marketing is an important element in growing a small business. It is often word-of-mouth for small businesses running in the early days of the transaction if it has little or no marketing budget. The shares of consumption experiences with your products or services, and they share with their family and friends. This will increase your customer base and increase sales.

Word of mouth is definitely more of a favor to someone else (they clueing into something unexpectedly cool) is based. TiVo is a great example. There is no inherent advantage to using other people tell you to buy TIVO. But there is such a surprisingly good experience, that people tell their friends anyway. Even if TIVO were to offer one month of free service for anyone to tell you, I would not even consider it an engine of viral growth. It's just word of mouth incentives.

Viral marketing is more than reach out and touch the point of consumption of your passion, so that the passion the message and the message still leads the masses to achieve without the support of you. You can orchestrate a viral campaign, but very rarely are orchestrated viral campaigns as successful as those who are driven only by the passion of a consumer. This is a level of success you reach your customers must feel a personal interest and investment in the success of your campaign.

It is also important to know that the use of a successful viral campaign on vehicles to deliver the message depends. There are companies that have more than others viral. To create a strong viral, the message must be off the TV, radio and other advanced options for distributing the power of the Internet for transport.

A quickly fades great experiences when it reaches some links in the chain of mouth. However, it would not be the case if the recommendations of word-of-mouth always in a new user who is also a leader for product / service.

1). The idea is viral to your customers, not for your marketing department
Businesses as well as a standard field of advertising or marketing, then call a viral consultant with a request to "make" viral campaign.

What these companies do not understand is the nature of the viral message. Although it is possible to orchestrate a viral campaign, it is never a guarantee of success. (As opposed to something like email marketing, where merchants can say in general, however, "we generally have a response rate of x% for this job.") Viral marketing campaign development is taking time to explore and understand the passion points of a target group when it comes to craft a message carefully designed to point x, y and z to mediation.

2) Your customers are willing to risk their own reputation in the news
When it comes to word of mouth marketing, consumers in general are only their opinions or experiences with some friends and family. A man tells his friends about the excellent work that florist delivered a bouquet of flowers last minute to his wife for her birthday. A student told his classmates on the bar with the best barrels and eggs after the match. Word of mouth tends to occur through an informal conversation, and the message is often quickly forgotten.

With the objective is viral, things get a little more personal. There is a big difference between men, a few office mates say a flower shop and give it its own blog post on another website. Since viral often on a larger scale with more diverse levels of relationships, there is a greater need to feel after the spreader in the message with conviction. A blogger who report bad content therein or services is not a solid readership for a long time and the woman in charge of each e-mail, she never kept quick access to "ignore" by Friends and family will be placed.

The best viral campaigns in the passions and interests of consumers in order to exploit this if they get the message, they are considered trustworthy. Help consumers, their reputation with friends, family and friends online and they will reward you for spreading your message far and wide.

3) The idea is simple viral, distributed by e-mail, blogs and discussion forums
Word of mouth quickly runs out, because it is difficult to spread the news will be oral. You must have an actual conversation with someone who works on word of mouth. Therefore, the lifetime of a word of mouth campaign is short.

When it comes to viral ideas, there are tons of ways to spread the message. Messages can be sent by e-mail, blogs, discussion forums, social news service, podcast (the list goes on and on) to spread. Since each of these forms of communication virtually unlimited in scope, a viral campaign can easily be extended at each iteration, rather than smaller.

4). Your customers will enjoy the benefits of transferring the message
Perhaps the easiest way is to ensure the success of your viral campaign to give people a stake in its success. When people invest in things they have much more time and energy in their production. Whether you call on the people I, providing a "sneak peek" of a new service or find a way to enable them to add their voices to the viral message, make sure that people feel good about the Broadcast your message is key.

Keep these four tips in mind as you consider your viral campaign, you are much more likely to create a solid performance. Viral marketing may have its roots in the word of mouth marketing, but the Internet has become a powerful tool that can provide the best customer service in the call. Enjoy it for you to focus on the customer.

Finally, the main difference between the word-of-mouth and viral marketing is that word-of-mouth is often dictated controlled by you, the entrepreneur and marketing or viral marketing and a passion for consumer it is not the success of your.

MBA Notes: Pricing for Global Markets

2012-02-04T20:07:00.000+05:00

The price is an important element of global business strategies. However, it is very difficult on the international stage, with various factors, such as multiple currencies, additional costs, a wider distribution network and complex trade barriers and heterogeneity in the markets.

Prices in effect has an impact on the value for the customer. It also has an indirect influence on the strategy for the promotion and may for some other gaps in the marketing mix to make.

It is important for managers to pay close attention to during the development of pricing policy. Apart from production costs and analysis of supply and demand, must they consider other factors such as insurance costs, fluctuations in exchange rates, etc. The most important influencing factors on the pricing decision as follows:

Type of business / type of product - a product that is new to the market and has little or no competition can have a high price. However, as competition increases or reduces technological advantage, the company should effectively pricing strategies based on the focus of selected market segments.

Location - A company has manufacturing facilities in foreign countries often relative advantage over companies that are in their home country and still exports. This is because some changes in the economic policies of the countries heavily in export activity.

Distribution - An exporter who has its own subsidiaries outside the distribution has a greater influence on pricing decisions in relation to those who bank with independent distributors. Independent distributors tend to highlight the prices significantly. This problem may be by reducing the number of intermediaries between the company and the final consumer, setting up its own subsidiaries overseas minimized on the market.

Foreign markets - external environmental factors contribute to the complexity of pricing.

Differences in foreign currencies - Several economic factors such as inflation influence, and regards price controls, exchange rates, the pricing decisions.

Many companies follow the central price, because it helps the consistency in terms of price. This in turn prevents the unauthorized importation of cheaper countries to sell in expensive markets. A company faced with almost the same competitors in different markets on the world stage. For example, a fragmented strategy will not be very effective. Centralized price leads to a better forecast and plan effectively for the production. This is necessary in order to create uniformity, if the company seeks to market its products comprehensive set of homogeneous markets, which are distributed in different countries. These are markets that may differ in terms of geographical presence, however, market segments and customer requirements. However, a company promotes decentralized prices on some occasions. It is necessary to freedom, subsidiaries or distributors be to change the pricing policy, if there are sudden need for change due to external factors. For example, the companies have to follow the market trend, if there are more players in the region. The authority should amend the prices are taken to be that society does not lose market share because of a delay in the implementation of changes. You can also make changes if it were a market where most or all of the customers belong to a group with low income. It is important that the prices will meet local needs.

Leadership That Encourages Innovation

2012-01-02T11:39:00.002+05:00

Leading organizations to be innovative and continually do so with courage. It is the responsibility of the leaders of the organization, the culture and climate that encourages innovation and recognizes all levels. Despite the fact that the leadership is very important, it is still not sufficient by itself to create a culture of continuous improvement and innovation. To build a culture of innovation, many innovation champions must be identified, recruited, developed, trained, supported and valued throughout the organization.

To build a successful and sustainable culture of innovation, leadership must accomplish two general tasks. Leaders must first extremely sensitive to their surroundings and aware of the impact they themselves to their environment. This sensitivity allows them to offer an important perspective to the human task and it is important to bridge because only in this realization that the leader can begin to "talk leader" the gap between real world and the organizational culture. The second factor is the ability to accept the leader and with ambiguity. Innovation can not be clearly and organizations and individuals who are not able to tolerate ambiguity in the work environment and the relationships reproduce only routine action. innovative structures, such as innovation can not be any issues that it worked in the run.

Leaders have a deep appreciation of this fact, because otherwise a tendency to create cultures of blame. Ambiguity leaves room for risk taking and exploration of alternative spaces, to achieve the business does not always produce results. This protection against constant use of proven routines for all occasions. Tom Peters is close to the mark pointing out that most successful managers in an unusual ability to solve the paradox to have to bring the conflicts and tensions in the excitement, commitment and excellence.

Features, the most innovative companies are to be distinguished from the less innovative companies as follows:

Management is committed both financial and emotional support for innovation, and foster innovation champions and defenders of innovation.

Management should ensure that accurate and realistic assessments of the market for the proposed innovation. Highly innovative companies are in the vicinity of end users and are able to accurately assess the potential demand.

Management ensures that innovative projects to get the necessary support at all levels of the organization.

Management ensures that the structured methodology / systems are configured such that each innovation goes through a careful selection before the actual implementation.

This shows that hinder managers a crucial role to play in the improvement or organizational innovation. If management is able to install all the above types of procedures and practices so that they create a favorable climate for innovation effectively seeds. It is important to note that this is not sufficient to cover the practices of one or a few highlights.

Enhancing Creativity - Gordon Technique

2012-01-02T11:32:00.000+05:00

William J.J.Gordon worked with creative-thinking groups and had a variety of other creative activities. He was afraid that people will come, when asked, with a new creative idea, dear incrementalize. In other words, make it an alternative to a gradual improvement. While this may result in slightly better alternatives alternatives probably not real progress. Gordon decided that one way to avoid this problem would not simply say to the people what they forged. For example, uses the technique of focusing first on Gordon-function. Instead of saying, can build a better mousetrap, the group initially said that the focus has been entered. Instead of the group responsible for the development of an improved knife, the function could be expressed as a fraction.

Synectics
Caffeine for the Creative Mind: 250 Exercises to stimulate your brain gordon also developed a well-known technique called Synectics. Synectics means "the combination of seemingly disparate elements." First, set of very different people together in groups Synectics to get a real variety of perspectives. Secondly, Synectics relies heavily on the use of analogies. Synectics techniques were often taken over by companies and educational institutions. Three tools to Gordon Synectics direct analogy, personal analogy, and the analogy of the imagination.

Direct analogy:

It is looking for evidence in parallel, the knowledge or technology in an area different from the development. For example, we may believe something similar happens in nature?

Personal Analogy:

With this approach, the Synectics Group to identify psychologically with the most important pieces of the problem to try. In one case, for example, the group was invited to a mechanism that would work a rotating shaft 400 to 4000 revolutions per minute, so that the end of the PTO at 400 revolutions per minute would constantly turn design. To answer this question, the group entered the metaphorical box and I tried to use her body to the speed required to achieve without excessive friction.

Fantasy analogy:

Sigmund Freud saw creativity as the fulfillment of a wish or a fantasy. Fantasy analogy asks how many in wildest dreams that I can do? Gordon gives the example of a group of Synectics, to invent the task of a closure to the vapors of space suits. Their solution was a spring mechanism on the analogy of an imaginary line through the accession of insect claws closed bolt holding formed based.

It is more than just Synectics use of analogy. The technique follows a structure to solve the problem, interact and in what order a client and other participants to develop a viable solution for the customer. For example, after the problem was presented and discussed, there is a "stepping stone" in which the problem by the client for the concerns, opinions and wishes in states such as "I want to convert is open ..." or " How to ... ". Later, after a first idea was developed and refined, "detailed response" step requires the client of three useful functions or benefits to keep the idea and to generate key concerns. Still later, after the group is working to change the proposal in order to overcome these concerns, the "possible solution" to the elements of novelty and viability checked and, if there is sufficient commitment to the solution of additional measures. Finally, the customer, the steps to implement the solution, simple to use and the schedule and staff.

Communication in Business - Briefly Define

2012-01-01T20:26:00.001+05:00

COMMUNICATION:
Exchange of ideas between two people.

BUSINESS: generating activities, the service / commodity exchange in value.

The company is now
Complex
Decision
Pressure of time

Types of communication:
Verbally. and Non-verbal
With the help of words / no words
Sound
Facial expression
Oral / written
Interviewer -Memos/Letters-
Presentation, e-mail
Talking-Fax
Call control -Quotations/Purchases.
Meeting Report
News-Letter / Circular
Brochures

Communication in Business: Success depends on an organization built on effective communication.The activities of the organization on the exchange of information, plans, ideas, proposals to use data, and interviews will be carried out, meetings and research all the various forms of communication.In an organization, the manager has to read, speak, write, watch, listen and monitor these are all means of communication. It uses letters, reports and memos written communication.Businesses need to send information about their products and services to consumers and customers. They do this by techniques of advertising, personal selling, sales and other promotions.

Steps in Planning Communication / Communication
There are six phases of planning:

Do you know the goal:
You need to know why you should write and what to be written. The destination can be sales, goodwill value, demand, request or rejection, etc.

Visualize your reader or listener:
It is better for the sender to the recipient to understand. You should know the training, qualifications, training, position, status in society, the desire, expectations, problems, circumstances and possible answers to your request. Also, he / she is superior, subordinate, worker, professional or technical, a colleague, single or married, male or female, from time to customers young and old, new or long term.

Choose the ideas:
It depends on the type of message. Before taking up the points to be covered in communication, then put them in order of importance and urgency.

Get all the facts:
To explain the facts and figures, visual aids can be used to increase communication.

Organizing Ideas:
Once the ideas have been recorded, they will be arranged accordingly, and organized. Otherwise, do not keep the goals of the message.

Editing and proofreading:
Short communication channels are easy to transfer or to dictate without review or read. The reason for this is to ensure that the message complies with the principles of communication.

History of Corporate Social Responsibility

2011-12-11T13:39:00.000+05:00

The view that a company might commitments that go beyond economic role is not new in many ways. While the recorded history was the role of organizations providing goods and services for the market and are often related to the roles of political, social and / or military. For example, through the early stages of development of the Business Development in England (where organizations such as the Hudson Bay Company and the East India Company received a broad mandate) there was an understanding of public policy that encourages companies to achieve social goals such as exploring the colonial territory, the establishment of settlements, the provision of transport services, the development of banking and financial services, etc.

During the 19th century, society has to be a form of corporate organization is developing rapidly in the United States. it took a commercial form that the responsibilities of the board of directors and management to the shareholders (ie the duty of loyalty) is defined. In this later evolutionary form, public policy often discussed certain social sectors like health and safety at work, consumer protection, labor practices, environmental protection, etc. For example, the company responsible reacts social, because they were forced by the law and public Rules match. They also have voluntarily responded to market demands that social morality and taste of consumers is reflected. By the middle of the twentieth century, was the social responsibility in the United States of experts in corporate governance, such as Peter Drucker and business CSR literature has shown, discussed and still be a key business management, marketing, accounting, and the concern of the United States, Europe, Canada and elsewhere.

Harvard Business Review on Corporate Social Responsibility traditionally in the US, CSR has more defined in terms of a model of philanthropy. The companies have profits unhindered except by fulfilling their duty to pay taxes. Then some of the profits donated to charity.Regarded as tainting the act for the company does not consider benefits of giving. The first generation of CSR in this way shows how companies can not be responsible in any way, affect, and can contribute to business success. Corporate Philanthropy is the practice of companies of all sizes and industries makes donations to a variety of social, economic and others as part of a strategy of global corporate citizenship address.

The 2nd generation is now developing where companies and CSR as an integral part of long-term corporate strategy. Companies are taking it seriously and a business perspective, progressive, usually respond to CSR with a focus on new opportunities as a way of relationships between economic, social and ecological factors in the market. Companies believe that this approach provides a clear competitive advantage and promotes corporate innovation.

In the last decade, CSR and related concepts such as corporate citizenship and sustainability of businesses expanded. This is in response to new challenges have arisen as to the increased globalization on the agenda of managers as well as for related stakeholder communities. It is now part of both the vocabulary and agenda of scientists, experts, NGOs, consumer organizations, employees, suppliers, shareholders and investors.

3rd generation of CSR is required to make a significant contribution to the fight against poverty and environmental degradation. It will go on voluntary approaches to individual companies and organizations, the market in which they operate and how they are regulated, to rebuild all markets towards sustainability to influence participation.

The Global Reporting Initiative (GRI)

2011-12-11T13:17:00.000+05:00

(GRI), The Global Reporting Initiative is a multi-stakeholder process and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. These guidelines are intended for use by organizations for reporting on the environmental, economic and social activities, products and services. The GRI includes the active participation of representatives from business, investment, human rights, accounting, environment, research and trade unions around the world.

Started in 1997 by the Coalition for Environmentally Responsible Economies (CERES), the GRI became independent in 2002 and is a center official cooperation of United Nations Environment Programme (UNEP) and works with the Global Compact of the UN Secretary General. Guidelines of the GRI Sustainability Reporting cover a broad spectrum of social responsibility issues related to organization

(1) Economic performance (such as wages and benefits, training, research and development)

(2) Environmental performance (eg usage, energy, water and materials, emissions of greenhouse gas emissions, land use / biodiversity), and

(3) Social services (such as labor and human rights, health and safety, employee retention).

In addition to the basic guidelines of the GRI, it is also responsible for developing a set of guidelines for dietary supplement industry, for example, financial and mining communities. While the GRI is a reference book / Only there is a growing influence in the debate on ways and means should a company structure and governance transparency and reporting, and sustainability efforts in general.

Executive MBA in Technology Management

2011-11-05T00:08:00.000+05:00

Today is the achievement of professional standards, not only in depth and thorough understanding of organizations, including an overview of the business, such as the sustainable development of values and ethics of social responsibility for the United personal development for new concepts and professional manner and ways for students to do business to achieve.

The Executive MBA is designed to connect to strengthen leadership, management of people and by their own instructional design, the participatory approach and pragmatic analytical skills with a passion for innovation.

The online Executive MBA is an online experience of at least five years experience in providing assurance that the crucial step in the search for employment and training for the challenge, it has to fulfill. An on-line process in which the University pioneered the same quality and offers educational content to our classroom courses for those in need, depending on geographic location and time availability of educational opportunities that can unite the practice. Those who feel that covers an important phase in their lives, but they understand that the current changes may also provide an opportunity to advance their career.

Reach today requires some knowledge of a complete and thorough professional organizations and an overview of the business world, where values such as sustainability, social responsibility and ethics in business is the personal and professional development of people associate looking for new destinations, new roads and enjoy a new concept in the way of doing business.

Program strengthens the leadership and people management and employs a pragmatic and participatory approach to the new global environment through its international programs and practical experience. Online University MBA will help you in your efforts to grow personally and an entrepreneurial career, creatively, emotionally, and awareness of the real needs that the market demands.

The challenges in the near future, the companies will be treated by continuous innovation and the incorporation of sustainable elements, those people with a strong emphasis on social development. These companies need professionals who can combine technical training with an overview of business management.

The MBA in Technology Management Online is for professionals in technical training and experience of at least three years, which are needed to expand their business opportunities and expand basic education MBA is designed. The program teaches Virtual University has developed three modules, and also to promote entrepreneurship, to include the complete business plan.

Curriculum Online Executive MBA program is to keep an eye on the overall business strategy and content. An important feature of this program is its flexibility. Research institutions or universities that offer this online program seriously good will and credibility. Build a curriculum and activities in the field of practice tests accordingly. Thus, the proposed work and simulations are important Executive MBA online.

E-learning, as it must depend primarily on the Internet. Of course, the tables are electronic media, editorial chat, video conference, audio and video clips online, so university is willing to offer 24 hour service. There are many national and international institutions, the online MBA.

MBA Notes - The Monopoly Market

2011-10-05T11:41:00.000+05:00

There is a single seller in monopoly. This is exactly the opposite of perfect competition.

Characteristic

There is only one company that sells the product.
The company has no direct rivals or competitors.
Substitutes may exist. However, close substitutes are not available.
Difficult entry for other companies.
Monopoly is the price that producers and tried the best available, demand and cost conditions, without the fear of new businesses that take in the competition.
Monopoly is not a permanent condition. For reasons such as the development of substitutes, the entry of new firms, etc., a company that is now a monopoly not a monopoly may in the future.

Prices under monopoly
Aggregation as a mechanism to sell multiple optimal for a monopolist good. The price and monopoly power are determined based on certain assumptions, the price discrimination monopoly, companies are not defined. It aims to maximize returns. The individual buyer is a price taker and the company holds a monopoly in the state of no restrictions in terms of price.

The company monopoly control of both the price and supply of the goods, but one at a time.
The firm's demand curve is the same as the demand curve in the industry.

a) prices in the short term
The monopolist seeks to gain increasing performance to a level where the additional income to maximize cost extra. A monopoly can be profit or losses in the short term.

Strategy
The company can benefit by making the price higher than the cost and demand, caused by the specified units of the commodity.
Puck Magazine April 29.1885 - Jay Gould and monopolists may-pole
But the company may suffer losses as well due to the request of his misjudgment in determining the price or determination. In addition, the risk of competitors, the prices set below cost leading to a loss in the end.

The monopoly in the short term may be to price or quantity. He can not fix both. The company has a strategy to maximize profits or minimize losses led to the development. The company must be alert to the possibility of its competitors.

b) Pricing In The Long Run
The short-term gains would certainly attract other companies to enter the market. With the entry of new firms in the market would change from a monopoly to oligopoly or perfect competition.

If the control of society for scarce resources, it may prohibit the entry of new companies and take advantage of their monopoly. In the long run, it is not necessary that companies use their existing equipment to optimize its performance due to the lack of competition.

However, it is necessary for the company to take a loss on the long term. The size of the facility and how they can be used depends on the demand for raw materials.

A monopolist is in a better position to exploit the market and may limit the penetration of external companies in the industry. It is the concentration of economic power in the market where a monopoly exists.

Essential Characteristics of Management By Objectives and its Limitations

2011-09-02T20:51:00.001+05:00

Characteristics or Features of MBO.

Management by objectives is a philosophy or a system, not just technology.
It emphasized the participatory agreement on objectives.
It clearly defines the responsibilities of each in terms of results.
If focuses attention on what needs to be done (goals0 be rather than how it should be done.
It converts the objective needs as personal objectives at all levels within the organization.
It sets norms or standards (goals) and directs the operation as a basis for performance evaluation.
This system is intentionally directed to achieve effective and efficient organizational and personal goals.
MBO process (or cycle management by objective and key elements of management by objectives, or the minimum of management by objectives.

There are four important and necessary steps or elements in the process of management by objectives as follows:

Set goals.
Objective or goal setting is a multistage process. It begins with the investigating judge of STAT3 current affairs, efficiency, the threats and opportunities. Then the key will be identified by areas such as commodity markets, better service, lower costs, simplify the work, employee motivation, innovation, efficiency and social responsibility. The performance of these sectors is essential for the organization in the sense that errors in these areas can lead to failure of the organization. And that is why they are known as the "key" outcome area. Peter said that the targets are in all areas where performance and results directly important to the survival and prosperity of the economy.

Subsequently, the setting of targets or joint interaction. Subordinates are actively involved in the formulation of objectives at each level in the organization of such goals in relation to the overall objectives of the organization done. He is careful to goals that are measurable and contribute to the element. These goals can be long rang, rang, medium or short range. In addition, the availability of resources is also an important aspect to always put in some goals. It is always necessary to decide about priorities between the different objectives without compromising the environment in which business operates, as well as possible further changes.

Development of action plans.
Define the objectives to be translated into action plans. It requires the allocation of specific responsibilities for various departments, offices and individuals. It also requires the allocation of resources to fulfill the assigned tasks. The dimensions of time are also determined so that the objectives be achieved without unnecessary delay.

Regular review and monitoring of progress.
Set your goals and action plans, it is necessary to establish an appropriate monitoring system to keep the activities regularly. This progress is not the path followed to date, the ultimate goal. It ensures that finding the differences, if any, are to be taken studied in depth and immediate remedial action to bring them in order on the court. Such regular monitoring and periodic review not only provide feedback that is completed in time. But also motivates managers responsible for performance. Regular review and monitoring are done at the departmental level, usually.

The performance evaluation.
This is the final phase of the MBO, which evaluates the annual performance. The annual review or evaluation is complete and occurs at the level of the organization. The actual results are measured against annual targets. Such an assessment is also used to determine the objectives for the next year to take for the modification of standards (goals0 if necessary, and appropriate measures to avoid gaps goals prescribed form.

Limitations /Weakness /Disadvantages of MBO

Unfavorable attitude of the manager.
Some managers have an attitude that takes them by the steady loss of MBO system that relies heavily on his busy schedule and is not consistent with their duties.

Problems about Goal Setting.
MBO requires the issuance of a warrant, detailed guidelines for goal setters, the following difficulties in setting goals:

The active and positive participation of his subordinates is not easy to leave.
Truly verifiable targets offered simply to formalize
Emphasis will be placed in short-term goals, while long-term goals are to be avoided, drive long-term goals of crucial importance for growth and development of the organization
The objectives are inflexible and rigid. For example, the changes are desirable annual budget adopted not only in the middle of the year.
Over-use of quantitative targets at risk, the qualitative aspect, which can be more important than the quantification, in some cases.
Orecedebce or more goals take precedence over those who can use them. Each action is unacceptable in this series to achieve the Gilas, without regard to their impact on humans. So come all these difficulties in the way of management by objectives in the operation of an organization. It also includes the management of more of the target.
Time the nature of management by objectives. Management by objectives takes time, especially in the early stages of its introduction, if employees are not with the process.

Management by Objectives (MBO ) and Benefits of MBO

2011-09-02T20:29:00.001+05:00

Management by Objectives (MBO) has become a popular slogan. There is a mentality that takes the basic high-performance manager, the task of corporate governance. The concept of management by objectives was coined by Peter Drucker in 1954. He expressed the concept of management by objectives, and then emphasized it is developed as a management philosophy. Some authors have used the term interchangeably with a results-oriented management by objectives management.

Management by objectives is a comprehensive management philosophy that focuses on the goals and the final results. Management by objectives based on the assumption that the people better if they know what is expected of them and can put their personal goals with organizational goals refer to. It also assumes that making people better if they expect what they know and can put their personal goals with organizational goals. It also assumes that people are interested in the objective settlement process and evaluate their performance against the target.

Some important definitions of MBO can be specified as follows:

George S. Odiorne.
The system of management by objectives can be used as process through which managers and subordinates to define the organization to share their common goals each area a great responsibility in relation to the expected results are described by him, and with these measures as guidelines for the operation to evaluate the device and the contribution of each member.

Peter Drucker.
He says that management by objectives and self-control is a management philosophy. Based on a concept of human action. Human behavior and motivation. MBO is for any manager at all levels and for all companies, whether large or small. He says that management by objectives, performance guarantees by transforming the objective needs as personal objectives.

Heinz Weihrich and Harold Knoontz.
MBO is a complete management system that a number of key management activities in a systematic way, which is directed deliberately at the effective and efficient organizational and individual objectives integrated.

Stress balance on the objectives. MBO forces managers with the goals of load balancing set of key areas. Terms of crises will be avoided to take place in the organization.

Benefits Of Management By Objectives
Better management. MBO forces managers to plan for the results and think not only for planning activities or work. Managers are required to ensure that objectives are realistic and necessary resources are made available to subordinates to achieve goals. Clearly, setting goals for his subordinates to serve as standards for evaluation, and the reasons for them. Sun MBO to improved administration.

Better organized. Positions in the company can be built around the key result areas. Managers are required to clarify roles and organizational structures. Therefore, to better organize.

Increase employee involvement and commitment. When the MBO program is installed in an organization, people will not only work, following the instructions and wait for the leadership and shape the decisions and things are not dictated by their superiors. They are now people with clearly defined objectives that were identified by their own participation in the formal process.

Orderly growth of the organization. MOB provides for the maintenance and the orderly growth of the organization defined set of goals for everyone involved. It also provides the measure of what is actually achieved. Progress and even the office of management by objectives, emphasizes the ability, competence and success of managers, rather than their personality. The orderly growth and development of the organization is assured.

Development of effective controls. MBO not only sharpens the planning, but also the development of effective controls. It is stated explicitly checked regularly and annual performance appraisals, as the necessary feedback for streamlining goals or objectives. It allows a manager's own performance, deg4ree high self-control that is a strong motivation to manage.

Creating an ideal atmosphere. Doughlas McGregor says, motivation, who are the potential for capacity development of responsibility, the will to direct behavior toward organizational goals present in all people. Management did not, there is. The essential task of management is to organize the conditions of organization and working methods.

Objective assessment.Management by objectives provides a basis for evaluating the performance of a subordinate, because the goals (standards) are set jointly with the supervisor and subordinates.

Guidelines for a Formal Report

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Final presentation of the official report consists of three sections: the first round as the accompanying letter, the title page, table of contents and a summary and the body, which includes an introduction, discussion of results and summary of findings and recommendations, and additional components such as the works cited, bibliography and notes .

Letter of transmittal
First impressions are important, as the letter or memo authorizing the report should be seriously considered. The letter must:
    Deliver the report ("This is the report requested by ')
    An overview of the report
    Offer to meet to discuss the contents

Page Title
The first page of a report contains the report title, the name of the recipient or the recipient, the name of the author and the company, date and sometimes a series of reports.

Summary
An abridged version of the entire report, in non-technical, short written and informative, usually describes the salient features of the report draws a core message, and make a recommendation, always written last, after the rest of the report was written.

Table of Contents
Displays the content and layout of the report, always include a list of plants, and sometimes a list of illustrations.

Introduction/Presentation
Prepares the reader for the forthcoming discussion are the purpose and scope of the report and provides background information so that readers can read and intelligent discussion. The introduction should motivate the reader. The reader should understand why the problem has been studied and why the study is a contribution to existing knowledge. Guffey and Nagle (2003) propose the introduction contains seven items:

Explaining how the report was created and why it is not allowed.
Description of the problem that the report and asked specific questions to be solved.

The purpose of the report.

Scope (boundaries) and limitations or restrictions on research.
Sources and methods of information gathering.
Summary of results, whether the report is written after the deduction.
To follow from the main sections of the report, provides the consistency and the transition to the reader.

The introductory paragraph is usually followed by a review of the literature, often given the heading "Background". The literature is at least the following objectives in the report:

Put research into a historical context to show familiarity with relevant developments.
Distinguish what has been done, what needs to be done.
Demonstrates how to use your research is based on previous knowledge by presenting and evaluating what is already known about your research topic.
A point of reference for the interpretation of your own conclusions. Its report shows how extended your study, revised or improved skills in one area.

The objective of the review of the literature is "the logical continuity between previous and present works" demonstrate (APA, 1994, p. 11).

Discussion of Results/Findings
There to do a story that understand all the details, facts and data through the reader what the author has tried what he or she actually found and what he needed or she thinks, should the following fact.

Official reports often visual aids to highlight, summarize or clarify information. Some general guidelines apply to the use of visual aids: the visual material must have titles and headings, should be visually identified and discussed in the text, they need to be near her are in the text, they should, vertically on the page, and the source credited, if his every country. Use graphics software to create professional-looking graphics.

Conclusions
A summary of the main conclusions or milestones in the discussion, the conclusions are only opinions can never defend the action.

Recommendations
If the discussion and conclusions suggest that certain measures should be taken, the recommendations is to do what categorically.

References
A list of the documents used to complete the project is complete and the author believes will be useful for the reader contains enough information for the reader to correctly identify and order the documents.

At the end of the report, all references are included on a page titled "References", as shown.

Books:
Corporate Author:
Internet
Journals:
Articles

Bibliography
It is recommended that a bibliography listing all sources consulted in the research, whether quoted or not, in fact, be included in an official report.

Attachments
A section at the end of the report that the required data (eg charts, diagrams, photos, technical data and test results), which is deservedly in the discussion, but if it contains trapped with him, and would interfere with the disorder the grand narrative.

10 Principles of Economics

2011-08-12T23:05:00.000+05:00

Understanding 10 principles is the key to understanding the whole concept of the economy.

Tradeoffs:
How we make decisions that we make compromises that we have chosen something more something else, or we must give up something else I have. Decisions include how to buy a child a compromise between the money for themselves, money and the child's needs, but also includes trade from the moment you give up your personal information or leisure time for the baby. Shown in giving the film is a very good example of compromise. It shows a college student, to move to Washington if he wants the college has ended, and are part of the time it uses to search for tests or examinations of study for an hour for jobs Washington. The decision on its priorities over others, he faces a compromise. Society as a whole is also disadvantages: The government must decide how to spend a lot of money in some aspects of the country. Something that I personally was happy and made me think when the movie shows how we still have to compromise in the environment: "We all want clean air, but the tradeoff is the loss of income or even the loss of jobs for some Americans "means, says the presenter. I did not understand the relationship between these two until they speak for a coal company in Ohio that had to be closed because he also harmful to the environment, the consequences? Over a thousand people lost their jobs, the Council decided to have a cleaner environment, but the compromise was the loss of jobs of all employees .

Opportunity cost
What do you sacrifice to get something in its economy. The presenter and Gregory Mankiw explains this principle with a college student. To change the election four years of college gives students the costs are many. It is the cost of money in their books and tuition, and also the "opportunity cost", as Mr Mankiw, because they decided to go to college, that 'they provide is the ability to obtain employment and wages are the work would have taken. "Nothing is free, our time is worth something," said Todd Buchholz, an economist, you see that it is a charge of something no longer involved with the money, makes the cost of something, what you can do as much time with your loved ones. This segment of the film contrasts in situations where varying opportunity costs, is shown an example of how the opportunity cost of a student is quite low because that the student abandons low-paid jobs, but the opportunity cost of a very talented high school athletes offered to go directly to Professional is very high, because if they go to college, he gave millions of dollars that he won a professional athlete who decides.

Marginal Thinking
A reasonable person as a student in the film shows, think on, because if too much work to finish college instead of the job that earns money for personal expenses, they simply cut back a bit to work. It is not radical, she is finishing the adjustment, rather, they thought at the edge. Another good example is that of a Broadway that is often met with empty seats. So think on the edge, they decide to negotiate with the public and sell tickets at half price a few hours before the show, the empty spaces in the show. Adjustment of the ticket price the theater actually receives more sales, because even if they deserve 50% of original cost, which is greater than zero, if the seats would have remained empty. By rational thinking and better decisions on the board and make decisions.

Incentives
If the costs and benefits of something different or to change to change our decisions. "When my son, I want to wash my car if my car says you can use it in the evening today is an incentive," said Robert Sobel of Hofstra University and is for me the best explanation of the steps incentives. The incentive is what they say to use the car that night, in other words, it benefits from, yes, but if they do not have all the incentives, it would probably to doubt it. A very good example they set, how we respond to incentives, and refers to the situation today is that how we as a reaction to gas prices. In Europe, the price of gasoline is very high, this incentive makes people buy smaller, more fuel-efficient cars, unlike America, where the price is still relatively low, and people buy big cars and vans. Did you not notice that the shops and streets were the "Tax Free Week" here in Florida packed? This is because people incentives, incentives that will benefit react, apparently you buy more, if you will not be taxed. When President Clinton was in office, he asked the price of cigarettes in the amount of one dollar and a half because it was shown that young people not to smoke and buy cigarettes. This is a perfect example of an obstacle, because it discourages young people from smoking. Another point that explains the behavior of some people taking incentives. Seat belts are now required, as it is effective in saving lives, but instead: "There is evidence that behavior change in response to that seat belts do," says Gregory, because some people exceed the speed limit because they feel safer.

Trade
Since we are not self-sufficient we operate. "People are specialized, people do certain tasks and relying on other people, doing other tasks for them," said Gregory. For example, a hairdresser cut their business services (eg haircuts) for money, and the other person relies on her hairdresser let their hair. "The idea I have something and you have something, and if we change we're both going to be better off is basically what makes the economy," says Caroline Hoxby. We as human beings and be able to survive, we act, we change, we rely on. This is explained in more detail in another example in the film. We leave in a group of dedicated farmers who grow food for us, we both benefit, because we get food, and they are paid for the production of food. Countries to trade between them, if they are good products, cheaper to sell. We work every day to survive.

Markets
Agreements are made on the markets, and prices are installed, which then communicates with the world. In the food market, farmers sell their products and supermarket owners buy and sell. Another type of market is the stamp market. Mark Easter is a stamp dealer explained that as the stock market, where dealers go for the highest price offered. The first person who works as a market, Adam Smith was the grandfather of the economy, says the first book published on the economy called "The Wealth of Nations" in 1776. How can buyers and sellers interact with each other and not create chaos? Adam Smith said, "the markets, as guided by an invisible hand at least a desirable allocation of resources." We all have interests, and if we try everything to achieve this goal, we would all be happy. The invisible hand in the film is a simple example of Mr. Sobel said he said, "If I have a $ 25 dollar and you have a good and you I want to sell it, we need to win both, they wanted the $ 25 dollars more than good, and I am the good of more than $ 25 dollars you want. "The key to the invisible hand are the prices sellers and consumers depend on them. When communism fell in Russia and Eastern Europe, he showed that the free market is the best way to operate, because people know what they want, how you want, how they want the purchase, and etc.

Government
Sometimes the government is committed to developing better results. This occurs when one of two situations occurs. Only when the market outcome is inefficient, and second, if it fails to efficiently distribute income. In many cases, the externality is the cause of the error. "Externalize is when a business or something individual that creates an impact beyond the immediate buyer and seller of the product. Power plants are obviously for the benefit of users and buyers of electricity, but it also has an externality since the smoke they produce damage to the health of a person can. market power can also lead to market failure because a particular company or in-person to control oversize and affect prices. If the market is not fair to the government as well. Some people have their services paid more than the others, is something that can not be controlled by the invisible hand. If the government gets involved, because the situation is very complicated, more complicated, it is, the harder it is for the government to address them.

Productivity
Statistics show that in 1998 the average American with an annual income of $ 31 500, which had an average of $ 8,300 Mexican and $ 1700 for the average Indian. You may find that their quality of life is not the same as the Americans are better off than the Indians. Productivity explains everything, a rich country produces more poor. And productivity depends on the skills, capital and etc. If a country has an educated workforce, productivity increases. Economic freedom and independence means more productivity. A perfect example is the United States and Hong Kong, where people are free to use their brains to goods, services or ideas that can be taken to the market where consumers benefit from them.

Inflation
This essentially means that inflation, which means that prices are rising all the money that is pressure levels. Printing money is something that must be controlled, because even if it can be "temporarily make people feel richer," as stated by Todd Buchholz increase, possibly based on prices and inflation will come into play, and it is very hard to regain control. Stability between goods and money is the best way to keep inflation at bay.

The Phillips curve
The chairman of the Federal Reserve is to maintain low unemployment and inflation under control. Mr. Mankiw notes that you can not achieve both goals simultaneously and that the policy instrument is the money supply. When one rises the other falls and vice versa, it is called the Phillips curve. As the film explains that it is a compromise in the short term, you must decide on the other. But the compromise does not really exist today, because last year, both inflation and unemployment fell. This does not mean that the Phillips curve would not return in the game, say some economists.

MBA Project Reports- Free Downloads

2011-08-05T17:40:00.000+05:00

Project Report on Consumer Satisfaction
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Mutual Funds Project - Project on Mutual Funds is the better investments plan
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PROJECT REPORT OF CUSTOMER FOCUS ON SUPPLY CHAIN MANAGEMENT
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Project Report on Study of Conflict Management Strategies
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Project Report on Payables Management
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Project Report on Effect of Welfare Measures to Employees Morale
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PROJECT REPORT ON MARKET SURVEY ON THE BRAND EQUITY
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Project Report on Cash management of Standard Charted bank
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Project on Post Recession affect on the demand of Nokia E-series
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Project Report On Working Capital Analysis
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Project on Study of the Customer Relationship Management
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Project on Performance Appraisal System
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Project report on Equities: Cash & Derivatives
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Project Report on Stress Management
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MBA Sponsorship and its Advantages

2011-07-12T23:26:00.000+05:00

The various advantages, the company sponsoring the MBA by MBA students can benefit from are endless. Here we describe some of these benefits. Each year, employers offer sponsorship to MBA students about two-thirds of part-time MBA and a small number of students in full-time MBA.

This sponsorship MBA can take different forms: either the full or partial payment of tuition fees of the MBA program, or it may be in kind, such as study time allowance.

MBA sponsorship will give managers with the tools of strategic analysis, have to enhance capacity within the organization to a long-term perspective on specific MBA students.

Like all MBA programs can be illustrative examples from all sectors of the economy, sponsorship of MBA offer the employees / managers, and the whole organization, in turn, with the broader knowledge base.

Sponsorship of MBA offers students the opportunity to be part of an international network of alumni to foster valuable contacts for the future.

The MBA program consists of a curriculum of learning materials that the theories and concepts, and later established international cross-industry research included, they will eventually all be reinvested in the company.

Part of the MBA program includes a requirement for students to submit a brief. These memories can take many forms, including a report of style or business plan. Sponsorship of MBA can often mean that the company that sponsors full right to have such a thesis will no doubt cause the company money quantify savings than the experts, the cost can be implemented, often more than the total cost of sponsoring the entire course of study MBA.

Sponsorship of MBA students are offered a direct impact on the organization if the students do their work on the basis of the Kingdom of the sponsor, the know-how in the electives in the MBA program.

MBA Ranking 2011

2011-07-12T23:00:00.001+05:00

U. S. News Media Group issued in 2011, Americas Best Graduate Schools rankings, both attended Harvard University (MA) and Stanford University (California) won the first place. Yale School of Management has a place in the 11 (from 10th place ranking in the 2010 Business School).

MIT Sloan School of Management is in the top 3 (two seats in the fifth form last year) evaluated. It is also No. 1 in a series of rankings of specialty include: Information Systems, Production / Operations and Supply Chain / Logistics.

University of Pennsylvania Wharton School fell two places to No. 5 this year. Executive MBA and Finance: It is also No. 1 for the specialties of the place.

Northwestern Kellogg School of Management has a place to fourth nationally and is No. 1 for the following specialties rated: Marketing and Part-Time MBA.

The Top 15 MBA programs are:

1. Harvard Business School
1. Stanford Graduate School of Business
3. MIT Sloan
4. Kellogg / Northwestern
5. Chicago / Booth
5. Wharton / UPENN
7. Tuck / Dartmouth
7. Haas / Berkeley
9. Columbia Business School
9. NYU / Stern
11. Yale SOM
12. Ross / Michigan
13. Darden / UVA
14. Fuqua / Duke
15. Anderson / UCLA

Source: U.S. News & World Report

MBA Notes: Strategic Management

2011-07-02T11:46:00.000+05:00

Benefits of Strategic Management
The main advantages of strategic management has developed better strategies by aid agencies nor systematic, logical and realistic policy options.

Strategic Management offers the following financial and non financial:

Financial benefits of strategic management
First Study shows organizations, strategic management principles tend to be better rewarded than comparing productively with those who do not.

Second most powerful organizations tend to prepare for the implementation of strategic planning for future deviations in the external and internal environment. Companies with strategic planning have excellent long-term effectiveness in line with its monetary sector.

Non-financial benefits of strategic management
To avoid the first addition to the support of the destruction of corporate money, the strategic management of real additional benefits, including increased understanding of external threats, a better understanding of the strengths of competitors, improve employee productivity decreased resistance to change, and with a clear understanding of performance and rewarding relationships.

Second addition to strengthening management and employees, strategic management is often helpful to bring order and discipline to an organization.

Need and importance of strategic management
Why we need strategic management and why is it important? Strategic management is important for the following reasons:

Due to the rapidly changing business environment: In a rapidly changing environment, strategy formulation should be regarded as a continuous process of learning.

Provides guidance: Strategic Management sets guidelines for help and support for development, and provides a base from which progress can be measured.

Systematize the decision: Strategic management helps to systematize an organization's strategic decisions and actions.

Research and development: the strategic management process allows cross-functional approach to the management of R & D to ensure that the public R & D decisions and plans must be integrated and coordinated between the various departments.

Resource allocation: Strategic Management promotes an efficient allocation of resources to the business units.

Developed communication and coordination

Helps managers a holistic approach

Strategic Management and its objectives

Strategic management is the art and science of formulation, implementation and evaluation of various operational decisions that the organization can achieve its objective described.

Concept of strategy
The term "strategy" is acquired form the Greek word "Strategos" general sense. A plan or process or set of decision rules or makes an arrangement to create a common thread.

Strategic management is the process of strategy formulation, implementation, evaluation and control to achieve the strategic goal of organizations are defined.

The main objective of strategic management is to explore and new opportunities for the future in planning experiments to optimize long-term trends of tomorrow.

The main objective of strategic management is to explore and create new opportunities for future planning any long-term attempts to maximize the trends of tomorrow.

HR notes- Job Design

2011-06-09T00:32:00.000+05:00

Job design is the process of:

a) The decision as to the contents of the contract.

b) Decision methods for carrying out the work.

c) The decision as to the relationship that exists within the organization.

Job analysis helps to develop the design of design tasks and employment conditions for employment with human qualities to do the job.

Factors affecting the design of tasks: - There are several factors that influence the design of work in the company.

Organizational factors: -

Organizational factors to factors within the organization, job design is related to their influence

Job characteristics: -

job characteristics refer to characteristics of the work, which involved the type of work and tasks because the organization decides how the design work must be done ever. Incase the company was not able to name many people, one job can have many tasks and vice versa.

Process or workflow within the organization: -

There is a certain order, to perform in jobs within the company. Incase the company wishes it could combine similar job and give it to someone what happened, if all jobs can come one after another in a sequence.

Ergonomics

Ergonomics refers to good work, skills and personal qualities of the individual and providing a desktop environment that the person to complete the work faster and to help in a proper manner.

Working methods: -

Each organization has its own ways of working. Although the work is the same method to do the work differs from company to company. This is called an internship and it affects the design of tasks.

Environmental factors: -

Environmental factors that influence job design are:

Staff availability and capacity: -

Some countries face the problem of shortage of skilled workers. You are not able to staff some level of education for employment and must travel to other countries through the design of jobs are obtained affected.

Social and cultural expectations: -

The social and cultural conditions of each country is different, so if a multinational appoint an Indian, he is taken into account, such as festivals, to take the good times, the time of loss, adjust, etc in Indian conditions. This applies to all countries and therefore did design work accordingly.

Behavioral factors: -

Job design is affected by behavioral factors as well. These factors are:

Rating: -

Job design is generally prepared on the basis of job analysis and job analysis requires the employee feedback employee feedback on this place any other activity is based. Many people are not interested in a true return because of fear and uncertainty. This in turn paid tribute to employment.

Autonomy: -

Each employee and indeed a measure of freedom, its work. This is called self. So if we design a work we need to ensure that autonomy of the worker that he wear his work is actually provided, see prepare.

Variety: -

If the same job, she repeats again and again leads to stress and monotony. This leads to apathy and negligence at work. Therefore, during the preparatory work to ensure some diversity of design, the person to keep the work interesting.

HR notes-Job analysis

2011-06-09T00:13:00.000+05:00

A job is defined as a series of duties and responsibilities that are given together with a specific employee. Job analysis is the process of investigation and recording of information on the operations and responsibilities of a particular task.
Job analysis is divided into 2 parts.
a) a job description
if the employment details are given.
b) specification of employment
where we explain the qualities of people seeking work required.

Methods of work analysis
There are various methods used by the organization to gather information and job analysis. These methods are

Personal Note: -
In this method, the viewer is actually watching the worker concerned. He made a list of tasks that the worker and the qualities needed to perform these functions on the basis of information gathered, the job analysis is ready, has carried out.

The actual performance of employment: -
In this method, the observer who is actually preparing the job analysis, the work itself. This gives him an idea of the skill required, level of task difficulty, effort required, etc.

Interview: -
In this procedure, an interview is conducted with the employee. A group of experts to answer the call. They ask questions about employment, qualified and levels of difficulty. They question and cons of the issue and gather information on the basis of this analysis of employment is available.

Critical Incident Method: -
In this process, the employee is asked to write one or more critical incident occurred in the labor market. The incident gives an idea about the problem, as, skills and levels of difficulty has been treated, is so critical incident method, an idea about the work and its importance. (An important and critical incident means that anything that is in employment)

Questionnaire Method: -
In this method, a spokesman for the worker is given, and they are asked to answer the questions in it. Questions to multiple-choice questions or open questions. The questions to decide exactly how the job analysis should be performed. The method is effective because people would think twice before writing anything.

Log records: -

Companies can ask staff to ensure that the log records and job analysis can be done on the basis of information collected from the log record. A log entry is a book to include in the staff write all the activities they performed at work. The files are many and run in nature and have a good idea of the tasks and duties in each job.

HRD issues: -
Records are kept of each employee from the personnel department. The file contains details of education, the name of employment, the number of years of experience, rights-managed, received in the past errors and the measures the number of promotions that work area, the area of basic skills, etc. based on the analysis of employment records can be done.

Source of Finance for business organization

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Sources of funding in the short term and long term

The activity requires two types of financing, namely:

1. Short-term financing

2. Long-term financing

Funding decisions in the short term with regard to the long-term assets and affected Liabilities and is also known as working capital financing.

In the short term financial decisions are generally the cash flow next year or in the duty cycle of the company. Normally, the short-term financing for a maximum period of 3 years.

The main sources of short-term financing are:

1. Cash Advance
2. Short-term bank loan
3. Bill discounting
4. Credit
5. Inter-corporate deposits
6. Commercial Papers
7. Factoring
8. advance of working capital from commercial banks

1. Cash Advance:
cash credit facility is generally taken to fund working capital needs of the organization. Interest is charged at the moment for the Cash Advance Bank A / C, regardless of credit through the use of the advance.

2. Short-term bank loans: bank overdraft

3. Update of the bill:
The bill discount is a source of short-term financing, ownership change was settled by the borrowers of the bank at a reduced rate.

4. Credit
Credit is an indirect form of financing working capital and banks than take the risk, the credit by the supplier itself provided.

A letter of credit by a bank on behalf of their clients issued to the seller. According to this document, the bank drafts drawn on them for deliveries to the customer's credit. I f the vendor complies with the conditions of the letter of credit established.

5. Inter Corporate Deposits
A deposit of one company to another, usually for a period of six months, that is, as described ICD. The short-term deposits with other firms as a relatively attractive form of money in the short term regarding the return.
These deposits are generally three types:
a. Call deposits: withdraw terminate a money market account is the lender on a given date can.
b. three-month deposits: These deposits must be taken by the borrower
commitments over a lack of short-term cash
c. Six-month deposits: Normally, businesses do not make loans to deposits that time. These deposits are usually made with high quality borrowers.

6. Commercial Papers
A business can commercial paper to raise funds. This is a promissory note. The implementation of the company to the amount and / or reimburse a specific date.

7. Factoring
One factor is a financial institution that services related to the management and financing of receivables offers credit sales. Factoring provides the resources to finance receivables, and facilitates the recovery of debts.
There are 2 banks, sponsored organizations that provide services such.

a. SBI Factors and Commercial Services Ltd.
b. CANBANK factors LTD, operated since early 1997.

8. advance of working capital from commercial banks
Since not allow the above sources, the use of funds over a longer period, the business climate to seek other sources when the need for a longer period, ie up 3 years and older.

If a company wants to invest in long-term assets, it must find to fund the needs. The Company may, to some extent rely on internally generated funds. But it is sufficient in most cases, internal resources, not to support investment projects. When this happens, the company plans to reduce their investments or seek external funding. Most companies choose to take outside funding. They supplement internal financing to external financing has risen from a variety of sources.
The main sources of long-term financing can be divided roughly into:

Internal sources include:

a. Share (equity shares and preference) in capital
b. Reserves and surplus
c. Personal loans are called by the owner as a "quasi-Capital"

External sources include:

a. loan from banks, financial institutions and international organizations like the International Monetary Fund, World Bank, Asian Development Bank.
b. Notes
c. The demands of family and friends
d. Deposits Inter-enterprise
e. Asian Depository Receipts / Global Depository Receipts
f. Commercial documents.

Funding in the short term or long term is a function of financial management. The sound and efficient management that is to raise funds and, if necessary, at very attractive prices. Fundraising either internally or externally requires professional behavior, including compliance with both legal requirements, technical and legal Companies Act, the Securities Exchange Board of India, stock exchange authorities and other tax laws imposed as Income Act, the Foreign Exchange Management Regulations, the banking law, etc.

What is Trend Analysis

2011-06-03T16:56:00.000+05:00

Trend analysis is used when it is necessary to analyze the trend data presented in a series of statements from several consecutive years. The tendency of such an analysis is obtained as a percentage. Trend analysis of percentage movements in a sense, the progress up or down or regression. This method involves calculating the percentage ratio that any statement on the same point in the door in the base year.
The base year is one of the periods involved in the analysis, but as soon as is usually taken as the base year. The trend of the percentage declaration is a "tool of analysis to condense the data rupee absolute" in the comparative statements.

Merits of trend analysis:
• Trend percentages show the increase or decrease in a recognized position with the magnitude of change in percent, which is more effective than the absolute data.
• The percentages tend to facilitate effective comparative study on the financial performance of an enterprise over a period of time.

The drawbacks of the trend analysis:
• Any trend itself is not very analytical and informative.
• If the interpretation must be based on percentages and ratios are carried out in isolation and not with the absolute data from which the percentages were obtained, the findings tend to be absurd and baseless.
• The comparability of trend percentages will be affected if the accounts are prepared on a consistent basis year after year and if the price level is not constant.
• During periods of inflation, data over a longer period of time is unprecedented, if enabled, data rupeee absolute.
• There is always the danger of choosing the base year, which may not be representative of normal and typical.
• Although the percentages tend to give important information, too much importance and weight should not be placed on the percentages when a small number in the base year. In such cases, even a slight variation will be increased by the percentage change.

Used
• There is an increase or decrease a recognized position with the magnitude of percentage changes is more effective than absolute data.
• The trend rate facilitates effective comparative study on the financial performance of a company over time.

What is Fund Flow Statement

2011-06-02T12:14:00.001+05:00

Fund flow statement also referred to as statement of “source and application of funds” provides insight into the movement of funds and helps to understand the changes in the structure of assets, liabilities and equity capital. The information required for the preparation of funds flow statement is drawn from the basic financial statements such as the Balance Sheet and Profit and loss account. “Funds Flow Statement” can be prepared on total resource basis, working capital basis and cash basis. The most commonly accepted form of fund flow is the one prepared on working capital basis.

CASH FLOW VS FUND FLOW:
CASH FLOW - A Cash Flow Statement is a statement which shows inflows and outflows of cash and cash equivalents of an enterprise during a particular period. It provides information about cash flows, associated with the period’s operations and also about the entity’s investing and financing activities during the period.

FUND FLOW – Fund Flow Statement also referred to as the statement of “Source and Application of Funds” provides insight into the movement of funds and helps to understand the changes in the structure of assets, liabilities and equity capital., A fund flow statement is different from cash flow statement in the following ways:
i). Funds flow statement is based on the concept of working capital while cash flow statement is based on cash which is only one of the element of working capital. Thus cash flow statement provides the details of funds movements.

ii). Funds flow statement tallies the funds generated from various sources with various uses to which they are put. Cash flow statement records inflows or outflows of cash, the difference of total inflows and outflows is the net increase or decrease in cash and cash equivalents.

iii). Funds Flow statement does not contain any opening and closing balance whereas in cash flow statement opening as well as closing balances of cash and cash equivalents are given.

iv). Funds Flow statement is more relevant in estimating the firm’s ability to meet its long-term liabilities, however, cash flow statement is more relevant in estimating the firms short-term phenomena affecting the liquidity of the business.

v). The Cash Flow statement considers only the actual movement of cash whereas the funds flow statement considers the movement of funds on accrual basis.

vi). In cash flow statement cash from the operations are calculated after adjusting the increases and decreases in current assets and liabilities. In funds flow statement such changes in current items are adjusted in the changes of working capital.

vii). Cash flow statement is generally used as a tool of financial analysis which is utilized by the management for short- term financial analysis and cash planning purposes, whereas funds flow statement is useful in planning intermediate and long-term financing.

Advantages of fund flow are as follows:

management of various companies are able to review their cash budget with the aid of fund flow statements

Helps in the evaluation of alternative finance and investments plan

Investors are able to measure as to how the company has utilized the funds supplied by them and its financial strengths with the aid of funds statements.

It serves as an effective tool to the management of economic analysis.

It explains the relationship between the changes in the working capital and net profits.

Help in the planning process of a company

It is an effective tool in the allocation of resources

Helps provide explicit answers to the questions regarding liquid and solvency position of the company, distribution of dividend and whether the working capital is effectively used or not.

Helps the management of companies to forecast in advance the requirements of additional capital and plan its capital issue accordingly.

Helps in determining how the profits of a company have been invested: whether invested in fixed assets or in inventories or ploughed back.

Source:scribd.com/doc/15880531/FINANCIAL-MANAGEMENT-Notes

Debentures-Kinds of Debentures

2011-06-02T11:47:00.000+05:00

The issue of debentures by public limited companies is regulated by Companies Act 1956. Debenture is a document, which either creates a debt or acknowledges it. Debentures are issued through a prospectus. A debenture is issued by a company and is usually in the form of a certificate, which is an acknowledgement of indebtedness. They are issued under the company's seal. Debentures are one of a series issued to a number of lenders.
The date of repayment is invariably specified in the debenture. Generally debentures are issued against a charge on the assets of the company. Debentures may, however, be issued without any such charge. Debenture holders have no right to vote in the meetings of the company.
Bearer Debentures: They are registered and are payable to its bearer

Kind of Debentures:
1.Bearer Debentures: They are negotiable instruments and are transferable by delivery.

2.Registered Debentures: They are payable to the registered holder whose name appears both on debenture and in the register of debenture holders maintained by the company. Registered debentures can be transferred but have to be registered again. Registered debentures are not negotiable instruments. PI registered debenture contains a commitment to pay the principal sum and interest. It also has a description of the charge and a statement that it is issued subject to the conditions endorsed therein

.
3.Secured Debentures: Debentures which create a charge on the assets of the company, which may be fixed or floating, are known as secured debentures.

4.Unsecured or Naked Debentures: Debentures, which are issued without any charge on assets, are unsecured or naked debentures, The holders are like unsecured creditors and may sue the company for recovery of debt.

5.Redeemable Debentures: Normally debentures are issued on the condition that they shall be redeemed after a certain period. They can, however, be reissued after redemption under Section 121 of Companies Act 1956.

6.Perpetual Debentures: When debentures are irredeemable they are called Perpetual.

7.Convertible Debentures: If an option is given to convert debentures into equity shares at stated rate of exchange after a specified period they are called convertible debentures. In our country the convertible debentures are very popular. On conversion, the holders cease to be lenders and become owners. Debentures are usually issued in a series with a pari passu (at the same rate) clause which entitles them to be discharged rate ably though issued at different times. New series of debentures cannot rank pari passu with old series unless the old series provides so

8.New debt instruments issued by public limited companies are participating debentures, convertible debentures with options, third party convertible debentures, and convertible debentures redeemable at premium, debt equity swaps and zero coupon convertible notes.

9.Participating Debentures: They are unsecured corporate debt securities,which participate in the profits of the company. They might find investors if issued by existing dividend paying companies.

10.Convertible Debentures with Options: They are a derivative of convertible debentures with an embedded option, providing flexibility to the issuer as well as the investor to exit from the terms of the issue. The coupon rate is specified at the time of issue.

11.Third Party convertible Debentures: They are debt with a warranty allowing the investor to subscribe to the equity of a third firm at a preferential vis-à-vis the market price. Interest rate on third party convertible debentures is lower than pure debt on account of the conversion option.

12.Convertible Debentures Redeemable at a premium: Convertible debentures are issued at face value with an option entitling investors to later sell the bond to the issuer at a premium. They are basically similar to convertible debentures but embody less risk.

Functions of the Financial Manager

2011-05-30T00:13:00.000+05:00

The important role of financial manager in modern business is as follows:

1.Provision Capital: How to create and implement programs for Provision of capital required by the Company.

2.Investor relations: the creation and maintenance of a sufficient market for company with the Securities and maintaining a sufficient connection with the investment Bankers, analysts and shareholders.

3.Short long-term financing: To the appropriate sources for the company current loans from commercial banks and other lending institutions.

4.Banking and storage: agreement with the bank, consider a given depots.

5. Credit and collections: the direct lending and collection accounts for the company, including oversight of the necessary sales financing arrangements, such as the payment of time and Leasing plans.

6. Investment: To raise money from the company as needed and get create and coordinate measures for investments in pension and other similar trust funds.

7.Insurance: Providing insurance protection as needed.

8. Planning Control: Develop, coordinate and manage an appropriate plan for monitoring the measures.

9.Reporting and Interpretation: To compare the information with business plans and standards and to report and interpret the results of operations for all Levels of management and owners of the company.

10. Evaluation and Consulting: For all segments management is responsible for policy or action on any stage
Operation of the company in achieving the objectives and effectiveness of policies, organizational structure and procedures.

11. Tax Administration: the administration of tax policy and procedures.

12. Government Reporting: monitor or coordinate the preparation of the reports from government agencies.

13. Asset Protection: Protect company assets through internal controls, internal audit and the appropriate insurance Cover.

Profit Maximization vs Wealth Maximization

2011-05-29T23:57:00.000+05:00

Profits - It is a fundamental objective of financial management. Profit maximization is intended to improve efficiency, maintain stability and reduce losses and inefficiencies.

Benefit may be seen in both directions in this context.
1. Maximizing profits for the owner.
2. Maximization of profit for others.

1. They are generally available with efficiency and it is the test of effectiveness.But this approach has limitations as the ambiguity of the term is not clearly how he has never been defined, varies from person to person.

2. Quality of earnings - profits are generally calculated in terms of cash. Normally referred to as the official profits, but ignored some basic ideas like waste, efficiency, skill requirements of workers, employees, sales, product mix, production processes, administrative installation.

3. Moment of the time value / benefit of profits - in inflationary conditions reduce the value of the gain and thus the benefits should not extend over a longer period comparable.

4. Some economists argue that profit maximization leads to some unhealthy tendencies and harmful to society and can not use, unhealthy competition and lead to abuse of position.

Maximization of wealth - one of the traditional

Approaches to financial management by maximizing the wealth we create and accumulation of wealth, property and assets on average over a longer period of time to take care when to maximize profits, its limitations, it is run wealth maximization in the true sense of the search, this is a long-term cash flows that the profits were so it may be a

Situation where a company is losing money every year, but there are cash prizes for the severe impairment, which indirectly suggests high levels of investment in fixed capital and is the real wealth, and takes into account the time value money and it is generally accepted.

What is Employee Retention

2011-05-12T23:42:00.000+05:00

An Organization.

One where people meet and work in harmony towards a common goal is set to achieve as an organization called. People who earn their bread together in an organization and butter and profits as an employee. The employees are the lifeblood of a company and contribute effectively to its operation and profit taking.

An organization can only survive if people seriously and they are more concerned about their personal interests.

Employee Retention?

Employee retention will maintain the various policies and practices, the staff of an organization for a longer period of time. Each organization invests time and money to groom a new joinee make him a material corporate loans and bring them to parity with current employees. The organization is completely lost when employees leave their jobs once they are well trained. Employee retention takes into account the various measures taken for an individual remains in an organization for the maximum period.

Why do employees leave?

Studies show that most employees leave the organization of constant frustration and friction with superiors or members of the team. to force in some cases, low salaries, lack of growth opportunities and motivation of an employee looking for a change. The management must strive to be best to people who are really important to the system and are known, effective employees will be retained.

It is the responsibility of supervisors and management to ensure that employees with their roles and responsibilities and work satisfaction by providing a new challenge and learning every day.

The Example, the concept of employee loyalty to understand.

Misha was a talented staff, who gave his best and he has his work within the prescribed period. His work had no mistakes and always has been as innovative and challenging. Never in someone else's work and remained away from unnecessary gossip and rumor. She avoided a walk around the job was his work very seriously and is confident that his performance has always been sensitive. Greg, his immediate boss never really liked Misha and considers its biggest threat unturned to insult and discourage workplace.He Misha. Mischa soon got tired of Greg and decided to go further.

Situation 1 - The HR does not make efforts to conserve and mixing his resignation was accepted.

Situation 2 - Human Resources responded immediately and problems that led many to think Misha talked about for a change. They tried their best to convince Misha and even appointed a new chief to make things better for them.

Situation 1 would most likely leave the organization in a dilemma. It is not easy for an employee, also gels with the system and knows how to find work. Rent to engage an employee, the form and be in a position in an organization tremendous effort and the genuine efforts made, therefore, should be to retain employees. Every problem has a solution and management, the exact reasons for the dissatisfaction of an employee to explore. employees adhere to an organization for a long time tend to know the organization better and develop a sense of connection with it. Employees who remain for a longer duration, are familiar with company policies, guidelines and rules and regulations and may therefore contribute more efficiently than people who come and go.

Employee retention techniques go a long way in motivating employees to enjoy their work and to avoid changing jobs frequently.

Customer Relationship Management - CRM (MBA Notes)

2011-04-17T17:41:00.001+05:00

Each business unit will focus on the springs a long-term relationship with its customers, its stability at the flower market food today. Customer expectations are now not limited to obtaining the best products and services, they also need a face-to-face business where they want to get exactly what they want and a fast time.

Customer Relationship Management is a concept, strategy or standing to strengthen relationships with customers and simultaneously reduce costs and improve productivity and profitability of the company. CRM is an ideal system a central collection of all data sources within an organization and provides real-time atomic information to the customer. A CRM system is great and important, but it can be for small businesses and large corporations can be realized as the most important goal is to help customers effectively.

Usually there is an organization of various departments, mainly access to customer information, directly or indirectly. Many CRM system instead of the central information, reviews and makes then addressed in all departments. Consider an example of an international call center, a CRM tool, called "xyz", and must be integrated with a phone and a PC or laptop. Well, this system automatically collects customer calls. Before the Board attended the phone, the CRM system, the customer lifts details on the screen or laptop and also shows that the possibility of agreements with this particular client, the client has already purchased or ordered in the past and what the probability of purchase is the future. Not only that, it may also select what is best for all products to customers. For Finance, it's information on the current account and the accounts can, they can leave information about recent purchases by the customer. All of these data items are stored in the CRM database and are available as and when necessary. In this example, the CRM system a well-defined platform for all businesses interact with their customers and meet all their needs and desires very efficient and create a long-term relationship.

Wangling this kind of relationship with customers is not easy to manage and it depends on how systematic and flexible CRM system implemented or integrated. But once he did he is the best way to deal with customers. As the customer to the gratitude of self-satisfaction and loyalty, which translates into feeling better collaboration with suppliers and in turn, thereby increasing activity.

A CRM system is used not only to care for existing customers, but also helpful in attracting new customers. The first process starts with identifying the customer and storing all relevant data into the CRM system which is also called "Opportunity of Business. Sales and field service, and try, and the business of customers of sophistry follow up with them and convert them into a successful business.

Customer Relationship Management Strategies, a new perspective to all suppliers and customers have given to the company under an estimable relationship kept by the needs of mutual purchase and sale.

What is Ambush Marketing

2011-04-03T20:35:00.000+05:00

Ambush marketing as a situation in which a company or product is the advertising value of a great event without the event by sponsoring fund drive. This is a marketing campaign, which took place at an event, but not to the payment of a fee to sponsor the event. It occurs when a company has evidence of an event as a sponsor and a rival to the room of the mind through devious means sponsor. Ambush marketing is when companies pass themselves off as official sponsors, they are not looking. Most displays are performed at major sporting events.

It is a concept that the actions of companies looking for employees with a sponsored event without paying the organizer described. or most important events afford a stamp for the exclusive and official sponsor of the event in a specific category or categories, and this exclusivity creates a problem for one or more other brands. The ambush is to highlight the impression to consumers that the thief is somehow tied to the event. Ambush marketing can some or most of the benefits of a legitimate, paid for the sponsorship to a relatively low cost.

Ambush marketing can be divided into two classes.

1. Direct ambush marketing. In 1994 FIFA World Cup MasterCard received exclusive rights to use the World Cup logo, but a competitor Sprint Communications logo used without permission. It is the direct attack, but may be protected by law.

2. Indirect Ambush Marketing. More indirect means of ambush marketing can include sponsorship of the transmission part of the event, sponsorship etc. sub-major event

It would be pertinent to consider why exactly this sponsorship as part of their marketing programs, because it will help explain the impact of ambush marketing.

Audience Awareness: When people can afford to relax their information more quickly. This allows the brand message effectively deep into the psyche of consumers.

Image: sponsorship led to the improvement of brand image by association with a high-level event.

Targeting segment: sponsorship, marketing their target consumers in an effective and relevant. So when Mercedes Benz wants to reach CEOs, can be done effectively by sponsoring a golf tournament than advertising on television.

Other options: Sometimes, companies have no other way to reach the masses through government restrictions on advertising, etc. (for example, many tobacco companies and alcohol can not apply directly).

PR: Finally, have the opportunity to sponsor high visibility and to get free PR.

Conclusion

Ambush marketing is defined as a marketing strategy Cast consumer's mind space for an event. What Ambush marketing is not, try something sneaky to take advantage of properties of grants without having to pay higher taxes. The decision to sponsor the marketing is really a question of whether the sponsorship, as is currently offered is really profitable.
Successful strategies for ambush feeding poorly thought incapable of sponsorship and sponsors in respect of ambush marketing to make the natural result of healthy competition and the effect of distance sponsored useful properties, not least for eradicate a successful ambush, over time, not the rate of sponsorship.

MBA without GMAT

2011-04-03T20:23:00.000+05:00

GMAT, GRE or MAT are standardized tests that colleges for MBA enrollment in advanced courses as required. GMAT Graduate Management Admission Test is. E 'used by the Graduate Management Admission Council (GMAC), the test should be administered in three main parts: the Analytical Writing Assessment, the Quantitative section and the verbal. Students can take the GMAT, the computer as a Computer Adaptive Test (CAT).).

The following are the top accredited colleges and universities with MBA programs without GMAT requirement:

Durham Business School (UK)

- Accredited by AACSB, the Association of MBAs and EQUIS.

- 15 in Britain, 26 and 65 in Europe in the world (Economist MBA Rankings 2008).

- Put in Great Britain 13, 22 and 80 in Europe in the world (Financial Times Global MBA Ranking 2009).

- Provides distance learning MBA / MBA (Finance)

- Financial Times Top 40 Distance Learning MBA programs in the world (March 2008).

Glasgow University Business School (UK)

- It 's the fourth oldest university in the English-speaking world.

- The University of Glasgow Business School is one of only two schools in Scotland, accredited by the Association to Advance Collegiate Schools of Business (AACSB).

- It is also accredited by the Association of MBAs.

Henley Business School (UK)

- Henley MBA Distance Learning is one of the best in the world, 2nd in the UK and 6th largest in the world, according to the Economist Intelligence Unit (EIU), January 2008.

- The MBA program is the first full-time international student and faculty quality (EIU 2008) placed at the base.

- It is the largest global provider of triple-accredited MBA program (AMBA, EQUIS, AACSB).

Hull University Business School (UK)

- Featured in the top quarter of the prestigious The Times Good University Guide 2009 rankings for business and economics.

- The quality of school teaching and learning is rated as "excellent" was to check with a score of 23/24 in QAA.

- The school received accreditation from the Foundation for Management Development EQUIS and AMBA accreditation for its MBA program.

Edinburgh Business School (UK)

- EBS is part of Heriot-Watt University - His Royal Charter granted in 1966.

- Offering Distance MBA training with the thematic priorities in the strategic planning, marketing, human resources and finance.

- EBS MBA program is listed as the largest outside the U.S. (FT 2009).

- More than 40% of Fortune 500 companies have students on its MBA program.

U. Carlos III of Madrid (Spain)

- Universidad Carlos III is one of only five schools AMBA-accredited in Spain.

- TOEFL and GMAT are not required.

Toulouse Business School (France)

- Does not require the GMAT for admission provided that applicants come from accredited institutions.

- End of the Aerospace MBA, which is a full-time of 12 months from October to September. The program is taught entirely in English.

- The Aerospace MBA program is accredited by AMBA.

Concordia University Wisconsin (USA)

- The MBA program can be examined by an independent e-learning.

- The MBA program is accredited by the International Assembly for Collegiate Business Education.

- Thesis and GMAT scores are not required.

Regis University (USA)

- Offering online MBA degree that can be completed in two years.

- No GMAT or thesis required.

- Consistently a top-Master University in the West by U.S. News and World Report ranks.

Brief Introduction of Forex Terms for Business Students

2011-03-29T12:34:00.000+05:00

Business students should try to take interest in forex news and trade development as well for getting better understanding about the current market and business functions. There are general Forex terms define as under:

Broker: It is Common name used to define, generally, that act as the middle-man in the financial markets. There are two types of brokers, market makers (dealing desk) or ECNs (non-dealing desk).

ECN: Stands for Electronic Currency Network. It directs the client straight through the interbank market, usually resulting in tighter spreads. Most ECN's have a fixed commission per roun/turn lot.

Lot: Pack in which trading units/merchandise being sent to the market. There are 3

types of lots: mini and regular. A micro lot consists of 1,000 units of the base currency. A mini lot consists of 10,000 units of the base currency. A regular lot consists of 100,000 units of the base currency.

Pip: The smallest price change that a given exchange rate can make.

Leverage: The use of various financial instruments such as the scope for increasing the earning capacity of an investment.

Margin: The amount of capital provided by the customer as a percentage of the current market value of securities in a margin account instead ...

Market Maker: Middle-man between the user and retail interbank market. Interbank liquidity provider charges the market maker a small commission for access to tradeable volumes. The market maker to offer charging for their customers access to tradable prices in the foreign exchange market.

Spread: The difference between the bid and the ask price of a security or asset.

STP: Straight Through Processing. This is a complete rationalization and automation of an entire transaction. or if a change request is made, there has been no manual intervention from the back and forth phone calls and faxes to confirm the approval, and it is. No manual intervention is also, of course, leaves no room for human error. This contract allows e-merchants trying to play with an agent bank occurs without interaction with a "middle man", whose job it is, the market exchange of money between customers make the room.

Plan of Action for the Manager of Sales

2011-03-12T12:10:00.000+05:00

On goals for you and your sales staff, you start with the action plan, these key elements: a starting point, written goals, a plan, how to deal with setbacks and roadblocks, checkpoints , dashboard, reward systems, Review.

Starting Point

Before you decide where you want to go see where you are. Get a three-ring binder, a lot of paper, a pencil and an eraser great. Find a quiet place and write a clear statement of where you are today. Take your time. They were without a roadmap for this long, a little longer will not hurt.Be as you can as an adult. This is not a "make me proud of you" exercise is not a "kick me". Be honest - did anyone see your plan if you wish to bid for control.

Written goals

Start a list of what you want while the rest of your life to achieve. List tangible (things) and intangible (identity) to be achieved.

You can view these areas of your life: economic, professional, family, social, health, spiritual sport and education.

At the end of this list, go back and rank them in order of priority - most important to least important. How you do this, make sure that priorities are not all from one area of your life. You do not want to be the richest person in the cemetery, or the lowest handicap on the golf course, while your family is scattered on the beach. If you're like most people, you will probably find a lot of things you thought you did not want that important when viewed in the picture.

Plan

Now you have your goals, why you need to make a plan first?

A. It is easier to move things.

B. Knowledge the image you may be less and easier to make decisions. Good planning is not always clear what should be your current choice, but it will facilitate your decision making. Ask yourself: Is what I do now to help me achieve my goals I? Scheduling allows you the best possible decisions about what to do now to make!

C. To control instead of being controlled.

D. Planning for the future is not predictable. He, however, you can expect, what the most likely to occur.

E. Planning is an ongoing activity, not a periodical.

Q. You'll be better able to translate general objectives into specific objectives and measurable.

G. Planning helps you identify what needs to be done to ensure the desired results. Henry David Thoreau said: "In the long term, met men only, where they arrive."

In your notebook plan of action-from No. 1 start gate, write how you will take to achieve your goals. It is OK to get your paper eraser and much more.

As for the roadblocks and setbacks Deal:

If you meet these goals for the high priority, write to each door, can find any obstacles and setbacks. Then, provided that what will actually happen, how do you cope? This is perhaps the most difficult part of the program, but I never said to spend your life would be easy. The only thing in life is easy to run and shouted: "What happened"

Checkpoints

Decide on a realistic assessment "when" for each of your goals.

Once a date for achieving each of your goals, break each goal into smaller segments of some secondary objectives. Select the date you reach the dates of these shorter-range goals.

After all, if you want to eat an elephant, you do not swallow it. Would you eat a slice at a time!

Dashboard

With your plan and the checkpoints that act on them! You'll start a new enthusiasm for internal review life! What you need on a daily basis, is not as painful and / or difficult to see because you know why you're doing.

If there are times, creep of fear, doubt, anxiety and discouragement? Yes, but remember, John F. Kennedy set the goal for America on the moon in ten years. It happened in seven years. If the man on the moon, you can achieve your goals!

Three of the five cards, a list of these objectives are more important and have with you all the time. Keep looking. Keep updating maps. It will motivate you to continue.

Reward system

Your self knows it is a good idea to work your plan. Your child-I must be a reason. Feed! decide the objectives of your program in advance how you meet the needs of the instant gratification of your salary child-self, and if you plan to achieve your objectives in the short term.

Review

Nothing is etched in stone. As so often as you want to step back and take a look at your image. Want to make a change? Go ahead.

You can now use one of the objectives of the program for your personal and professional life as a tool to help use your vendor can do more.

Excel Functions for Financial Analysis

2011-03-12T11:44:00.000+05:00

Excel Functions for Financial Analysis for Finance Manager:

AMORDEGRC (cost, date purchased, first period, salvage, period, rate, basis)

If an asset is purchased in the middle of the accounting period, the prorated depreciation is taken into account.

AMORLINC (cost, date purchased, first period, salvage, period, rate, basis)

Returns the depreciation for each accounting period. If an asset is purchased in the middle of the accounting period, the prorated depreciation is taken into account.

CUMIPMT

Returns the cumulative interest paid between two periods.

CUMPRINC

Returns the cumulative principal paid on a loan between two periods

DB (cost, salvage, life, period, month)

Returns the depreciation of an asset for a specified period using the fixed-declining balance method.

DDB (cost, salvage, life, period, factor)

Returns the depreciation of an asset for a specified period using the double declining balance method or some other method you specify

MIRR (values, finance rate reinvest rate)

Returns the modified internal rate of return for a series of periodic cash flows. MIRR considers both the cost of the investment and the interest received on reinvestment of cash.

IRR (values, guess)

Returns the internal rate of return for a series of cash flows

PV (rate, nper pmt, fv, type)

Returns the present value of an investment

NPV (rate, value1, value2,)

Returns the net present value of an investment based on a series of periodic cash flows and a discount rate

XNPV (rate, values, dates)

Returns the net present value for a schedule of cash flows that is not necessarily periodic.

SLN (cost, salvage, life)

Returns the straight-line depreciation of an asset for one period

SYD (cost, salvage, life, per)

Returns the sum-of-years' digits depreciation of an asset for a specified period

SYD = (cost-salvage) x (life – per + 1) x 2

(Life)(Life + 1)

VDB (cost, salvage, life, start period, end period, factor, no switch)

Returns the depreciation of an asset for any period you specify, including partial periods, using the double-declining balance method or some other method you specify. VDB stands for variable declining balance.

XIRR (values, dates, guess)

Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic.

MBA Student Loan-Programs and guide

2011-02-19T11:11:00.000+05:00

Before the test, to bridge any funding MBA loans, you generally need for scholarships, sponsoring firms and help you on your own savings, determine the best combination of financial options to finance your MBA.

If you take a loan, choose a part or all of your MBA finance, consider the following factors before you all dotted lines mark:

* What is the total cost of the borrowing over the term of the loan?

* Are there any additional charges, such as up front fees? If so, add these into your total cost calculations.

* How does the repayment schedule fit with your own requirements? MBA loans will usually allow for interest and / or principal payments to be postponed until after graduation. Make sure that this meets your needs.

* Is the lending organization experienced in providing student loans?

* Are there any special services available to you if you take a particular loan?

Considering these factors, you can make an informed decision about the loan the MBA which best suits your own situation.

The good news is that there are a number of reputable suppliers MBA loan you choose.

MBA Loans | the MBA Loan Program from GradLoans
GradLoans.com is a member of the long established Student Loan Network and offers an excellent overview of the financial aid process, providing answers to any questions that you may have on financial aid and how to apply for it. There is also guidance on the MBA loan process, including how to complete the Free Application for Federal Student Aid (FAFSA) form, which is available to US citizens and sometimes international students.

eStudentLoan: Compare MBA loans and apply online
On the eStudent Loan site you can find a free, objective apples-to-apples comparison of private and government student loans. You will also find plenty of tips and advice on the entire financial aid process and how to find and apply for the MBA loan that suits you best, using the eStudent Loan LoanFinder. Click here to visit the eStudent Loan site.

FAFSA Online - FAFSA Application Services
This site lets you complete your FAFSA Application online to qualify for Federal Financial Aid. The professional advisors at FAFSA Online will also review your form to insure accurate and prompt filing.

MBA LOANS This is a loan program sponsored by the Graduate Management Admission Council (GMAC) and funded by Sallie Mae and Wells Fargo Education Services.

College Loan Solutions, Inc. - College Loans for Today's Students
College Loan Solutions will help you to learn more about the private alternative student loans that are available to fund your education. There are no Federal Student Aid (FAFSA) forms required, no school verification and you can apply online. The funds made available go directly to you, the student.

Student Loan Consolidator - Student Loan Consolidation Services
Student Loan Consolidator has been around since early 1998. Their site provides practical and useful guidance to help you decide if you will benefit from consolidating your college education debt, and has an online application facility.

AMBA Loan scheme If you are UK resident and attending a business school that is accredited by the AMBA, then you are eligible for the Association's MBA Loan scheme. There are also details of business school loans, provided in conjunction with NatWest, which are available for study overseas.

To summarize on MBA loans:

* Don't sign any loan agreement until you have fully considered all other options to pay for your MBA.
* If you do need to bridge any finance gap with a loan, do all the research you can to make certain you get the best deal available and one that suits your circumstances.

Tips To Write Assignments For MBA

2011-02-01T22:12:00.000+05:00

MBA is the study of decision making for management position. MBA student can propose quick decision in the favor of an organization. The course of MBA is not hard if a student think over that practically. It is the course of practical knowledge in business management field to handle an organization business or enterprise very efficiently.

In these days, there are many universities which offering distance or part time MBA degree for working students. For the course students are bound to write assignments for internal assessment and to get higher marks or credits.

Some tips to write Assignments for distance MBA:

Online Study:

In the age of internet there is much importance of online study. Most of the blogs or sites offer presentation on various masters’ degree or chapters

Practical Study:

In order to write effective assignments students need to study practically. Practical study comes with the discussion and debate among friends. If a student reads papers, watch TV or magazines on regular basis then it can be developed practical knowledge.

Study in Class:

If a student can attend a regular class for his chapter or course then it can be much beneficial to think over for related assignments.

Forums Discussion:

To write an effective assignment for the management course forums discussion can be better place to take about decent ideas to the related chapters. A student can get there some materials also to add that in their assignments.

All these tips can be benefited for a student to write an effective assignment for distance MBA courses.

Most of the students write their assignment on computer and take print out but if a student submit hand written assignments then he can collects more credits or more marks by his university.

During preparation of MBA assignments a student can practice all the questions for his exam also. So, it is most important because it shows the student’s talent and their internal skills towards the subjects.

MBA in IT- Short Definations

2011-02-01T22:02:00.000+05:00

Essential Hardware Components
At the highest level, two things are required for computing
Hardware: The physical equipment in a computing environment such as the computer and its peripheral devices (printers, speakers, etc.)

Software: The set of instructions that operates various parts of the hardware. Also termed as “computer program
All computers have the following essential hardware components:
Input
The devices used to give the computer data or commands are called Input devices. Includes keyboard, mouse, scanner, etc
Processor
A processor is the logic circuitry that responds to and processes the basic instructions that drive a computer.
Memory
Memory is the electronic holding place for instructions and data that your computer's microprocessor can reach quickly.
Storage
Computer storage is the holding of data in an electromagnetic form for access by a computer processor.
Output
The devices to which the computer writes data are called Output devices
Input Devices
Mouse
A mouse is a small device that a computer user pushes across a desk surface in order to point to a place on a display screen and to select one or more actions to take from that position. Keyboard
On most computers, a keyboard is the primary text input device. A keyboard on a computer is almost identical to a keyboard on a typewriter.
Joystick
In computers, a joystick is a cursor control device used in computer games.
Digital Camera
A digital camera records and stores photographic images in digital form that can be fed to a computer as the impressions are recorded or stored in the camera for later loading into a computer or printer. Currently, Kodak, Canon, and several other companies make digital cameras.
Microphone
A device that converts sound waves into audio signals. These could be used for sound recording as well as voice chatting through internet.
Scanner
A scanner is a device that captures images from photographic prints, posters, magazine pages, and similar sources for computer editing and display.
What is a Port?
On computer and telecommunication devices, a port (noun) is generally a specific place for being physically connected to some other device, usually with a socket and plug of some kind.
Many Types of Ports
1.    Parallel
2.    Serial
3.    SCSI
4.    USB
5.    Firewire
Parallel
An interface on a computer that supports transmission of multiple bits at the same time; almost exclusively used for connecting a printer.
Serial
It is a general-purpose personal computer communications port in which 1 bit of information is transferred at a time.
SCSI
A port that's faster than the serial and parallel ports but slower and harder to configure than the newer USB port. Also know as the Small Computer System Interface.
USB
USB (Universal Serial Bus) is a plug-and-play hardware interface for peripherals such as the keyboard, mouse, joystick, scanner, printer and modem.
Firewire
FireWire is simply a really fast port that lets you connect computer peripherals and consumer electronics to your computer without the need to restart.
Processor
•    Pentium
•    Celeron
•    Athlon
•    PowerPC
•    StrongARM (PDA)
•    Crusoe (Laptops)
•    SPARC (Workstations)
Memory/Storage
RAM
RAM (random access memory) is the place in a computer where the operating system,
Punch cards
A card on which data can be recorded in the form of punched holes
ROM
ROM is "built-in" computer memory containing data that normally can only be read, not written to. Hard disk
Hard disk is a computer storage device which saves and retrieves the data when required. Floppy disk
A diskette is a random access, removable data storage medium that can be used with personal computers.
Tape
In computers, tape is an external storage medium, usually both readable and writable, can store data in the form of electromagnetic charges that can be read and also erased.
CD
A compact disc [sometimes spelled disk] (CD) is a small, portable, round medium for electronically recording, storing, and playing back audio, video, text, and other information in digital form.
DVD
DVD (digital versatile disc) is an optical disc technology that is expected to rapidly replace the CD-ROM disc (as well as the audio compact disc) over the next few years. The digital versatile disc (DVD) holds 4.7 gigabyte of information on one of its two sides, or enough for a 133-minute movie.
Classifying Memory/Storage
•    Electronic (RAM, ROM)
•    Magnetic (HD, FD, Tape), optical (CD, DVD)
•    Volatile (RAM), non-volatile (HD)
•    Direct access (RAM, HD), serial access (Tape)
•    Read/write (HD, RAM), read-only (CD)
Output Devices
•    Printer
•    Plotter
•    Speakers
•    Monitor
Modem is output as well as input device at the same time.
PC Parts
•    Monitor
•    Keyboard
•    Mouse
•    Speaker/headphone
•    Microphone
•    CPU
•    Front buttons
•    Backside ports, fan, slots, cables
Inside CPU
•    Power supply/fan & connectors
•    Motherboard
•    Bus
•    Edge connectors
•    Ports
•    Video card
•    Modem
•    Network card
•    Sound card
•    ROM
•    RAM
•    Slots
•    DIMM’s
The Processor Module
•    The slot on the motherboard
•    The housing
•    Fan
•    Heat sink
•    Pins (256?), Transistors (10 million?)

Marketing Notes-Consumer Adoption Process

2011-01-16T11:26:00.001+05:00

a) Stages in the Adoption Process

1. Awareness. In this stage the consumer is aware of the new product but lacks further information about it.
2. Interest. The consumer is motivated to seek information about the new product.
3. Evaluation. The consumer determines whether or not to try the new product.
4. Trial. The consumer tries the new product on a small scale to test its efficacy in meeting his or her needs. Trial can be imagined use of the product in some cases.
5. Adoption. The consumer decides to make use of the product on a regular basis.

b) Individual differences in the adoption of innovations
1. Innovators. Innovators help get the product exposure but are not often perceived by the majority of potential buyers as typical consumers.
2. Early Adopters. This group serves as opinion leaders to the rest of the market.
3. Early Majority. Some 34% of the market that is the "typical consumer" but likely to adopt innovations a little sooner.
4. Late Majority. This group is skeptical and adopts innovations only after most of the market has accepted the product.
5. Laggards. This group is suspicious of change and adopts only after the product is no longer considered an innovation.

C. Product Life-Cycle Strategies
After launching the new product, management wants the product to enjoy a long and happy life. Although it does not expect the product to sell forever, the company wants to earn a decent profit to cover all the effort
a) Product development begins when the company finds and develops a new-product idea.
b) Introduction is a period of slow sales growth as the product is introduced in the market.
c) Growth is a period of rapid market acceptance and increasing profits.
d) Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers.
e) Decline is the period when sales fall off and profits drop.

MBA Books in Marketing Recommendation

2011-01-02T11:48:00.000+05:00

Management Principles and Practice.
• Koontz & Weirich - Essentials Of Management, Tata McGraw Hill

Organizational Behavior.
• Peter

Managerial Economics & Environment.
• A.N.Agarwal – Indian Economy – Wishwa Prakashan

Executive Communication.
• Rajendra Paul and Koralahalli – Business Communication

Statistics & Research Methodology
• Kothari C.R. – Research Methodology

Operations Management.
• Pannerselvam – Production and Operations Management, PHI

Marketing Management.
• Philip Kotler – Marketing Management, Pearson Education / PHI, 2003

Financial & Management Accounting.
• Prasanna Chandra – Financial Management – Theory and Practice
• S.N.Maheswari – Management Accounting

Human Resource Management.
• Gary Dessler – Human Resource Management, Seventh Edition, Prentice-Hall Of India P.Ltd., Pearson
• VSP Roa – Human Resource Management : Text and Cases, First Edition, Excel Books, New Delhi – 2000

Operations Research.
• Kanti Swarup, Gupta and Man Mohan – Operations Research

Statistics & Research Methodology
• Kothari C.R. – Research Methodology (Rs.200)

Operations Management.
• Pannerselvam – Production and Operations Management, PHI (Rs.295)

Marketing Management.
• Philip Kotler – Marketing Management, Pearson Education

Financial & Management Accounting.
• Prasanna Chandra – Financial Management – Theory and Practice, Tata McGraw Hill

• S.N.Maheswari – Management Accounting

Human Resource Management.
• Gary Dessler – Human Resource Management, Seventh Edition
• VSP Roa – Human Resource Management : Text and Cases, First Edition, Excel

MBA Projects Sample Downloads - Marketing

2011-01-02T11:28:00.000+05:00

Consumer Buying Behaviour on Car Market Project Report
Download Full Project Report

Vodafone Essar Project Report
Organisation Study of Vodafone Essar limited.
Download Full Project Report

Brand Awareness of Airtel Project Report
Download Full Project Report

IDEA Cellular Project Report
Download Full Project Report

Cement Industry Analysis of Pakistan
Download Full Project Report

Comparative Market Analysis of Samsung Electronics project report
Download Full Project Report

LUX - Marketing Project Report
Download Full Project Report

Distribution System of LG Electronics ppt
Download Full Project Report

Quantitative, Contemporary and Emerging views of Management

2010-12-05T19:25:00.000+05:00

Quantitative Approach:-

It involves the use of quantitative techniques to improve decision making.

Branches in the Quantitative Management Viewpoint:

1. Management science / operations research:-

It is an approach aimed at increasing decision effectiveness through the use of complicated mathematical models and statistical methods.

2. Operations Management:-

It is the function or field of expertise that is primarily responsible for the production and delivery of an organization’s products and services.

3. Management information systems (MIS):-

It is the name often given to the field of management that

focuses on designing and implementing computer-based information systems for use by management

Contemporary viewpoints:
This school of thought or view point about management includes those major ideas about managing and organizations that have emerged since the 1950s.

The systems theory approach:-
It is based on the idea that organizations can be visualized as systems of interrelated parts or subsystems that operate as a whole in search of common goals.

Contingency Theory:-
It is the view that appropriate managerial action depends on the particular parameters of each situation.

Emerging views:
A. Globalization.:-
Managers in all types and sizes of organizations are faced with the opportunities and challenges of globalization.

B. Entrepreneurship:-
It refers to the process whereby an individual or a group of individuals uses organized efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness.

C. Managing in an E-Business World:-
1. E-business (electronic business)
2. E-commerce (electronic commerce)

D. Need for Innovation and Flexibility.

E. Quality Management Systems.
1. Total quality management:-
It is a philosophy of management that is driven by customer needs and expectations and focuses on continual improvement in work processes

F. Learning Organizations and Knowledge Management.
1. A learning organization is one that has developed the capacity to continuously adapt and change.
2. Knowledge management involves cultivating a learning culture where organizational members systematically gather knowledge and share it with others to achieve better performance.

G. Theory Z : William Ouchi’s:-
Theory Z combines positive aspects of American and Japanese management into a modified approach aimed at increasing managerial effectiveness.

Trade Discounts-Markup-Markdown- Trade Values- Trade Terms

2010-12-03T13:39:00.000+05:00

DISCOUNT:
Discount is a reduction in price which the seller offers to the buyer.

TRADE DISCOUNT:
Amount of discount = d × L
Where, d = Percentage of Discount
L = List Price
Net Price = L – Ld = L(1 – d)
Net Price = List Price – Amount of Discount

MARKUP:
Markup is an amount added to a cost price while calculating a selling price.

Markup as Percentage of Cost (MUC):
Here markup is some percentage of cost price. For simplicity, it is also named as %Markup on cost. The relation between %markup on cost, cost price and selling price is:

Selling Price = Cost price + (Cost price × %Markup on cost)
= Cost price (1 + %Markup on cost)

Markup as Percentage of Sale price (MUS):
Here markup is some percentage of selling price. For simplicity, it is also named as %Markup on sale. The relation between %markup on sale, cost price and selling price is:

Selling Price = Cost price + (Selling price × %Markup on sale)

Cost price = Selling price – (Selling price × %Markup on sale)
= Selling price (1 – %Markup on sale)

Rs Markup:
Markup in terms of rupees is called Rs markup. The relations between Rs markup, cost price and selling price are:

    1.   Selling Price = Cost price + Rs Markup
    2.   Rs Markup = %Markup on cost × Cost price
    3.   Rs Markup = %Markup on sale × Selling price

For example:
The cost price of certain item is 80Rs and its selling price is 100Rs. Then
Rs Markup = Selling price – Cost price
                  = 100 – 80
                  = 20 Rs

MARKDOWN:
Markdown is a reduction from the list/cost price.

SERIES TRADE DISCOUNT:
This refers to the giving of further discounts as incentives for more sales. Usually such discount is offered for selling product in bulk.

L = List price = 100
D = discounts

    Net price = L(1-D1)(1-D2)(1-D3)
Single equivalent discount rate = L – Netprice =? %
Rs. Discount = (0.2787)(20000)
                             = 5,574 Rs

TRADE DISCOUNT-EXAMPLE 2
Find the single discount rate that is equivalent to the series
15%, 10% and 5%.
TradeDiscount
Apply the multiple discounts to a list price of Rs. 100.
Net price = (1-d1)(1-d2)(1-d3)
               = 100(1 -15%) (1 - 10%) (1 - 5%)
               =100(0.85) (0.9) (0.95)
               = 100(0.7268)
               = 72.68
% Discount = 100 - 72.68
                   = 27.62%

CASH DISCOUNT:
Cash Discount is allowed on Invoices, Returned Goods, Freight, Sales Tax and A common business phrase for a cash discount is "3/10, net/30," meaning that a 3% discount is offered if the amount due is paid within 10 days; otherwise 100% of the amount due is payable in 30 days

CASH DISCOUNT-EXAMPLE:
Invoice was dated May 1st. The terms 2/10 mean that 2% discount is offered if invoice is paid up to 10thMay.
What is the net payment for invoice value of Rs. 50,000 if paid up to 10th May?
Cash Discount
N = L(1 – d)
= 50,000(1-0.02)
= 50,000(0.98)
= 49,000 Rs.

DISCOUNT PERIODS:
Discount Periods are periods for the buyer to take advantage of Discount Terms.

CREDIT PERIODS:
Credit Periods are periods for the buyers to pay invoices within specified times.

PARTIAL PAYMENTS:
When you buy on credit and have cash discount terms, part of the invoice may be paid within the specified time. These part payments are called Partial Payments.
You owe Rs. 40,000.
Your terms were 3/10 (3% discount by 10th day).
Within 10 days you sent in a payment of Rs. 10,000.
Rs. 10,000 was a part payment.
How much is your new balance?
First we will find the amount that if 3% discount is given on it, the net amount is 10000Rs.
Let that amount is t. Then
10000 = t (1 – 0.03)
This implies, t = 10000
(1 – 0.03)
Thus, t = 10309Rs
This means that although you pay 10,000Rs, due to 3% cash discount 10309Rs among 40,000Rs is paid.
Hence the new balance = 40000 – 10309 = 29691Rs.

What is Depreciation-Method to calculate Depreciation

2010-11-04T14:15:00.001+05:00

Fixed Assets:-Fixed Assets are those assets which are:

• Of long life

• To be used in the business to generate revenue

• Not bought with the main purpose of resale.

Fixed assets are also called “Depreciable Assets”

Accumulated Depreciation:-

It is the depreciation that has been charged on a particular asset from

the time of purchase of the asset to the present time.

Amortization:-

No depreciation is charged for ‘Land’. In case of ‘Leased Asset/Lease Hold Land’ the amount paid for it is charged over the life of the lease and is called Amortization.

Methods of calculating Depreciation:-

1: Straight line method/Original cost method/Fixed installment method:-

Depreciation = (cost – Residual value) / Expected useful life of the asset

Residual value:

It is the cost of the asset after the expiry of its useful life.

2: Write Down value/Reducing method/diminishing method:-

WDV = Original cost of fixed asset – Accumulated Depreciation

Entries for Recording Disposal:-

Debit: Fixed Asset Disposal A/c

Credit: Fixed Asset Cost A/c

(With the cost of asset)

Debit: Accumulated Dep. A/c

Credit: Fixed Asset Disposal A/c

(With the depreciation accumulated to date)

Debit: Cash / Bank / Receivable A/c

Credit: Fixed Asset Disposal A/c

(With the price at which asset is sold)

METHODS OF CHARGING DEPRECIATION

Capital Work in Progress Account:-

If an asset is not completed at that time when balance sheet is prepared, all costs incurred on that asset

up to the balance sheet date are transferred to an account called Capital Work in Progress Account.

Debit: Relevant asset account

Credit: Capital work in progress account

Cost of Goods Sold Statment & valuation of Stock

2010-11-04T14:05:00.000+05:00

Cost of goods sold statement:-
The statement shows the value of raw material consumed, amount spent on labor and other factory expenses, finished goods produced and goods unsold (in stock).

Standard format of cost of goods sold statement is given below:

Raw Material:
O/S Raw Material
+ Purchases
+ Cost Incurred to Purchase RM
- C/S Raw Material
Cost of Material Consumed

Conversion Cost:
+ Direct Labor Cost
+ Factory Overheads
Total Factory Cost

Work in Process:
+ O/S of WIP
- C/S of WIP
Cost of Goods Manufactured
Finished Goods:
+ O/S of Finished Goods
- C/S of Finished Goods
Cost of Good Sold

Cost of material consumed:-
It is the cost of material used for consumption that has been put in the production process.

Over Heads:-
Over Heads are the other costs incurred in relation of manufacturing of goods. Examples are factory utilities, supervisor salaries, equipment repairs etc.

Total factory cost:-
It is the cost of material consumed plus labor and over heads. In other words it is the total cost incurred in the factory.

Cost of goods manufactured:-
It is total factory cost plus opening stock of work in process less closing stock of work in process.

Cost of goods sold:-
It is the cost of goods manufactured plus opening stock of finished goods less closing stock of finished goods.

Prime/Basic Cost = Cost of Direct Material Consumed + Direct Labor cost

Conversion cost:-
It is the cost incurred to convert raw material to finished goods.
Conversion cost = Labor cost + factory overhead

Valuation of Stock:-
Any manufacturing organization purchases different material through out the year. The prices of purchases may be different due to inflationary conditions of the economy. The question is, what item should be issued first & what item should be issued later for manufacturing. For this purpose, the organization has to make a policy for issue of stock. All the issues for manufacturing and valuation of stock are recorded according to the policy of the organization.

Mostly these three methods are used for the valuation of stock:
• First in first out (FIFO)
• Last in first out (LIFO)
• Weighted average
First in first out (FIFO)
The FIFO method is based on the assumption that the first merchandise purchased is the first merchandised issued. The FIFO uses actual purchase cost.

Last in first out (LIFO)
The LIFO method is based on the assumption that the recently purchased
merchandise is issued first. The LIFO uses actual purchase cost.

Weighted average method
This average cost is computed by dividing the total cost of goods available for sale by the number of units in inventory.

Henri Fayol’s 14 Principles of Management

2010-10-01T11:50:00.003+05:00

Henri Fayol’s 14 Principles of Management:

1. Division of work
Specialization increases output by making employees more efficient.

2. Authority.
Managers must be able to give order. Authority gives them this right. Along with authority, however, goes responsibility.

3. Discipline.
Employees must obey and respect the rules that govern the organization.

4. Unity of Command
An employee should receive orders from one superior only.

5. Unity of direction.
The organization should have a single plan of action to guide managers and workers.

6. Subordination of individual interests to the general interest.
The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.

7. Remuneration.
Workers must be paid a fair wage for their services.

8. Centralization.
This term refers to the degree to which subordinates are involved in decision making.

9. Scalar Chain.
The line term refers to the degree to which subordinates are involved In decision making.

10. Order.
People and materials should be in the right place at the right time.

11. Equity.
Managers should be kind and fair to their subordinates.

12. Stability of tenure of personnel
Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.

13. Initiative.
Employees who are allowed to originate and carry out plans will exert high levels of effort.

14. Esprit de corps
Promoting team spirit will build harmony and unity within the organization.

Bureauctatic Management-General Adminstrative Theorists

2010-10-01T11:30:00.007+05:00

Bureaucratic management:

GENERAL ADMINISTRATIVE THEORISTS:-

He was the managing director of a large French coal-mining firm. His attention was aimed at the activities of all managers. He described the practice of management as distinct from other typical business functions.

Max Weber :-

Max Weber (pronounced VAY-BAR) was a German sociologist who wrote in the early part of the 20th century. He developed a theory of authority structures and described organizational activity based on authority relations. He described the ideal form of organization—the bureaucracy, defined as a form of organization marked by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships

The major characteristics of Weber’s ideal bureaucracy include:

a. Specialization of a labor

b. Formalization of rules and procedures

c. Impersonality in application of rules and sanctions

d. Formalization of lines of authority into a hierarchical structure

e. Formalization of the career advancement process to be based on merit

Management Levels and Management Skills

2010-09-17T10:07:00.005+05:00

Levels of Managers in an Organization:-

First-Line Managers:
They are those managers having the least authority and are at the lowest level in the hierarchy of an organization.

Middle Mangers:
Those managers who beneath the top-levels of the hierarchy and directly supervise other managers below them.

Top Managers:-
They are those managers at the very top levels of the hierarchy who have the most authority and who are ultimately responsible for the entire organizational matters.

Management Skills:

Managers need three types of key skills to perform the duties and activities:

1. Technical skills:-
Technical skills include knowledge of and proficiency in a certain specialized field, such as computers,engineering, accounting, or manufacturing. These skills are more important at lower levels of management since these managers are dealing directly with employees doing the organization’s work.

2. Human skills:-
Human skills are associated with a manager’s ability to work well with others both as a member of a group and as a leader who gets things done through others. Because managers deal directly with people, They know how to communicate, motivate, lead, and inspire enthusiasm and trust. These skills are equally important at all levels of management.

3. Conceptual skills:-
Conceptual skills are the skills managers must have to think and to conceptualize about abstract and complex situations. Using these skills, managers must be able to see the organization as a whole, understand the relationships among various submits, and visualize how the organization fits into its broader environment.

Four trends are likely to impact managerial work in the future:-

Changes & innovation

Managing diversity

Global perspective

Continuous improvement

Management-Managers & Managerial role in Organizaion

2010-08-24T17:58:00.004+05:00

MANAGEMENT AND MANAGERS

Who are Manager?
A manager is someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals.

What do managers do?
Planning (making things happen and meeting the competition and tends to be more important
for top-level managers.)
Organizing (how the work gets done and tends to be more important for both top and middle-level managers.)
Leading (inspiring Motivating and inspiring workers and it is more important for first-line managers.)
Controlling (monitoring progress towards goal achievement and taking corrective action when needed and it is important among all levels of the hierarchy.)

Management process:-
It is the set of ongoing decisions and work activities in which managers engage as they plan, organize, lead, and control.

Management:-
It is the process of coordinating and integrating work activities.

MANAGERIAL ROLES IN ORGANIZATIONS

Role:-
It is an organized set of behaviors that is associated with a particular office or position.

Interpersonal roles are roles that involve people (subordinates and persons outside the organization) and other duties that are ceremonial and symbolic in nature. The three interpersonal roles include being a figurehead, leader, and liaison.
Informational roles involve receiving, collecting, and disseminating information. The three informational roles include a monitor, disseminator, and spokesperson.
Decisional roles revolved around making choices. The four decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.

Marketing Tips For The Holidays as marketer

2010-08-06T11:20:00.004+05:00

Most people think it's because the holidays are a slow time for business and that people don't want to get involved in a new business venture at this time. But really the main reason for this slow-down in business is because most people just stop doing business during the holidays. But survey networks know that the holidays are really a perfect time to do business, and that they just need to adjust their marketing strategies a bit to fit the season.

Here's some ideas to keep business warm and perking throughout the busy holiday season . . .

Tip #1: Holiday Time is Great for Prospecting! -- Holiday Time usually means parties and lots of socializing -- why not use this to your advantage and do a little informal prospecting.

"The kids are home from school, family is in town, or people are traveling. The trick is not to look at these things as reasons to stop doing business, but rather, as opportunities to expand business. When the kids are home from school, they're usually doing activities. These normally include other children, and therefore, other parents. Instead of talking about the kids and "things," expand your conversation a little. Talk about Family, Occupation, Recreation, and Money. FORM for short.

People usually open up if you're a good listener. At some point, they'll ask about you and yours. Don't go into a heavy sales pitch."

"Remember, you're just having a nice conversation. If you feel like you've made a new friend and sparked their curiosity, you've done your job. And remember, new people can be found anywhere - standing in a long line at a theme park or at a social event or family gathering. If you are constantly talking and planting seeds during the holidays, your business never has to slow down."

Tip #2: Cash in on the Gift Giving Season -- Tis the season for gifts, so get creative! Here's a few ideas to try:

• Put together some gift baskets of your company's products that are ready to go and that appeal to a variety of customers.

• Everyone gets stressed out trying to find just the right presents, so offer them a stress free shopping solution that's hard to refuse -set up personal appointments with your customers at their convenience -- visit them at the office take them to lunch, or come to their home on the weekend or evenings. Make it easy for them to do business with you.

• Sell gift certificates! Call your customers or drop them a holiday postcard and tell them that you have gift certificates on sale.

Tip #3 - Get a Jump on January: Do some business planning in December to get ready for business in January. January is the single best month for doing business. Get a special mailing together for your prospects and customers and have it ready to go in the mail in early January.

Tip #4 - Keep On Doing What You've Been Doing: Don't abandon your business during the holidays. Try to stick as closely as you can to your regular schedule -- and if you just can't keep up the pace -- at least decide to accomplish something every week that keeps your business humming. It'll be a lot easier to gear up in the new year if you do!

Tip #5 - Send A Thank You Note! Be sure to send a holiday greeting letting your customers and team know that you appreciate them. It takes some time to do this but the results are well worth it! Thank You notes build trust - the most important element in any relationship including business.

by: David Batchelor
Source: www.business-terms.net

McClelland's Theory of Needs

2010-07-07T01:10:00.005+05:00

In his acquired-needs theory, David McClelland proposed that an individual's specific needs are acquired over time and are shaped by one's life experiences. Most of these needs can be classed as either achievement, affiliation, or power. A person's motivation and effectiveness in certain job functions are influenced by these three needs. McClelland's theory sometimes is referred to as the three need theory or as the learned needs theory.

Achievement
People with a high need for achievement (nAch) seek to excel and thus tend to avoid both low-risk and high-risk situations. Achievers avoid low-risk situations because the easily attained success is not a genuine achievement. In high-risk projects, achievers see the outcome as one of chance rather than one's own effort. High nAch individuals prefer work that has a moderate probability of success, ideally a 50% chance. Achievers need regular feedback in order to monitor the progress of their acheivements. They prefer either to work alone or with other high achievers.

Affiliation
Those with a high need for affiliation (nAff) need harmonious relationships with other people and need to feel accepted by other people. They tend to conform to the norms of their work group. High nAff individuals prefer work that provides significant personal interaction. They perform well in customer service and client interaction situations.

Power
A person's need for power (nPow) can be one of two types - personal and institutional. Those who need personal power want to direct others, and this need often is perceived as undesirable. Persons who need institutional power (also known as social power) want to organize the efforts of others to further the goals of the organization. Managers with a high need for institutional power tend to be more effective than those with a high need for personal power.

Thematic Apperception Test
McClelland used the Thematic Apperception Test (TAT) as a tool to measure the individual needs of different people. The TAT is a test of imagination that presents the subject with a series of ambiguous pictures, and the subject is asked to develop a spontaneous story for each picture. The assumption is that the subject will project his or her own needs into the story.

Psychologists have developed fairly reliable scoring techniques for the Thematic Apperception Test. The test determines the individual's score for each of the needs of achievement, affiliation, and power. This score can be used to suggest the types of jobs for which the person might be well suited.
Implications for Management
People with different needs are motivated differently.

* High need for achievement - High achievers should be given challenging projects with reachable goals. They should be provided frequent feedback. While money is not an important motivator, it is an effective form of feedback.
* High need for affiliation - Employees with a high affiliation need perform best in a cooperative environment.
* High need for power - Management should provide power seekers the opportunity to manage others.

Note that McClelland's theory allows for the shaping of a person's needs; training programs can be used to modify one's need profile.

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Two Factor Theory-Herzberg's Motivation-Hygiene Theory

2010-07-07T01:03:00.003+05:00

To better understand employee attitudes and motivation, Frederick Herzberg performed studies to determine which factors in an employee's work environment caused satisfaction or dissatisfaction. He published his findings in the 1959 book The Motivation to Work.

The studies included interviews in which employees where asked what pleased and displeased them about their work. Herzberg found that the factors causing job satisfaction (and presumably motivation) were different from those causing job dissatisfaction. He developed the motivation-hygiene theory to explain these results. He called the satisfiers motivators and the dissatisfiers hygiene factors, using the term "hygiene" in the sense that they are considered maintenance factors that are necessary to avoid dissatisfaction but that by themselves do not provide satisfaction.

The following table presents the top six factors causing dissatisfaction and the top six factors causing satisfaction, listed in the order of higher to lower importance.

Factors Affecting Job Attitudes

Leading to

Dissatisfaction

Leading to

Satisfaction

Company policy
Supervision
Relationship w/Boss
Work conditions
Salary
Relationship w/Peers

Achievement
Recognition
Work itself
Responsibility
Advancement
Growth

Herzberg reasoned that because the factors causing satisfaction are different from those causing dissatisfaction, the two feelings cannot simply be treated as opposites of one another. The opposite of satisfaction is not dissatisfaction, but rather, no satisfaction. Similarly, the opposite of dissatisfaction is no dissatisfaction.

While at first glance this distinction between the two opposites may sound like a play on words, Herzberg argued that there are two distinct human needs portrayed. First, there are physiological needs that can be fulfilled by money, for example, to purchase food and shelter. Second, there is the psychological need to achieve and grow, and this need is fulfilled by activities that cause one to grow.

From the above table of results, one observes that the factors that determine whether there is dissatisfaction or no dissatisfaction are not part of the work itself, but rather, are external factors. Herzberg often referred to these hygiene factors as "KITA" factors, where KITA is an acronym for Kick In The A..., the process of providing incentives or a threat of punishment to cause someone to do something. Herzberg argues that these provide only short-run success because the motivator factors that determine whether there is satisfaction or no satisfaction are intrinsic to the job itself, and do not result from carrot and stick incentives.

Implications for Management
If the motivation-hygiene theory holds, management not only must provide hygiene factors to avoid employee dissatisfaction, but also must provide factors intrinsic to the work itself in order for employees to be satisfied with their jobs.

Herzberg argued that job enrichment is required for intrinsic motivation, and that it is a continuous management process. According to Herzberg:

*The job should have sufficient challenge to utilize the full ability of the employee.
* Employees who demonstrate increasing levels of ability should be given increasing levels of responsibility.
*If a job cannot be designed to use an employee's full abilities, then the firm should consider automating the task or replacing the employee with one who has a lower level of skill. If a person cannot be fully utilized, then there will be a motivation problem.

Critics of Herzberg's theory argue that the two-factor result is observed because it is natural for people to take credit for satisfaction and to blame dissatisfaction on external factors. Furthermore, job satisfaction does not necessarily imply a high level of motivation or productivity.

Herzberg's theory has been broadly read and despite its weaknesses its enduring value is that it recognizes that true motivation comes from within a person and not from KITA factors.

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ERG Theory

2010-07-07T00:57:00.003+05:00

To address some of the limitations of Maslow's hierarchy as a theory of motivation, Clayton Alderfer proposed the ERG theory, which like Maslow's theory, describes needs as a hierarchy. The letters ERG stand for three levels of needs: Existence, Relatedness, and Growth. The ERG theory is based on the work of Maslow, so it has much in common with it but also differs in some important aspects.

Similarities to Maslow's Hierarchy
Studies had shown that the middle levels of Maslow's hierarchy have some overlap; Alderfer addressed this issue by reducing the number of levels to three. The ERG needs can be mapped to those of Maslow's theory as follows:

* Existence: Physiological and safety needs
* Relatedness: Social and external esteem needs
* Growth: Self-actualization and internal esteem needs

Like Maslow's model, the ERG theory is hierarchical - existence needs have priority over relatedness needs, which have priority over growth.

Differences from Maslow's Hierarchy

In addition to the reduction in the number of levels, the ERG theory differs from Maslow's in the following three ways:

*Unlike Maslow's hierarchy, the ERG theory allows for different levels of needs to be pursued simultaneously.
*The ERG theory allows the order of the needs be different for different people.
*The ERG theory acknowledges that if a higher level need remains unfulfilled, the person may regress to lower level needs that appear easier to satisfy. This is known as the frustration-regression principle.

Thus, while the ERG theory presents a model of progressive needs, the hierarchical aspect is not rigid. This flexibility allows the ERG theory to account for a wider range of observed behaviors. For example, it can explain the "starving artist" who may place growth needs above existence ones.

Implications for Management
If the ERG theory holds, then unlike with Maslow's theory, managers must recognize that an employee has multiple needs to satisfy simultaneously. Furthermore, if growth opportunities are not provided to employees, they may regress to relatedness needs. If the manager is able to recognize this situation, then steps can be taken to concentrate on relatedness needs until the subordinate is able to pursue growth again.

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Taylor's 4 Principles of Scientific Management

2010-07-07T00:43:00.003+05:00

Taylor's 4 Principles of Scientific Management
After years of various experiments to determine optimal work methods, Taylor proposed the following four principles of scientific management:

1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.

2. Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.

3. Cooperate with the workers to ensure that the scientifically developed methods are being followed.

4. Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.

These principles were implemented in many factories, often increasing productivity by a factor of three or more. Henry Ford applied Taylor's principles in his automobile factories, and families even began to perform their household tasks based on the results of time and motion studies.
Drawbacks of Scientific Management
While scientific management principles improved productivity and had a substantial impact on industry, they also increased the monotony of work. The core job dimensions of skill variety, task identity, task significance, autonomy, and feedback all were missing from the picture of scientific management.

While in many cases the new ways of working were accepted by the workers, in some cases they were not. The use of stopwatches often was a protested issue and led to a strike at one factory where "Taylorism" was being tested. Complaints that Taylorism was dehumanizing led to an investigation by the United States Congress. Despite its controversy, scientific management changed the way that work was done, and forms of it continue to be used today.

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Frederick Taylor and Scientific Management

2010-07-07T00:36:00.004+05:00

In 1911, Frederick Winslow Taylor published his work, The Principles of Scientific Management, in which he described how the application of the scientific method to the management of workers greatly could improve productivity. Scientific management methods called for optimizing the way that tasks were performed and simplifying the jobs enough so that workers could be trained to perform their specialized sequence of motions in the one "best" way.

Prior to scientific management, work was performed by skilled craftsmen who had learned their jobs in lengthy apprenticeships. They made their own decisions about how their job was to be performed. Scientific management took away much of this autonomy and converted skilled crafts into a series of simplified jobs that could be performed by unskilled workers who easily could be trained for the tasks.

Taylor became interested in improving worker productivity early in his career when he observed gross inefficiencies during his contact with steel workers.

Soldiering
Working in the steel industry, Taylor had observed the phenomenon of workers' purposely operating well below their capacity, that is, soldiering. He attributed soldiering to three causes:

1. The almost universally held belief among workers that if they became more productive, fewer of them would be needed and jobs would be eliminated.

2. Non-incentive wage systems encourage low productivity if the employee will receive the same pay regardless of how much is produced, assuming the employee can convince the employer that the slow pace really is a good pace for the job. Employees take great care never to work at a good pace for fear that this faster pace would become the new standard. If employees are paid by the quantity they produce, they fear that management will decrease their per-unit pay if the quantity increases.

3. Workers waste much of their effort by relying on rule-of-thumb methods rather than on optimal work methods that can be determined by scientific study of the task.

To counter soldiering and to improve efficiency, Taylor began to conduct experiments to determine the best level of performance for certain jobs, and what was necessary to achieve this performance.

Time Studies
Taylor argued that even the most basic, mindless tasks could be planned in a way that dramatically would increase productivity, and that scientific management of the work was more effective than the "initiative and incentive" method of motivating workers. The initiative and incentive method offered an incentive to increase productivity but placed the responsibility on the worker to figure out how to do it.

To scientifically determine the optimal way to perform a job, Taylor performed experiments that he called time studies, (also known as time and motion studies). These studies were characterized by the use of a stopwatch to time a worker's sequence of motions, with the goal of determining the one best way to perform a job.

The following are examples of some of the time-and-motion studies that were performed by Taylor and others in the era of scientific management.

Pig Iron
If workers were moving 12 1/2 tons of pig iron per day and they could be incentivized to try to move 47 1/2 tons per day, left to their own wits they probably would become exhausted after a few hours and fail to reach their goal. However, by first conducting experiments to determine the amount of resting that was necessary, the worker's manager could determine the optimal timing of lifting and resting so that the worker could move the 47 1/2 tons per day without tiring.

Not all workers were physically capable of moving 47 1/2 tons per day; perhaps only 1/8 of the pig iron handlers were capable of doing so. While these 1/8 were not extraordinary people who were highly prized by society, their physical capabilities were well-suited to moving pig iron. This example suggests that workers should be selected according to how well they are suited for a particular job.

The Science of Shoveling
In another study of the "science of shoveling", Taylor ran time studies to determine that the optimal weight that a worker should lift in a shovel was 21 pounds. Since there is a wide range of densities of materials, the shovel should be sized so that it would hold 21 pounds of the substance being shoveled. The firm provided the workers with optimal shovels. The result was a three to four fold increase in productivity and workers were rewarded with pay increases. Prior to scientific management, workers used their own shovels and rarely had the optimal one for the job.

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What is Opportunity Cost

2010-06-16T11:48:00.002+05:00

Scarcity of resources is one of the more basic concepts of economics. Scarcity necessitates trade-offs, and trade-offs result in an opportunity cost. While the cost of a good or service often is thought of in monetary terms, the opportunity cost of a decision is based on what must be given up (the next best alternative) as a result of the decision. Any decision that involves a choice between two or more options has an opportunity cost.

Opportunity cost contrasts to accounting cost in that accounting costs do not consider forgone opportunities. Consider the case of an MBA student who pays $30,000 per year in tuition and fees at a private university. For a two-year MBA program, the cost of tuition and fees would be $60,000. This is the monetary cost of the education. However, when making the decision to go back to school, one should consider the opportunity cost, which includes the income that the student would have earned if the alternative decision of remaining in his or her job had been made. If the student had been earning $50,000 per year and was expecting a 10% salary increase in one year, $105,000 in salary would be foregone as a result of the decision to return to school. Adding this amount to the educational expenses results in a cost of $165,000 for the degree.
Opportunity cost is useful when evaluating the cost and benefit of choices. It often is expressed in non-monetary terms. For example, if one has time for only one elective course, taking a course in microeconomics might have the opportunity cost of a course in management. By expressing the cost of one option in terms of the foregone benefits of another, the marginal costs and marginal benefits of the options can be compared.

As another example, if a shipwrecked sailor on a desert island is capable of catching 10 fish or harvesting 5 coconuts in one day, then the opportunity cost of producing one coconut is two fish (10 fish / 5 coconuts). Note that this simple example assumes that the production possibility frontier between fish and coconuts is linear.

Relative Price
Opportunity cost is expressed in relative price, that is, the price of one choice relative to the price of another.

For example, if milk costs $4 per gallon and bread costs $2 per loaf, then the relative price of milk is 2 loaves of bread. If a consumer goes to the grocery store with only $4 and buys a gallon of milk with it, then one can say that the opportunity cost of that gallon of milk was 2 loaves of bread (assuming that bread was the next best alternative).

In many cases, the relative price provides better insight into the real cost of a good than does the monetary price.

Applications of Opportunity Cost
The concept of opportunity cost has a wide range of applications including:

* Consumer choice
* Production possibilities
* Cost of capital
* Time management
* Career choice
* Analysis of comparative advantage

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MBA Notes-The Production Possibility Frontier

2010-06-16T11:38:00.003+05:00

Consider the case of an island economy that produces only two goods: wine and grain. In a given period of time, the islanders may choose to produce only wine, only grain, or a combination of the two according to the following table:

Production Possibility Table

Wine (thousands of bottles)	Grain (thousands of bushels)
0	15
5	14
9	12
12	9
14	5
15	0

The production possibility frontier (PPF) is the curve resulting when the above data is graphed, as shown below:

Production Possibility Frontier

The PPF shows all efficient combinations of output for this island economy when the factors of production are used to their full potential. The economy could choose to operate at less than capacity somewhere inside the curve, for example at point a, but such a combination of goods would be less than what the economy is capable of producing. A combination outside the curve such as point b is not possible since the output level would exceed the capacity of the economy.

The shape of this production possibility frontier illustrates the principle of increasing cost. As more of one product is produced, increasingly larger amounts of the other product must be given up. In this example, some factors of production are suited to producing both wine and grain, but as the production of one of these commodities increases, resources better suited to production of the other must be diverted. Experienced wine producers are not necessarily efficient grain producers, and grain producers are not necessarily efficient wine producers, so the opportunity cost increases as one moves toward either extreme on the curve of production possibilities.

Suppose a new technique was discovered that allowed the wine producers to double their output for a given level of resources. Further suppose that this technique could not be applied to grain production. The impact on the production possibilities is shown in the following diagram:

Shifted Production Possibility Frontier

In the above diagram, the new technique results in wine production that is double its previous level for any level of grain production.

Finally, if the two products are very similar to one another, the production possibility frontier may be shaped more like a straight line. Consider the situation in which only wine is produced. Let's assume that two brands of wine are produced, Brand A and Brand B, and that these two brands use the same grapes and production process, differing only in the name on the label. The same factors of production can produce either product (brand) equally efficiently. The production possibility frontier then would appear as follows:

PPF for Very Similar Products

Note that to increase production of Brand A from 0 to 3000 bottles, the production of Brand B must be decreased by 3000 bottles. This opportunity cost remains the same even at the other extreme, where increasing the production of Brand A from 12,000 to 15,000 bottles still requires that of Brand B to be decreased by 3000 bottles. Because the two products are almost identical in this case and can be produced equally efficiently using the same resources, the opportunity cost of producing one over the other remains constant between the two extremes of production possibilities.

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MBA Economics Topics-Supply and Demand

2010-06-16T11:30:00.003+05:00

The market price of a good is determined by both the supply and demand for it. In 1890, English economist Alfred Marshall published his work, Principles of Economics, which was one of the earlier writings on how both supply and demand interacted to determine price. Today, the supply-demand model is one of the fundamental concepts of economics. The price level of a good essentially is determined by the point at which quantity supplied equals quantity demanded. To illustrate, consider the following case in which the supply and demand curves are plotted on the same graph.

Supply and Demand

On this graph, there is only one price level at which quantity demanded is in balance with the quantity supplied, and that price is the point at which the supply and demand curves cross.

The law of supply and demand predicts that the price level will move toward the point that equalizes quantities supplied and demanded. To understand why this must be the equilibrium point, consider the situation in which the price is higher than the price at which the curves cross. In such a case, the quantity supplied would be greater than the quantity demanded and there would be a surplus of the good on the market. Specifically, from the graph we see that if the unit price is $3 (assuming relative pricing in dollars), the quantities supplied and demanded would be:

Quantity Supplied = 42 units

Quantity Demanded = 26 units

Therefore there would be a surplus of 42 - 26 = 16 units. The sellers then would lower their price in order to sell the surplus.

Suppose the sellers lowered their prices below the equilibrium point. In this case, the quantity demanded would increase beyond what was supplied, and there would be a shortage. If the price is held at $2, the quantity supplied then would be:

Quantity Supplied = 28 units

Quantity Demanded = 38 units

Therefore, there would be a shortage of 38 - 28 = 10 units. The sellers then would increase their prices to earn more money.

The equilibrium point must be the point at which quantity supplied and quantity demanded are in balance, which is where the supply and demand curves cross. From the graph above, one sees that this is at a price of approximately $2.40 and a quantity of 34 units.

To understand how the law of supply and demand functions when there is a shift in demand, consider the case in which there is a shift in demand:

Shift in Demand

In this example, the positive shift in demand results in a new supply-demand equilibrium point that in higher in both quantity and price. For each possible shift in the supply or demand curve, a similar graph can be constructed showing the effect on equilibrium price and quantity. The following table summarizes the results that would occur from shifts in supply, demand, and combinations of the two.

Result of Shifts in Supply and Demand

Demand	Supply	Equilibrium Price	Equilibrium Quantity
+		+	+
-		-	-
	+	-	+
	-	+	-
+	+	?	+
-	-	?	-
+	-	+	?
-	+	-	?

In the above table, "+" represents an increase, "-" represents a decrease, a blank represents no change, and a question mark indicates that the net change cannot be determined without knowing the magnitude of the shift in supply and demand. If these results are not immediately obvious, drawing a graph for each will facilitate the analysis.

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MBA Economics Topics-The Supply Curve

2010-06-15T13:25:00.005+05:00

Price usually is a major determinant in the quantity supplied. For a particular good with all other factors held constant, a table can be constructed of price and quantity supplied based on observed data. Such a table is called a supply schedule, as shown in the following example:

Supply Schedule

Price	Quantity Supplied
1	12
2	28
3	42
4	52
5	60

By graphing this data, one obtains the supply curve as shown below:

As with the demand curve, the convention of the supply curve is to display quantity supplied on the x-axis as the independent variable and price on the y-axis as the dependent variable.

The law of supply states that the higher the price, the larger the quantity supplied, all other things constant. The law of supply is demonstrated by the upward slope of the supply curve.

As with the demand curve, the supply curve often is approximated as a straight line to simplify analysis. A straight-line supply function would have the following structure:

Quantity = a + (b x Price)

where a and b are constant for each supply curve.

A change in price results in a change in quantity supplied and represents movement along the supply curve.

Shifts in the Supply Curve

While changes in price result in movement along the supply curve, changes in other relevant factors cause a shift in supply, that is, a shift of the supply curve to the left or right. Such a shift results in a change in quantity supplied for a given price level. If the change causes an increase in the quantity supplied at each price, the supply curve would shift to the right:

Supply Curve Shift

There are several factors that may cause a shift in a good's supply curve. Some supply-shifting factors include:

* Prices of other goods - the supply of one good may decrease if the price of another good increases, causing producers to reallocate resources to produce larger quantities of the more profitable good.
* Number of sellers - more sellers result in more supply, shifting the supply curve to the right.
* Prices of relevant inputs - if the cost of resources used to produce a good increases, sellers will be less inclined to supply the same quantity at a given price, and the supply curve will shift to the left.
* Technology - technological advances that increase production efficiency shift the supply curve to the right.
* Expectations - if sellers expect prices to increase, they may decrease the quantity currently supplied at a given price in order to be able to supply more when the price increases, resulting in a supply curve shift to the left.

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MBA Economics Topics-Price Elasticity of Demand

2010-06-15T13:12:00.004+05:00

An important aspect of a product's demand curve is how much the quantity demanded changes when the price changes. The economic measure of this response is the price elasticity of demand.

Price elasticity of demand is calculated by dividing the proportionate change in quantity demanded by the proportionate change in price. Proportionate (or percentage) changes are used so that the elasticity is a unit-less value and does not depend on the types of measures used (e.g. kilograms, pounds, etc).

As an example, if a 2% increase in price resulted in a 1% decrease in quantity demanded, the price elasticity of demand would be equal to approximately 0.5. It is not exactly 0.5 because of the specific definition for elasticity uses the average of the initial and final values when calculating percentage change. When the elasticity is calculated over a certain arc or section of the demand curve, it is referred to as the arc elasticity and is defined as the magnitude (absolute value) of the following:

Q2 - Q1
--------------------

( Q1 + Q2 ) / 2
--------------------
P2 - P1
--------------------
( P1 + P2 ) / 2

where

Q1 = Initial quantity
Q2 = Final quantity
P1 = Initial price
P2 = Final price

The average values for quantity and price are used so that the elasticity will be the same whether calculated going from lower price to higher price or from higher price to lower price. For example, going from $8 to $10 is a 25% increase in price, but going from $10 to $8 is only a 20% decrease in price. This asymmetry is eliminated by using the average price as the basis for the percentage change in both cases.

For slightly easier calculations, the formula for arc elasticity can be rewritten as:

( Q2 - Q1 ) ( P2 + P1 )
----------------------
( Q2 + Q1 ) ( P2 - P1 )

To better understand the price elasticity of demand, it is worthwhile to consider different ranges of values.

Elasticity > 1

In this case, the change in quantity demanded is proportionately larger than the change in price. This means that an increase in price would result in a decrease in revenue, and a decrease in price would result in an increase in revenue. In the extreme case of near infinite elasticity, the demand curve would be nearly horizontal, meaning than the quantity demanded is extremely sensitive to changes in price. The case of infinite elasticity is described as being perfectly elastic and is illustrated below:

Perfectly Elastic Demand Curve

Elasticity <>
Perfectly Inelastic Demand Curve

From this demand curve, it is easy to visualize how even a very large change in price would have no impact on quantity demanded.

Elasticity = 1

This case is referred to as unitary elasticity. The change in quantity demanded is in the same proportion as the change in price. A change in price in either direction therefore would result in no change in revenue.

Applications of Price Elasticity of Demand
The price elasticity of demand can be applied to a variety of problems in which one wants to know the expected change in quantity demanded or revenue given a contemplated change in price.

For example, a state automobile registration authority considers a price hike in personalized "vanity" license plates. The current annual price is $35 per year, and the registration office is considering increasing the price to $40 per year in an effort to increase revenue. Suppose that the registration office knows that the price elasticity of demand from $35 to $40 is 1.3.

Because the elasticity is greater than one over the price range of interest, we know that an increase in price actually would decrease the revenue collected by the automobile registration authority, so the price hike would be unwise.

Factors Influencing the Price Elasticity of Demand
The price elasticity of demand for a particular demand curve is influenced by the following factors:

* Availability of substitutes: the greater the number of substitute products, the greater the elasticity.
* Degree of necessity or luxury: luxury products tend to have greater elasticity than necessities. Some products that initially have a low degree of necessity are habit forming and can become "necessities" to some consumers.
* Proportion of income required by the item: products requiring a larger portion of the consumer's income tend to have greater elasticity.
* Time period considered: elasticity tends to be greater over the long run because consumers have more time to adjust their behavoir to price changes.
* Permanent or temporary price change: a one-day sale will result in a different response than a permanent price decrease of the same magnitude.
* Price points: decreasing the price from $2.00 to $1.99 may result in greater increase in quantity demanded than decreasing it from $1.99 to $1.98.

Point Elasticity
It sometimes is useful to calculate the price elasticity of demand at a specific point on the demand curve instead of over a range of it. This measure of elasticity is called the point elasticity. Because point elasticity is for an infinitesimally small change in price and quantity, it is defined using differentials, as follows:

and can be written as:

dQ		P

dP		Q

The point elasticity can be approximated by calculating the arc elasticity for a very short arc, for example, a 0.01% change in price.

MBA Economics Topics-The Demand Curve

2010-06-15T13:06:00.005+05:00

The quantity demanded of a good usually is a strong function of its price. Suppose an experiment is run to determine the quantity demanded of a particular product at different price levels, holding everything else constant. Presenting the data in tabular form would result in a demand schedule, an example of which is shown below.

Demand Schedule

Price	Quantity Demanded
5	10
4	17
3	26
2	38
1	53

he demand curve for this example is obtained by plotting the data:

Demand Curve
By convention, the demand curve displays quantity demanded as the independent variable (the x axis) and price as the dependent variable (the y axis).

The law of demand states that quantity demanded moves in the opposite direction of price (all other things held constant), and this effect is observed in the downward slope of the demand curve.

For basic analysis, the demand curve often is approximated as a straight line. A demand function can be written to describe the demand curve. Demand functions for a straight-line demand curve take the following form:

Quantity = a - (b x Price)

where a and b are constants that must be determined for each particular demand curve.

When price changes, the result is a change in quantity demanded as one moves along the demand curve.

Shifts in the Demand Curve
When there is a change in an influencing factor other than price, there may be a shift in the demand curve to the left or to the right, as the quantity demanded increases or decreases at a given price. For example, if there is a positive news report about the product, the quantity demanded at each price may increase, as demonstrated by the demand curve shifting to the right:

Demand Curve Shift
A number of factors may influence the demand for a product, and changes in one or more of those factors may cause a shift in the demand curve. Some of these demand-shifting factors are:

* Customer preference
*Prices of related goods
o Complements - an increase in the price of a complement reduces demand, shifting the demand curve to the left.
o Substitutes - an increase in the price of a substitute product increases demand, shifting the demand curve to the right.
*Income - an increase in income shifts the demand curve of normal goods to the right.
*Number of potential buyers - an increase in population or market size shifts the demand curve to the right.
*Expectations of a price change - a news report predicting higher prices in the future can increase the current demand as customers increase the quantity they purchase in anticipation of the price change.

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MBA Finance Topics-FINANCIAL RATIOS

2010-06-12T21:48:00.001+05:00

Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratio analysis can predict future bankruptcy.

Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used:

* Liquidity ratios
* Asset turnover ratios
* Financial leverage ratios
* Profitability ratios
* Dividend policy ratios

Liquidity Ratios

Liquidity ratios provide information about a firm's ability to meet its short-term financial obligations. They are of particular interest to those extending short-term credit to the firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio) and the quick ratio.

The current ratio is the ratio of current assets to current liabilities:

Current Assets

Current Liabilities

Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business. Typical values for the current ratio vary by firm and industry. For example, firms in cyclical industries may maintain a higher current ratio in order to remain solvent during downturns.
One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation values. The quick ratio is an alternative measure of liquidity that does not include inventory in the current assets. The quick ratio is defined as follows:

Quick Ratio

Current Assets - Inventory

Current Liabilities

The current assets used in the quick ratio are cash, accounts receivable, and notes receivable. These assets essentially are current assets less inventory. The quick ratio often is referred to as the acid test.
Finally, the cash ratio is the most conservative liquidity ratio. It excludes all current assets except the most liquid: cash and cash equivalents. The cash ratio is defined as follows:

Cash Ratio

Cash + Marketable Securities

Current Liabilities

The cash ratio is an indication of the firm's ability to pay off its current liabilities if for some reason immediate payment were demanded.

Asset Turnover Ratios

Asset turnover ratios indicate of how efficiently the firm utilizes its assets. They sometimes are referred to as efficiency ratios, asset utilization ratios, or asset management ratios. Two commonly used asset turnover ratios are receivables turnover and inventory turnover.
Receivables turnover is an indication of how quickly the firm collects its accounts receivables and is defined as follows:

Receivables Turnover

Annual Credit Sales

Accounts Receivable

The receivables turnover often is reported in terms of the number of days that credit sales remain in accounts receivable before they are collected. This number is known as the collection period. It is the accounts receivable balance divided by the average daily credit sales, calculated as follows:

Average Collection Period

Accounts Receivable

Annual Credit Sales / 365

The collection period also can be written as:

Average Collection Period

365

Receivables Turnover

Another major asset turnover ratio is inventory turnover. It is the cost of goods sold in a time period divided by the average inventory level during that period:

Inventory Turnover

Cost of Goods Sold

Average Inventory

The inventory turnover often is reported as the inventory period, which is the number of days worth of inventory on hand, calculated by dividing the inventory by the average daily cost of goods sold:

Inventory Period

Average Inventory

Annual Cost of Goods Sold / 365

The inventory period also can be written as:

Inventory Period

365

Inventory Turnover

Other asset turnover ratios include fixed asset turnover and total asset turnover.

Financial Leverage Ratios

Financial leverage ratios provide an indication of the long-term solvency of the firm. Unlike liquidity ratios that are concerned with short-term assets and liabilities, financial leverage ratios measure the extent to which the firm is using long term debt.
The debt ratio is defined as total debt divided by total assets:

Debt Ratio

Total Debt

Total Assets

The debt-to-equity ratio is total debt divided by total equity:

Debt-to-Equity Ratio

Total Debt

Total Equity

Debt ratios depend on the classification of long-term leases and on the classification of some items as long-term debt or equity.
The times interest earned ratio indicates how well the firm's earnings can cover the interest payments on its debt. This ratio also is known as the interest coverage and is calculated as follows:

Interest Coverage

EBIT

Interest Charges

where EBIT = Earnings Before Interest and Taxes

Profitability Ratios

Profitability ratios offer several different measures of the success of the firm at generating profits.
The gross profit margin is a measure of the gross profit earned on sales. The gross profit margin considers the firm's cost of goods sold, but does not include other costs. It is defined as follows:

Gross Profit Margin

Sales - Cost of Goods Sold

Sales

Return on assets is a measure of how effectively the firm's assets are being used to generate profits. It is defined as:

Return on Assets

Net Income

Total Assets

Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each dollar invested in the firm's stock. Return on equity is defined as follows:

Return on Equity

Net Income

Shareholder Equity

Dividend Policy Ratios

Dividend policy ratios provide insight into the dividend policy of the firm and the prospects for future growth. Two commonly used ratios are the dividend yield and payout ratio.
The dividend yield is defined as follows:

Dividend Yield

Dividends Per Share

Share Price

A high dividend yield does not necessarily translate into a high future rate of return. It is important to consider the prospects for continuing and increasing the dividend in the future. The dividend payout ratio is helpful in this regard, and is defined as follows:

Payout Ratio

Dividends Per Share

Earnings Per Share

Use and Limitations of Financial Ratios

Attention should be given to the following issues when using financial ratios:

A reference point is needed. To to be meaningful, most ratios must be compared to historical values of the same firm, the firm's forecasts, or ratios of similar firms.
Most ratios by themselves are not highly meaningful. They should be viewed as indicators, with several of them combined to paint a picture of the firm's situation.
Year-end values may not be representative. Certain account balances that are used to calculate ratios may increase or decrease at the end of the accounting period because of seasonal factors. Such changes may distort the value of the ratio. Average values should be used when they are available.
Ratios are subject to the limitations of accounting methods. Different accounting choices may result in significantly different ratio values.

Source: www.netmba.com

MBA Finance Topics-Common Size Financial Statements

2010-06-12T21:41:00.001+05:00

Common size ratios are used to compare financial statements of different-size companies, or of the same company over different periods. By expressing the items in proportion to some size-related measure, standardized financial statements can be created, revealing trends and providing insight into how the different companies compare.

The common size ratio for each line on the financial statement is calculated as follows:

Common Size Ratio

Item of Interest

Reference Item

For example, if the item of interest is inventory and it is referenced to total assets (as it normally would be), the common size ratio would be:

Common Size Ratio for Inventory

Inventory

Total Assets

The ratios often are expressed as percentages of the reference amount. Common size statements usually are prepared for the income statement and balance sheet, expressing information as follows:

Income statement items - expressed as a percentage of total revenue
Balance sheet items - expressed as a percentage of total assets

The following example income statement shows both the dollar amounts and the common size ratios:

Common Size Income Statement

	Income Statement	Common-Size Income Statement
Revenue	70,134	100%
Cost of Goods Sold	44,221	63.1%
Gross Profit	25,913	36.9%
SG&A Expense	13,531	19.3%
Operating Income	12,382	17.7%
Interest Expense	2,862	4.1%
Provision for Taxes	3,766	5.4%
Net Income	5,754	8.2%

For the balance sheet, the common size percentages are referenced to the total assets. The following sample balance sheet shows both the dollar amounts and the common size ratios:

Common Size Balance Sheet

	Balance Sheet	Common-Size Balance Sheet
ASSETS
Cash & Marketable Securities	6,029	15.1%
Accounts Receivable	14,378	36.0%
Inventory	17,136	42.9%
Total Current Assets	37,543	93.9%
Property, Plant, & Equipment	2,442	6.1%
Total Assets	39,985	100%
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities	14,251	35.6%
Long-Term Debt	12,624	31.6%
Total Liabilities	26,875	67.2%
Shareholders' Equity	13,110	32.8%
Total Liabilities & Equity	39,985	100%

The above common size statements are prepared in a vertical analysis, referencing each line on the financial statement to a total value on the statement in a given period.
The ratios in common size statements tend to have less variation than the absolute values themselves, and trends in the ratios can reveal important changes in the business. Historical comparisons can be made in a time-series analysis to identify such trends.
Common size statements also can be used to compare the firm to other firms.

Comparisons Between Companies (Cross-Sectional Analysis)

Common size financial statements can be used to compare multiple companies at the same point in time. A common-size analysis is especially useful when comparing companies of different sizes. It often is insightful to compare a firm to the best performing firm in its industry (benchmarking). A firm also can be compared to its industry as a whole. To compare to the industry, the ratios are calculated for each firm in the industry and an average for the industry is calculated. Comparative statements then may be constructed with the company of interest in one column and the industry averages in another. The result is a quick overview of where the firm stands in the industry with respect to key items on the financial statements.

Limitations

As with financial statements in general, the interpretation of common size statements is subject to many of the limitations in the accounting data used to construct them. For example:

Different accounting policies may be used by different firms or within the same firm at different points in time. Adjustments should be made for such differences.
Different firms may use different accounting calendars, so the accounting periods may not be directly comparable.

Source: www.netmba.com

MBA Finance Topics-CAPITAL BUDGETING

2010-06-12T21:38:00.001+05:00

A capital expenditure is an outlay of cash for a project that is expected to produce a cash inflow over a period of time exceeding one year. Examples of projects include investments in property, plant, and equipment, research and development projects, large advertising campaigns, or any other project that requires a capital expenditure and generates a future cash flow.

Because capital expenditures can be very large and have a significant impact on the financial performance of the firm, great importance is placed on project selection. This process is called capital budgeting.

Criteria for Capital Budgeting Decisions

Potentially, there is a wide array of criteria for selecting projects. Some shareholders may want the firm to select projects that will show immediate surges in cash inflow, others may want to emphasize long-term growth with little importance on short-term performance. Viewed in this way, it would be quite difficult to satisfy the differing interests of all the shareholders. Fortunately, there is a solution.

The goal of the firm is to maximize present shareholder value. This goal implies that projects should be undertaken that result in a positive net present value, that is, the present value of the expected cash inflow less the present value of the required capital expenditures. Using net present value (NPV) as a measure, capital budgeting involves selecting those projects that increase the value of the firm because they have a positive NPV. The timing and growth rate of the incoming cash flow is important only to the extent of its impact on NPV.

Using NPV as the criterion by which to select projects assumes efficient capital markets so that the firm has access to whatever capital is needed to pursue the positive NPV projects. In situations where this is not the case, there may be capital rationing and the capital budgeting process becomes more complex.

Note that it is not the responsibility of the firm to decide whether to please particular groups of shareholders who prefer longer or shorter term results. Once the firm has selected the projects to maximize its net present value, it is up to the individual shareholders to use the capital markets to borrow or lend in order to move the exact timing of their own cash inflows forward or backward. This idea is crucial in the principal-agent relationship that exists between shareholders and corporate managers. Even though each may have their own individual preferences, the common goal is that of maximizing the present value of the corporation.
Alternative Rules for Capital Budgeting

While net present value is the rule that always maximizes shareholder value, some firms use other criteria for their capital budgeting decisions, such as:

* Internal Rate of Return (IRR)
* Profitability Index
* Payback Period
* Return on Book Value

In some cases, the investment decisions resulting from the IRR and profitability index methods agree with those of NPV. Decisions made using the payback period and return on book value methods usually are suboptimal from the standpoint of maximizing shareholder value.

Source: www.netmba.com

MBA Finance Topics-PERPETUITIES

2010-06-12T21:33:00.001+05:00

A perpetuity is a series of equal payments over an infinite time period into the future. Consider the case of a cash payment C made at the end of each year at interest rate i, as shown in the following time line:

Perpetuity Time Line

0	1	2	3


PV	C	C	C

Because this cash flow continues forever, the present value is given by an infinite series:

PV = C / ( 1 + i ) + C / ( 1 + i )² + C / ( 1 + i )³ + . . .

From this infinite series, a usable present value formula can be derived by first dividing each side by ( 1 + i ).

PV / ( 1 + i ) = C / ( 1 + i )² + C / ( 1 + i )³ + C / ( 1 + i )⁴ + . . .

In order to eliminate most of the terms in the series, subtract the second equation from the first equation:

PV - PV / ( 1 + i ) = C / ( 1 + i )

Solving for PV, the present value of a perpetuity is given by:

PV =

Growing Perpetuities

Sometimes the payments in a perpetuity are not constant but rather, increase at a certain growth rate g as depicted in the following time line:

Growing Perpetuity Time Line

0	1	2	3


PV	C	C(1+g)	C(1+g)²

The present value of a growing perpetuity can be written as the following infinite series:

PV =

( 1 + i )

C ( 1 + g )

( 1 + i )²

C ( 1 + g )²

( 1 + i )³

+ . . .

To simplify this expression, first multiply each side by (1 + g) / (1 + i):

PV ( 1 + g)

( 1 + i )

C ( 1 + g )

( 1 + i )²

C ( 1 + g )²

( 1 + i )³

+ . . .

Then subtract the second equation from the first:

PV -

PV ( 1 + g)

( 1 + i )

Finally, solving for PV yields the expression for the present value of a growing perpetuity:

PV =

i - g

For this expression to be valid, the growth rate must be less than the interest rate, that is, g < i .

Source: www.netmba.com

MBA Finance Topics-ANNUITIES

2010-06-12T21:20:00.002+05:00

An annuity is a series of equal payments over a specified time frame. For example, a cash payment of C made at the end of each year for four years at annual interest rate i is shown in the following time line:

4-Year Annuity Time Line

0	1	2	3	4


PV	C	C	C	C

This time line is for an ordinary annuity, in which the cash payments are made at the end of each year. For example, the first payment is made exactly one year from the present. The present value of this cash flow is calculated by:

PV = C / ( 1 + i ) + C / ( 1 + i )2 + C / ( 1 + i )3 + C / ( 1 + i )4

In general, for a t year annuity:

PV = C / ( 1 + i ) + C / ( 1 + i )2 + ... + C / ( 1 + i )t

From this potentially long series, a present value formula can be derived. First, multiply each side by 1 / ( 1 + i ).

PV / ( 1 + i ) = C / ( 1 + i )2 + C / ( 1 + i )3 + ... + C / ( 1 + i )t+1

In order to eliminate most of the terms in the series, subtract the second equation from the first equation:

PV - PV / ( 1 + i ) = C / ( 1 + i ) - C / ( 1 + i )t+1

Solving for PV, the present value of an ordinary annuity is given by:

PV =

1 -

( 1 + i ) ^t

This equation assumes that the first payment of the annuity is made at the end of the first time period. If instead the payments are made at the beginning of each time period, then the present value calculation would be similar to the above, except that all payments would be shifted forward by one year. This shift can be accomplished by multiplying the entire present value expression by ( 1 + i ). Such an annuity with the payments occurring at the beginning of each time period is called an annuity due.

Annuity Factor Table

The factor for calculating the present value of an ordinary annuity may be calculated for a range of time periods and interest rates and tabulated for quick reference. The annuity factor is the value of the following expression:

1 -

( 1 + i ) ^t

Table of Present Value Annuity Factors

_t \ ⁱ	1%	2%	3%	4%	5%	6%	7%	8%	9%	10%
1	0.990	0.980	0.971	0.962	0.952	0.943	0.935	0.926	0.917	0.909
2	1.970	1.942	1.913	1.886	1.859	1.833	1.808	1.783	1.759	1.736
3	2.941	2.884	2.829	2.775	2.723	2.673	2.624	2.577	2.531	2.487
4	3.902	3.808	3.717	3.630	3.546	3.465	3.387	3.312	3.240	3.170
5	4.853	4.713	4.580	4.452	4.329	4.212	4.100	3.993	3.890	3.791
6	5.795	5.601	5.417	5.242	5.076	4.917	4.767	4.623	4.486	4.355
7	6.728	6.472	6.230	6.002	5.786	5.582	5.389	5.206	5.033	4.868
8	7.652	7.325	7.020	6.733	6.463	6.210	5.971	5.747	5.535	5.335
9	8.566	8.162	7.786	7.435	7.108	6.802	6.515	6.247	5.995	5.759
10	9.471	8.983	8.530	8.111	7.722	7.360	7.024	6.710	6.418	6.145
11	10.368	9.787	9.253	8.760	8.306	7.887	7.499	7.139	6.805	6.495
12	11.255	10.575	9.954	9.385	8.863	8.384	7.943	7.536	7.161	6.814
13	12.134	11.348	10.635	9.986	9.394	8.853	8.358	7.904	7.487	7.103
14	13.004	12.106	11.296	10.563	9.899	9.295	8.745	8.244	7.786	7.367
15	13.865	12.849	11.938	11.118	10.380	9.712	9.108	8.559	8.061	7.606

Source: www.netmba.com

MBA Finance Topics-PRESENT VALUE

2010-06-12T21:13:00.003+05:00

How to calculate the present value of a future sum of money or multiple future cash payments.

The present value of a sum of money to be received at a future date is determined by discounting the future value at the interest rate that the money could earn over the period.

Starting with the future value equation:

FV = PV ( 1 + i ) t

where

FV = future value
PV = present value
i = annual interest rate

we see that the present value is given by:

FV
PV = ______________

( 1 + i ) t

The term 1 / ( 1 + i ) t is known as the discount factor.

If both the future value and present value are known, one can solve for the time or the interest rate using one of the techniques discussed in future value calculations.
Present Value of Multiple Future Cash Payments

When there is more than a single cash payment at a future date, the present value is calculated by taking the present values of the individual cash payments and summing them. It is helpful to draw a time line depicting the timing of the cash payments:

Time Line

0	1	2	3


PV	C₁	C₂	C₃

In this model, the cash payment at each date may be either an inflow or an outflow; the direction is designated by the sign. The present value of the above cash flow is:

PV = C1 / ( 1 + i ) + C2 / ( 1 + i )2 + C3 / ( 1 + i )3

Discount Factor Table

The discount factor 1 / ( 1 + i ) ^t may be calculated for a range of time periods and interest rates and tabulated for quick reference.

Table of Discount Factors

_t \ ⁱ	1%	2%	3%	4%	5%	6%	7%	8%	9%	10%
1	0.990	0.980	0.971	0.962	0.952	0.943	0.935	0.926	0.917	0.909
2	0.980	0.961	0.943	0.925	0.907	0.890	0.873	0.857	0.842	0.826
3	0.971	0.942	0.915	0.889	0.864	0.840	0.816	0.794	0.772	0.751
4	0.961	0.924	0.888	0.855	0.823	0.792	0.763	0.735	0.708	0.683
5	0.951	0.906	0.863	0.822	0.784	0.747	0.713	0.681	0.650	0.621
6	0.942	0.888	0.837	0.790	0.746	0.705	0.666	0.630	0.596	0.564
7	0.933	0.871	0.813	0.760	0.711	0.665	0.623	0.583	0.547	0.513
8	0.923	0.853	0.789	0.731	0.677	0.627	0.582	0.540	0.502	0.467
9	0.914	0.837	0.766	0.703	0.645	0.592	0.544	0.500	0.460	0.424
10	0.905	0.820	0.744	0.676	0.614	0.558	0.508	0.463	0.422	0.386
11	0.896	0.804	0.722	0.650	0.585	0.527	0.475	0.429	0.388	0.350
12	0.887	0.788	0.701	0.625	0.557	0.497	0.444	0.397	0.356	0.319
13	0.879	0.773	0.681	0.601	0.530	0.469	0.415	0.368	0.326	0.290
14	0.870	0.758	0.661	0.577	0.505	0.442	0.388	0.340	0.299	0.263
15	0.861	0.743	0.642	0.555	0.481	0.417	0.362	0.315	0.275	0.239

Source: www.netmba.com