MANAGEMENT CONTROL SYSTEM

Q1 Describe and illustrate significance of human behavior patterns in

management control

Ans. Management control systems influence human behavior. Good management control systems influence

behavior in a goal congruent manner; that is, they ensure that individual actions taken to achieve personal goals
also help to achieve the organization's goals. The concept of goal congruence, describing how it is affected both
by informal actions and by formal systems.

Senior management wants the organization to attain the organization's goals. But the individual members of the
organization have their own personal goals, and they are not necessarily consistent with those of the
organization. The central purpose of a management control system, then, is to ensure a high level of what is
called "goal congruence." In a goal congruent process, the actions people are led to take in accordance with
their perceived self interest are also in the best interest of the organization.

The significance of human behavior patterns in management control system can be explained with the help
of Informal Factors that influence Goal Congruence. In the informal forces both internal and external factors
play a key role.
External Factors

External factors are norms of desirable behavior that exist in the society of which the organization is a part.
These norms include a set of attitudes, often collectively referred to as the work ethic, which is manifested in
employees' loyalty to the organization, their diligence, their spirit, and their pride in doing a good job (rather
than just putting in time). Some of these attitudes are local that is, specific to the city or region in which the
organization does its work. In encouraging companies to locate in their city or state, chambers of commerce and
other promotional organizations often claim that their locality has a loyal, diligent workforce. Other attitudes
and norms are industry-specific. Still others are national; some countries, such as Japan and Singapore, have a
reputation for excellent work ethics.

Internal Factors
Ø Culture

The most important internal factor is the organization's own culture-the common beliefs, shared values, norms
of behavior and assumptions that are implicitly and explicitly manifested throughout the organization. Cultural
norms are extremely important since they explain why two organizations with identical formal management
control systems, may vary in terms of actual control. A company's culture usually exists unchanged for many
years. Certain practices become rituals, carried on almost automatically because "this is the way things are done
here." Others are taboo ("we just don't do that here"), although no one may remember why. Organizational
culture is also influenced strongly by the personality and policies of the CEO, and by those of lower-level man-
agers with respect to the areas they control. If the organization is unionized, the rules and norms accepted by the
union also have a major influence on the organization's culture. Attempts to change practices almost always
meet with resistance, and the larger and more mature the organization, the greater the resistance is.
Ø Management Style
The internal factor that probably has the strongest impact on management control is management style. Usually,
subordinates' attitudes reflect what they perceive their superiors' attitudes to be, and their superiors' attitudes
ultimately stem from the CEO.

Managers come in all shapes and sizes. Some are charismatic and outgoing; others are less ebullient. Some
spend much time looking and talking to people (management by walking around); others rely more heavily on
written reports.
The Informal Organization

The lines on an organization chart depict the formal relationships-that is, the official authority and
responsibilities-of each manager. The chart may show, for example, that the production manager of Division A
reports to the general manager of Division A. But in the course of fulfilling his or her responsibilities, the
production manager of Division A actually communicates with many other people in the organization, as well as
with other managers, support units, the headquarters staff, and people who are simply friends and acquaintances.
In extreme situations, the production manager, with all these other communication sources available, may not
pay adequate attention to messages received from the general manager; this is especially likely to occur when
the production manager is evaluated on production efficiency rather than on overall performance. The realities
of the management control process cannot be understood without recognizing the importance of the
relationships that constitute the informal organization.

Ø Perception and Communication

In working toward the goals of the organization, operating managers must know what these goals are and what
actions they are supposed to take in order to achieve them. They receive this information through various
channels, both formal (e.g., budgets and other official documents) and informal (e.g., conversations). Despite
this range of channels, it is not always clear what senior management wants done. An organization is a
complicated entity, and the actions that should be taken by anyone part to further the common goals cannot be
stated with absolute clarity even in the best of circumstances.

Moreover, the messages received from different sources may conflict with one another, or be subject to differing
interpretations. For example, the budget mechanism may convey the impression that managers are supposed to
aim for the highest profits possible in a given year, whereas senior management does not actually want them to
skimp on maintenance or employee training since such actions, although increasing current profits, might reduce
future profitability. The informal factors discussed above have a major influence on the effectiveness of an
organization’s management control. The other major influence is the formal systems. These systems can be
classified into two types: (1) the management control system itself and (2) rules, which are described in this
section.

The Formal Control System

Rules

We use the word rules as shorthand for all types of formal instructions and controls, including: standing
instructions, job descriptions, standard operating procedures, manuals, and ethical guidelines. Rules range from
the most trivial (e.g., paper clips will be issued only on the basis of a signed requisition) to the most
important):e.g., capital expenditures of over $5 million must be approved by the board' of directors).
Some rules are guides; that is, organization members are permitted, and indeed expected, to depart from them,
either under specified circumstances or when their own best judgment indicates that a departure would be in the
best interests of the organization.

Some rules are positive requirements that certain actions be taken (e.g., fire drills at prescribed intervals). Others
are prohibitions against unethical, illegal, or other undesirable actions. Finally, there are rules that should never
be broken under any circumstances: a rule prohibiting the payment of bribes, for example, or a rule that airline
pilots must never take off without permission from the air traffic controller.

Some specific types of rules are listed below:

Ø Physical Controls
Security guards, locked storerooms, vaults, computer passwords, television surveillance, and other physical
controls may be part of the control structure.
Ø Manuals
Much judgment is involved in deciding which rules should be written into a manual, which should be
considered to be guidelines rather than fiats, how much discretion should be allowed, and a host of other
considerations. Manuals in bureaucratic organizations are more detailed than are those in other
organizations; large organizations have more manuals and rules than small ones; centralized organizations
have more than decentralized ones; and organizations with geographically dispersed units performing
similar functions (such as fast-food restaurant chains) have more than do single-site organizations
Ø System Safeguards
Various safeguards are built into the information processing system to ensure that the information flowing
through the system is accurate, and to prevent (or at least minimize) fraud of every sort. These include:
cross-checking totals with details, requiring signatures and other evidence that a transaction has been
authorized, separating duties, counting cash and other portable assets frequently, and a number of other
procedures described in texts on auditing.

Ø Task Control Systems

Task control is the process of assuring that specific tasks are carried out efficiently and effectively. Many of
these tasks are controlled by rules. If a task is automated, the automated system itself provides the control.

Q2 Explain the concept of goal congruence (informal and formal).

GOAL CONGRUENCE
 SPM has a main goal to ensure (as far as possible) the level of high goal congruence.
 Goal congruence is an harmony between the actions of individuals to achieve personal
goals to help the achievement of organizational goals.
 In an organization, human behavior must be influenced by the formal system (which
was formed by the organization) and informal (work ethic, management style and culture).
Factors that influence informal goal congruence consists of external factors and internal.
 External factors, namely the norms of behavior expected to occur in the community
(and the organization is part of the community).
 External factors affecting goal congruence is the work ethic and appropriate industry-
specific norms.
 Working ethos is one of the organization's loyalty, and perseverance, spirit and pride
that have in carrying out their duties.
 The internal factors that affect goal congruence is the culture, management style,
informal relationships within the organization and perception and communication.
 Culture includes beliefs in the organization together, the values embraced life,
behavioral norms and assumptions that implicitly and explicitly accepted applied at all levels
of the organization.

Culture is strongly influenced by the personality and policy managers.
 Style of management has the strongest impact on management control, because the
attitude is a reflection of his subordinates superiors.
 Informal relations are also needed, although the formal relationship has been
established.
 The means to achieve organizational goals must also be well communicated and the
messages conveyed are expected to be interpreted with the same meaning.
FORMAL FACTORS AFFECTING GOAL CONGRUENCE
 Formal Factors affecting goal congruence reply consists of SPM and the rules.
 The rules are a set of writings that includes all types of instructions and control
(including instructions about positions, the division of labor, standard operating procedures,
guidelines and ethical guidance guidance).
 The rules may contain things that are simple to complex, strict guidelines to work
flexible and positive action (prohibition of negative actions).
The types of rules can be:
1. Physical control of all assets of the organization. 
2. Manual that is reviewed periodically. 
3. Security of information systems. 
 Control system tasks.

 The process begins with the formal control of strategic planning (according to
organizational goals and strategies), preparation of budgets, implementation plans (actual
performance, in accordance with the rules of the organization), reporting results and
performance evaluation performance results.
 Strategy is also influenced by organizational structure, so that the SPM is also so.
 Organizations can have multiple structures, namely:
 The structure of functional (every manager is responsible for functional areas within
the organization).
 Advantage is efficiency, weaknesses related to the effectiveness of uncertainty, the
need for a gradual resolution of problems and less appropriate for the products and diverse
market.
 The structure of business units (each manager responsible for the activities of each
business unit as part of a semi-independent from the organization).
 The good news is the more visible management style and product market approach, its
weakness is dulikasi number of jobs and functional areas of dispute between business units.
 The structure of the matrix (each funsional units have dual responsibilities).
 Controller
 Controller is the person responsible for designing and operating the SPM.
 Controller submitted to the Chief Financial Officer (Finance Manager).
 Controller controller can be divided into corporate and business unit controller.
The function controllers:
1. Designing and operating information and control systems. 
2. Preparing financial statements and financial reports (including taxes) to shareholders
and external parties other. 
3. Preparing, analyzing and reporting performance meninterpretasikan; analyze the
program and budget proposals, as well as in mengkonsolidasikannya annual budget. 
4. Supervises internal audit and operational audit, record control procedures that
guarantee the validity of the information and determine an adequate level of security against
fraud. 
5. Develop personnel in organizations involved in the control and training related to the control
function

Q3. What is goal congruence? What are the informal factors that
influence goal congruence

Goal Congruence • In a goal congruent process actions people take in accordance

with their perceived self-interest are also in best interest for the organization. • In this
imperfect world, perfect congruence does not exist between individual and
organisation. • An adequate control system will motivate individuals to act in best
interests of organisation. • In evaluating any management control system, two
important questions are: what action does it motivate people to take , in their own
self interest? Are these actions in the best interest of the organization?

2. Informal Factors For Goal Congruence • External Factors:  external factors are
norms of desirable behaviour that exist in the society in which the organization is a
part. These norms of desirable behavior including set nofattitudes referred to as
‘work ethic’. For example the employee loyalty, their diligence, their spirit of work
etc.  Local attitude e.g. specific to place  industry-specific norms and attitudes •
Internal Factors: Culture: The common beliefs, shared values, norms of behaviour
are implicity and explicity manifested in people behaviour throughout the
organization. It brings about the’this is the way things are done here” & ‘we don’t
do that here’ in the practices of the company.  influenced by personality and
policies of CEO

3. Informal Factors For Goal Congruence… Management Style: different

managerial styles exist which influence behaviour and goal congruence. For
example: Strict disciplinarian vs charismatic and outgoing style vs entrepreneurial
and quick goal accomplishment style. MBWA v/s written reports

4. Informal Factors For Goal Congruence  Informal Organisation: • reporting

relationships • • official authority and responsibilities of each manager managerial
performance evaluation  Perception and Communication: •In working towards
goals operating managers must know what these goals mean and what actions they
are supposed to take to achieve them. •They receive information from formal and
informal channels . Despite the range of channels complete clarity on intention of
senior management is not possible. •Messages from different sources may conflict
with one another or may subject to different interpretations.

5. Formal Control System • Rules:  All types of formal instructions and controls
including standing instructions, job descriptions, SOPs, manuals, guidelines etc. 
Some rules are positive requirements/guides and some which are negative in nature.
 Specific types of rules are as under: Physical controls Manuals System safeguards
Task Control Systems

6. Formal Control System • Formal Control Process:  A strategic plan implements

organisation’s goals and strategies  Strategic plan is converted into an annual
budget to focus on planned revenues & expenses for individual responsibility
centers.  Responsibility centers are guided by rules & other formal information. 
Actual results are compared with the budget to determine deviations and if required,
corrective actions are taken.

7. Types of Organisations • Functional Organization:  Here, Manager brings

specialized knowledge to take decisions related to a specific function like production,
marketing, finance etc.  Efficiency is an important advantage  Disadvantages
include: 1. There is no ambiguous way of determining effectiveness of separate
functional managers 2. Disputes between managers of different functions can be
resolved only at the top, even if it has originated at much lower level

8. Types of Organisations 3. Functional structures are inadequate for a firm with

diversified products and markets 4. Such organisations tend to create “silos” for each
function, preventing cross-functional coordination in areas like new product
development Such problem can be solved by supplementing vertical functional
structure with lateral cross-functional processes such as cross-functional job rotation
and team-based rewards

9. Types of Organisations • Business Unit Organisation:  It is responsible for all the

functions involved in producing and marketing a specified product line  Managers
handle units as separate companies  Performance of managers is measured by
profitability of the unit  Headquarters reserve certain key prerogatives e.g.
obtaining and allocating funds  Headquarters establish company-wide policies

10. Types of Organisations  Advantages of Business units: It provides training in

general management Manager may make sound production and marketing decisions
than headquarters might Unit can react to new threats or opportunities more quickly
 Disadvantages of Business units: Each staff may duplicate some work Disputes
between business units, their personnel and headquarters staff

11. Types of Organisations • Implications for System Design:  Along with ease of
control, business organizations have other criteria also to run their businesses. 
Once management has decided that a given structure is best, all things considered,
system designer must take that structure as given.  Business units require broader
type of managers and functional organizations provide benefit of economies of scale.
 System designer should exist to serve the system.
12. Functions of Controller • Controller or CFO is responsible for designing and
operating management control system • Functions of a controller are:  designing &
operating information and control  preparing financial statements and reports for
shareholders and other parties.  preparing and analysing performance reports 
supervising internal audit and accounting control procedures  developing personnel
in controller organisation.

13. Controller – Line Organisation • He may be responsible for developing and

analysing control measurements • He may monitor adherence to spending limitations
given by Chief Executive • He may control integrity of accounting system • He may
safeguard company assets from theft and fraud • He plays an important role in
preparation of strategic plans and budgets • He implements policies that are decided
by line management

14. Controller – Business units • He owes some allegiance to corporate controller

and also to the managers of their own units, for whom they provide staff assistance •
In some companies, controller reports to business unit manager and in other
companies, to the corporate controller, but there are problems in both these
relationships • It is expected that controller will not condone or participate in the
transmission of misleading information or in concealment of unfavorable information

Q4. Describe the various types of budget with suitable examples.

Four Main Types of Budgets/Budgeting Methods

There are four common types of budgets that companies use: (1)
incremental, (2) activity-based, (3) value proposition, and (4) zero-based.
These four budgeting methods each have their own advantages and
challenges, which will be discussed in more detail in this guide.

 
 

Source: CFI’s Budgeting & Forecasting Course.

1. Incremental budgeting

Incremental budgeting takes last year’s actual figures and adds or

subtracts a percentage to obtain the current year’s budget.  It is the
most common method of budgeting because it is simple and easy to
understand.  Incremental budgeting is appropriate to use if the
primary cost drivers do not change from year to year.  However, there
are some problems with using the method:

 It is likely to perpetuate inefficiencies. For example, if a manager

knows that there is an opportunity to grow his budget by 10%
every year, he will simply take that opportunity to attain a bigger
budget, while not putting effort into seeking ways to cut costs or
economize.
 It is likely to result in budgetary slack. For example, a manager
might overstate the size of the budget that the team actually
needs so it appears that the team is always under budget.
 It is also likely to ignore external drivers of activity and
performance. For example, there is very high inflation in certain
input costs.  Incremental budgeting ignores any external factors
and simply assumes the cost will grow by, for example, 10% this
year.
 

2. Activity-based budgeting

Activity-based budgeting is a top-down budgeting approach that

determines the amount of inputs required to support the targets or
outputs set by the company.  For example, a company sets an output
target of $100 million in revenues.  The company will need to first
determine the activities that need to be undertaken to meet the sales
target, and then find out the costs of carrying out these activities.

Source: CFI’s Budgeting & Forecasting Course.

3. Value proposition budgeting

In value proposition budgeting, the budgeter considers the following

questions:

 Why is this amount included in the budget?

  Does the item create value for customers, staff, or other
stakeholders?
 Does the value of the item outweigh its cost? If not, then is there
another reason why the cost is justified?

Value proposition budgeting is really a mindset about making sure that

everything that is included in the budget delivers value for the business.
Value proposition budgeting aims to avoid unnecessary expenditures –
although it is not as precisely aimed at that goal as our final budgeting
option, zero-based budgeting.

4. Zero-based budgeting

As one of the most commonly used budgeting methods, zero-based

budgeting starts with the assumption that all department budgets are
zero and must be rebuilt from scratch.  Managers must be able to
justify every single expense. No expenditures are automatically
“okayed”. Zero-based budgeting is very tight, aiming to avoid any and all
expenditures that are not considered absolutely essential to the
company’s successful (profitable) operation. This kind of bottom-up
budgeting can be a highly effective way to “shake things up”.

The zero-based approach is good to use when there is an urgent need

for cost containment, for example, in a situation where a company is
going through a financial restructuring or a major economic or market
downturn that requires it to reduce the budget dramatically.

Zero-based budgeting is best suited for addressing discretionary costs

rather than essential operating costs. However, it can be an extremely
time-consuming approach, so many companies only use this approach
occasionally.

Levels of Involvement in Budgeting Process

We want buy-in and acceptance from the entire organization in the

budgeting process, but we also want a well-defined budget and one
that is not manipulated by people.  There is always a trade-off between
goal congruence and involvement. The three themes outlined below
need to be taken into consideration with all types of budgets.

Imposed budgeting

Imposed budgeting is a top-down process where executives adhere to a

goal that they set for the company.  Managers follow the goals and
impose budget targets for activities and costs.  It can be effective if a
company is in a turnaround situation where they need to meet some
difficult goals, but there might be very little goal congruence.

Negotiated budgeting

Negotiated budgeting is a combination of both top-down and bottom-

up budgeting methods.  Executives may outline some of the targets
they would like to hit, but at the same time, there is shared
responsibility for budget preparation between managers and
employees. This increased involvement in the budgeting process by
lower-level employees may make it easier to adhere to budget targets,
as the employees feel like they have a more personal interest in the
success of the budget plan.

Participative budgeting

Participative budgeting is a roll-up approach where employees work

from the bottom up to recommend targets to the executives.  The
executives may provide some input, but they more or less take the
recommendations as given by department managers and other
employees (within reason, of course).  Operations are treated as
autonomous subsidiaries and are given a lot of freedom to set up the
budget.

 
Q5. Write a short note on Mix and Volume Variance

Sales mix and quantity variances

8

When calculating sales variances as part of variance analysis, one issue that arises is when a company sells
more than one product. Two possible scenarios can occur:

 If customers are unlikely to buy one product instead of another from the same company, then separate
sales volume variances can be calculated
 If, on the other hand, customers might substitute one product for another, then the concept of
sales mix is important and separate sales volume variances can be replaced by a  combined sales mix
variance.

Calculation

Sales variances can be explained as follows :

(1)  Sales price variances are calculated by comparing the actual selling price per unit and the budgeted selling
price per unit;each price variance is multiplied by the number of units for each type of product.

(2)  A sales volume variance is the difference between the actual number of units sold, and the budgeted
number. Each difference is multiplied by the budgeted profit per unit. Sales volume in turns splits into a sales
mix variance and a sales quantity variance.

(3)  A sales mix variance indicates the effect on profit of changing the mix of actual sales from the standard mix.
A Sales Mix variance can be calculated in one of two ways :

(a)  The difference between the actual total quantity sold in the standard mix and the actual quantities sold,
valued at the standard profit per unit;

(b)  The difference between the actual sales and budgeted sales, valued at the standard profit per unit less the
budgeted weighted average profit per unit.

(4) A sales quantity variance indicates the effect on profit of selling a different total quantity from the budgeted
total quantity. Like the mix variance, it can be calculated in one of two ways :

(a) The difference between actual sales volume in the standard mix and budgeted sales valued at the standard
profit per unit.
(b) The difference between actual sales volume and budgeted sales valued at the weighted average profit per
unit.

Q6. Explain Elements of a Control System.

ASIC ELEMENTS OF A CONTROL SYSTEM

11/24/2016
There are four basic elements of a typical motion control system. These are the controller,
amplifier, actuator, and feedback. The complexity of each of these elements will vary depending
on the types of applications for which they are designed and built. Rockwell Automation
manufacturers a wide variety of these products under the Allen Bradley brand name.

The controller section of the AC drive is the brain if the system. It typically consists of a
microprocessor based CPU and memory that is used to process data once it is collected and
stored. This controller section of the AC drive will process information received from the inputs of
the drive and also from the feedback signals that will usually be a representation of the position
or speed of the actuator. The controller will then issue commands to the amplifier section based
on this information.

The amplifier section of the drive receives the commands from the control section. The amplifier
then generates the power signal necessary for the actuator to drive the load with the correct
speed and direction. The amplifier section of the AC drive is usually able to be further broken
down into three sections of its own. The rectifier circuit, DC circuit, and inverter circuit. Most of
the Allen Bradley AC drive repairs that we perform use a rectifier or SCR pre-charge circuit to
reduce the instantaneous incoming current at power up, and supply continuous current while in
operation. The DC circuit will contain both current and voltage filter components including a
choke and parallel bus capacitors and may have some type of regenerative discharge circuitry.
The inverter section of the AC drive will typically be comprised of insulated gate bipolar
transistors or IGBTs. The switching control for the inverter circuit is provided by the control
section of the AC drive. Using the switching control, the DC voltage supplied by the DC circuit, is
changed in the inverter circuit to a pulse width modulated output that feeds the actuator of the
motion control system.

The actuator portion of the system will most often be an induction AC motor or permanent
magnet AC motor with windings and insulation that are specially designed to handle the heat and
stress generated by a pulse width modulated output.

The feedback element of the motion control system may be handled by the system in a number
of ways depending on the information needed. Encoders or resolvers can be used to provide
feedback signals from the actuator in a closed loop control or hall effect sensors can provide
feedback from the output of the AC drive in an open loop control. These feedback signals as
previously mentioned will be a representation of the speed or position of the actuator and are
used by the control section of the drive to determine what commands to provide to the other
sections of the drive.
Q7. Give strategic formulation process

Strategy formulation refers to the process of choosing the most appropriate course of
action for the realization of organizational goals and objectives and thereby achieving
the organizational vision. The process of strategy formulation basically involves six
main steps. Though these steps do not follow a rigid chronological order, however they
are very rational and can be easily followed in this order.

Setting Organizations’ objectives - The key component of any strategy statement is to

set the long-term objectives of the organization. It is known that strategy is generally a
medium for realization of organizational objectives. Objectives stress the state of being
there whereas Strategy stresses upon the process of reaching there. Strategy includes
both the fixation of objectives as well the medium to be used to realize those objectives.
Thus, strategy is a wider term which believes in the manner of deployment of resources
so as to achieve the objectives.

While fixing the organizational objectives, it is essential that the factors which influence
the selection of objectives must be analyzed before the selection of objectives. Once the
objectives and the factors influencing strategic decisions have been determined, it is
easy to take strategic decisions.

Evaluating the Organizational Environment - The next step is to evaluate the general
economic and industrial environment in which the organization operates. This includes
a review of the organizations competitive position. It is essential to conduct a qualitative
and quantitative review of an organizations existing product line. The purpose of such a
review is to make sure that the factors important for competitive success in the market
can be discovered so that the management can identify their own strengths and
weaknesses as well as their competitors’ strengths and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track of
competitors’ moves and actions so as to discover probable opportunities of threats to its
market or supply sources.

Setting Quantitative Targets - In this step, an organization must practically fix the
quantitative target values for some of the organizational objectives. The idea behind this
is to compare with long term customers, so as to evaluate the contribution that might be
made by various product zones or operating departments.
Aiming in context with the divisional plans - In this step, the contributions made by
each department or division or product category within the organization is identified
and accordingly strategic planning is done for each sub-unit. This requires a careful
analysis of macroeconomic trends.

Performance Analysis - Performance analysis includes discovering and analyzing the

gap between the planned or desired performance. A critical evaluation of the
organizations past performance, present condition and the desired future conditions
must be done by the organization. This critical evaluation identifies the degree of gap
that persists between the actual reality and the long-term aspirations of the
organization. An attempt is made by the organization to estimate its probable future
condition if the current trends persist.

Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course
of action is actually chosen after considering organizational goals, organizational
strengths, potential and limitations as well as the external opportunities.

Q8. Describe Management Control System in strategic planning.

Strategic Planning

According to Anthony:

"Strategic planning is the process of deciding on the goals of the organization and the
strategies for attaining these goals."

Strategies are guidelines for deciding the appropriate actions for attaining the organization's
goals. The essential difference between strategic planning and management control is that the
strategic planning process is unsystematic.

Strategic control occurs in three ways. First, strategic planning is itself a form of control.
Second, strategic plans are converted into reality not only by their influence on the
management control activity but also by the key decisions regarding allocation of resources.

Third, while capital budgeting systems can respond to requests for resources that are
consistent with the accepted strategic plan, the period between formal, comprehensive
strategic planning exercises can give rise to unanticipated changes in the environment or
unexpected internal crises.
Anthony views management planning and control as the processes by which (1)
organizational objectives are achieved and (2) the use of resources is made effective and
efficient.

"Management control is the process by which managers influence other members of the
organization to implement the organization's strategies."

Management control decisions are made within the guidance established by strategic
planning. Management control is a systematic process. It is done by managers at all levels; it
is done on regular basis; it involves the whole organization; and it involves a large amount of
personal interaction and relatively less judgment.

There are two somewhat different types of management control activities: (1) the
management control of operating activities, and (2) the control of operational projects.

Process for operating activities has four phases: programming, budget preparation, execution,
and evaluation.

Programming is the process of deciding on the major programs that the organization will
undertake to implement its strategies and the approximate amount of resources that will be
devoted to each.

Budget preparation. An operating budget is the organization's financial plan for a specific
period, usually one year.

Execution and evaluation. During the year managers execute the program or part of a
program for which they are responsible. Reports on responsibility centers show both
budgeted and actual information. They are used as a basis for control. The process of
evaluation is a comparison of actual amounts with the amounts that should be expected of
actual circumstances.

A projects is a set of activities intended to accomplish a specified end result of sufficient

importance to be of interest to management (for example: construction projects,
research/development projects, and motion picture productions).
In a project, and in each of its components, the focus is on three aspects: (1) its scope (that is,
the specifications for the end product), (2) its schedule (that is, the time required), and (3) its
cost.

In actual operations, project managers engage in both planning activities and control
activities. They control when they act to improve effectiveness and efficiency.

Anthony views this third category of organizational planning and control as (1) focusing on
specific, discrete tasks and (2) the process of ensuring that those tasks are done effectively
and efficiently.

"Task control is the process of ensuring that specific tasks are carried out effectively and
efficiently."

As the definition suggests, the focus of operational control is on individual tasks or

transaction: scheduling and controlling individual jobs through a shop, as contrasted with
measuring the performance of the shop as a whole; procuring specific items for inventory, as
contrasted with management of inventory as whole: and so on.

Task control is distinguished from management control in the following ways:

The management control system is basically of similar throughout the organization. Each
type task requires a different task control system.

In management control, managers interact with other managers; in task control either humans
are not involved at all, or the interaction is between a manager and a nonmanager.

In management control the focus is on organizational units called responsibility centers; in

task control the focus is on specific tasks.

Management control relates to activities that are not specified; task control relates to
specified tasks.

In management control the focus is equally on planning and on execution; in task control it is
primarily on execution.
An essential characteristic of the process is that the "standard" against which actual
performance is measured is consistent with the organization's strategies. Exhibit 6-3 outlines
differences among the three types of processes with respect to the nature of the problems that
typically are addressed in each process and the types of decisions that are relevant for these
problems.

As another way of explaining the differences among the three processes, Exhibit 6-4 gives
some examples of activities associated with each.

Most commentators would agree with the definition of strategic control offered by Schendel
and Hofer:

"Strategic control focuses on the dual questions of whether: (1) the strategy is being
implemented as planned; and (2) the results produced by the strategy are those intended."

This definition refers to the traditional review and feedback stages which constitutes the last
step in the strategic management process. Normative models of the strategic management
process have depicted it as including there primary stages: strategy formulation, strategy
implementation, and strategy evaluation (control).

Strategy evaluations concerned primarily with traditional controls processes which involves
the review and feedback of performance to determine if plans, strategies, and objectives are
being achieved, with the resulting information being used to solve problems or take
corrective actions.

Recent conceptual contributors to the strategic control literature have argued for anticipatory
feedforward controls, that recognize a rapidly changing and uncertain external environment.

Schreyogg and Steinmann (1987) have made a preliminary effort, in developing new system
to operate on a continuous basis, checking and critically evaluating assumptions, strategies
and results. They refer to strategic control as "the critical evaluation of plans, activities, and
results, thereby providing information for the future action".
Schreyogg and Steinmann based on the shortcomings of feedback-control. Two central
characteristics if this feedback control is highly questionable for control purposes in strategic
management: (a) feedback control is post-action control and (b) standards are taken for
granted.

Schreyogg and Steinmann proposed an alternative to the classical feedback model of control:
a 3-step model of strategic control which includes premise control, implementation control,
and strategic surveillance. Pearce and Robinson extended this model and added a component
"special alert control" to deal specifically with low probability, high impact threatening
events.

The nature of these four strategic controls is summarized in Figure 6-4. Time (t ) marks the
point where strategy formulation starts. Premise control is established at the point in time of
initial premising (t ). From here on promise control accompanies all further selective steps of
premising in planning and implementing the strategy. The strategic surveillance of emerging
events parallels the strategic management process and runs continuously from time (t )
through (t ). When strategy implementation begins (t ), the third control device,
implementation control is put into action and run through the end of the planning cycle (t ).
Special alert controls are conducted over the entire planning cycle.

Planning premises/assumptions are established early on in the strategic planning process and
act as a basis for formulating strategies.

"Premise control has been designed to check systematically and continuously whether or not
the premises set during the planning and implementation process are still valid.

It involves the checking of environmental conditions. Premises are primarily concerned with
two types of factors:

Environmental factors (for example, inflation, technology, interest rates, regulation, and
demographic/social changes).

Industry factors (for example, competitors, suppliers, substitutes, and barriers to entry).

All premises may not require the same amount of control. Therefore, managers must select
those premises and variables that (a)are likely to change and (b) would a major impact on the
company and its strategy
 International Business
Q1. What are the four steps of the global pricing strategy
Four steps of four steps to global pricing strategy are
• Keegan’s four steps to global pricing strategy
• General pricing strategies
• Problems with pricing for multinational markets
• Problems with foreign currency and economic conditions
• Grey markets

I Keegan’s four steps to global pricing strategy

1. Determine the price elasticity of demand (Inflexible demand will allow for a higher
price)
2. Estimate fixed and variable manufacturing costs (product adaptation costs must be
calculated)
3. Identify all costs associated with the marketing programme
4. Select the price that offers the highest contribution margin

II General pricing strategies

• Market skimming

a pricing approach in which the producer sets a high introductory price to attract
buyers with a strong desire for the product and the resources to buy it, and then
gradually reduces the price to attract the next and subsequent layers of the market.

• Market penetration

an approach to pricing in which a manufacturer sets a relatively low price for a

product in the introductory stage of its life cycle with the intention of building market
share.

• Market holding - strategy intended to :

Maintain their share of the market

Currency fluctuations often trigger price adjustments

Price adjustments can mean lower, or no profit margin

strong home currency could mean manufacturing/licensing abroad

• Cost-plus pricing

Cost-plus pricing is a pricing strategy in which the selling price is determined by adding a specific
markup to a product's unit cost. An alternative pricing method is value-based pricing.

III Problems with pricing for multinational markets

The main challenges are

• Co-ordination across various markets

• Do we maintain a ‘uniform’ pricing policy across markets

• How to transfer price between and across markets? E.g. Sandvik (Sweden)

• Parallel imports or ‘Grey’ markets?

IV Problems with foreign currency and economic conditions

The main challenges are

• Which currency for pricing in international markets?
• How to deal with fluctuating exchange rates?
• Strategies for high inflation rates?

V Grey Markets

• Products must be available internationally (as products are standardised in

global markets)
• Low trade barriers (tariffs, legal restrictions, transport costs)
• Price differentials must be great enough (so that grey marketers can make a
profit)
Q2. What is foreign exchange market
Foreign exchange market (forex, or FX, market), institution for the exchange of one country’s
currency with that of another country. Foreign exchange markets are actually made up of many
different markets, because the trade between individual currencies—say, the euro and the U.S.
dollar—each constitutes a market. The foreign exchange markets are the original and oldest financial
markets and remain the basis upon which the rest of the financial structure exists and is traded:
foreign exchange markets provide international liquidity, preferably with relative stability.

A foreign exchange market is a 24-hour over-the-counter (OTC) and dealers’ market, meaning that
transactions are completed between two participants via telecommunications technology. The
currency markets are also further divided into spot markets—which are for two-day settlements—
and the forward, swap, interbank futures, and options markets. London, New York, and Tokyo
dominate foreign exchange trading. The currency markets are the largest and most liquid of all the
financial markets; the triennial figures from the Bank for International Settlements (BIS) put daily
global turnover in the foreign exchange markets in trillions of dollars. It is sobering to consider that
in the early 21st century an annual world trade’s foreign exchange is traded in just less than every
five days on the currency markets, although the widespread use of hedging and exchanges into and
out of vehicle currencies—as a more liquid medium of exchange—means that such measures of
financial activity can be exaggerated.
The original demand for foreign exchange arose from merchants’ requirements for foreign currency
to settle trades. However, now, as well as trade and investment requirements, foreign exchange is
also bought and sold for risk management (hedging), arbitrage, and speculative gain. Therefore,
financial, rather than trade, flows act as the key determinant of exchange rates; for example,
interest rate differentials act as a magnet for yield-driven capital. Thus, the currency markets are
often held to be a permanent and ongoing referendum on government policy decisions and the
health of the economy; if the markets disapprove, they will vote with their feet and exit a currency.
However, debates about the actual versus potential mobility of capital remain contested, as do
those about whether exchange rate movements can best be characterized as rational,
“overshooting,” or speculatively irrational.

The increasingly asymmetric relationship between the currency markets and national governments
represents a classic autonomy problem. The “trilemma” of economic policy options available to
governments are laid out by the Mundell-Fleming model. The model shows that governments have
to choose two of the following three policy aims: (1) domestic monetary autonomy (the ability to
control the money supply and set interest rates and thus control growth); (2) exchange rate stability
(the ability to reduce uncertainty through a fixed, pegged, or managed regime); and (3) capital
mobility (allowing investment to move in and out of the country).

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Historically, different international monetary systems have emphasized different policy mixes. For
instance, the Bretton Woods system emphasized the first two at the expense of free capital
movement. The collapse of the system destroyed the stability and predictability of the currency
markets. The resultant large fluctuations meant a rise in exchange rate risk (as well as in profit
opportunities). Governments now face numerous challenges that are often captured under the term
globalization or capital mobility: the move to floating exchange rates, the political liberalization of
capital controls, and technological and financial innovation.

In the contemporary international monetary system, floating exchange rates are the norm. However,
different governments pursue a variety of alternative policy mixes or attempt to minimize exchange
rate fluctuations through different strategies. For example, the United States displayed a preference
for ad hoc international coordination, such as the Plaza Agreement in 1985 and the Louvre Accord in
1987, to intervene and manage the price of the dollar. Europe responded by forging ahead with a
regional monetary union based on the desire to eliminate exchange rate risk, whereas many
developing governments with smaller economies chose the route of “dollarization”—that is, either
fixing to or choosing to have the dollar as their currency.

The international governance regime is a complex and multilayered bricolage of institutions, with
private institutions playing an important role; witness the large role for private institutions, such as
credit rating agencies, in guiding the markets. Also, banks remain the major players in the market
and are supervised by the national monetary authorities. These national monetary authorities follow
the international guidelines promulgated by the Basel Committee on Banking Supervision, which is
part of the BIS. Capital adequacy requirements are to protect principals against credit risk, market
risk, and settlement risk. Crucially, the risk management, certainly within the leading international
banks, has become to a large extent a matter for internal setting and monitoring.

The series of contagious currency crises in the 1990s—in Mexico, Brazil, East Asia, and Argentina—
again focused policy makers’ minds on the problems of the international monetary system. Moves,
albeit limited, were made toward a new international financial architecture. Most importantly, these
crises led to the establishment of the Financial Stability Forum (since 2009 the Financial Stability
Board), which investigated the problems of offshore, capital flows, and hedge funds; and the G20,
which attempted to broaden the international regime’s membership and thus deepen its legitimacy.
In addition, there were calls for a currency transaction tax, named after Nobel Laureate James
Tobin’s proposal, from many civil society nongovernmental organizations as well as some
governments. The success of international monetary reform is a crucial issue for governments and
their autonomy, firms and the stability of their investments, and citizens who ultimately are those
who absorb these effects as they are transmitted into everyday life.

Q3. Why do you need international trade

1- Reduced dependence on your local market

Your home market may be struggling due to economic pressures, but if you go
global, you will have immediate access to a practically unlimited range of
customers in areas where there is more money available to spend, and because
different cultures have different wants and needs, you can diversify your
product range to take advantage of these differences.

2- Increased chances of success

Unless you’ve got your pricing wrong, the higher the volume of products you sell,
the more profit you make, and overseas trade is an obvious way to increase
sales.  In support of this, UK Trade and Investment (UKTI) claim that companies
who go global are 12% more likely to survive and excel than those who choose
not to export.

3- Increased efficiency
Benefit from the economies of scale that the export of your goods can bring – go
global and profitably use up any excess capacity in your business, smoothing the
load and avoiding the seasonal peaks and troughs that are the bane of the
production manager’s life.

4- Increased productivity

Statistics from UK Trade and Investment (UKTI) state that companies involved in
overseas trade can improve their productivity by 34% – imagine that, over a third
more with no increase in plant.

5- Economic advantage

Take advantage of currency fluctuations – export when the value of the pound
sterling is low against other currencies, and reap the very real benefits.  Words
of warning though; watch out for import tariffs in the country you are exporting
to, and keep an eye on the value of sterling.  You don’t want to be caught out by
any sudden upsurge in the value of the pound, or you could lose all the profit
you have worked so hard to gain.

6- Innovation

Because you are exporting to a wider range of customers, you will also gain a
wider range of feedback about your products, and this can lead to real benefits. 
In fact, UKTI statistics show that businesses believe that exporting leads to
innovation – increases in break-through product development to solve problems
and meet the needs of the wider customer base.  53% of businesses they spoke
to said that a new product or service has evolved because of their overseas
trade.

7- Growth

The holy grail for any business, and something that has been lacking for a long
time in our manufacturing industries – more overseas trade = increased growth
opportunities, to benefit both your business and our economy as a whole
Q4. What are the different forces of globalisation

Globalization is driven by various new development and gradual changes in the world economy.

Generally, organizations go global for expanding their markets and increasing their sales and profits.
One of the major forces of globalization is the expansion of communication systems.

In the present era, it has become easy to distribute information to any part of the world through the
Internet.

(a) Advancement of Technologies:

Refers to one of the crucial factors of globalization. Since 1990s, enhancement in

telecommunications and Information Technology (IT) has marked remarkable improvements in
access of information and increase in economic activities. This advancement in technologies has led
to the growth of various sectors of economies throughout the world.
Apart from this, the advancement in technology and improved communication network has
facilitated the exchange of goods and services, resources, and ideas, irrespective of geographical
location. In this way, advanced technologies have led to economic globalization.

(b) Reduction in Cross-trade Barriers:

Refer to one of the critical forces of globalization. Every- country restricts the movement of goods
and services across its border. It imposes tariffs and quotas on the goods and services imported in its
country. In addition, the random changes in the regulations create a chaos in global business
environment.

Such practices impose limits on international business activities. However, gradual relief in the cross-
border trade restrictions by most governments induces free trade, which, in turn, increases the
growth rate of an economy.

(c) Increase in Consumer Demand:

Acts as a main driver to facilitate globalization. Over the years, with increase in the level of income
and standard of living, the demand of consumers for various products has also increased. Apart from
this, nowadays, consumers are well aware about products and services available in other countries,
which impel many organizations to work in association with foreign players for catering to the needs
of the domestic market.

(d) High Competition:

Constitutes an important driver for bringing about globalization. An organization generally strives
hard to grain competitive edge in the market. The frequent increase in competition in the domestic
market compels organizations to go global. Thus, various organizations enter other countries (for
selling goods and services) to expand their market share.

They export goods in foreign markets where the price of goods and services are relatively high.
Many organizations have achieved larger global market shares through mergers and acquisitions,
strategic alliances, and joint ventures. So, these are the major factors that have contributed a lot in
globalization and the growth of global economy.
Q5. Describe on international chambers of commerce
The International Chamber of Commerce is the largest, most diverse business organization in the
world. The ICC has hundreds of thousands of member companies from more than 100 countries and
broad business interests. The ICC's vast networks of committees and experts belong to all sectors
and keep members fully informed of all issues that affect their industries. They also maintain contact
with the United Nations, the World Trade Organization, and other intergovernmental agencies.

The ICC fosters international trade and commerce to promote and protect open markets for goods
and services and the free flow of capital. The ICC performs three primary activities: the
establishment of rules, dispute resolution, and policy advocacy. The ICC also wages war on
commercial crime and corruption to bolster economic growth, create jobs and stabilize employment,
and ensure overall economic prosperity. Because members of the ICC and their associates engage in
international business, the ICC has unparalleled authority in setting rules that govern cross-border
business. While these rules are voluntary, thousands of daily transactions abide by the ICC-
established rules as part of regular international trade.

The History of the ICC:

The ICC was founded in Paris, France in 1919. The organization’s international secretariat was also
established in Paris, and its International Court of Arbitration was formed in 1923. The first chairman
of the chamber was Etienne Clementel, the early-20th-century French politician.

The ICC’s Governing Bodies :

There are four primary governing bodies of the ICC. The lead governing body is the World Council,
which is composed of national committee representatives. The highest officers of the ICC, the
chairman, and vice-chairman are elected by the World Council every two years.

The executive board provides strategic direction for the ICC. The board is elected by the World
Council and is comprised of 30 business leaders and ex-officio members. The executive board's
prominent duties are the development of ICC strategies and policy implementation.

The international secretariat is the operational arm of the ICC and is responsible for developing and
implementing the ICC’s work program and introducing business perspectives to intergovernmental
organizations. The secretary-general, who is appointed by the World Council, oversees this
governing body.

The finance committee acts as an advisor to the executive board on all financial aspects. This
committee prepares the budget on behalf of the board, submits regular reports, reviews the
financial implications of ICC activities, and oversees all expenses and revenue flow.
Q6. Explain different types of dumping

Sporadic dumping,

Predatory dumping,

Persistent dumping; and

Reverse dumping.

1. Sporadic dumping: Manufactures practice sporadic dumping to get rid of excess merchandise. A
manufacturer with unsold inventories avoids starting a price war in the home market to preserve his
competitive position. Excess supplies are destroyed. Example, Asian farmers dumped small chickens
into the sea. Another method is to have the excess supply dumped in a foreign market where the
product is normally not sold. Thus, sporadic dumping is aimed at liquidating excess stocks that may
arise occasionally.

2. Predatory dumping (Intermittent dumping): While sporadic dumping is occasional, predatory

dumping is permanent. Predatory dumping is also known as intermittent dumping. It involves sale of
goods in overseas markets at a price lower than the home market price. This is selling at a loss to
gain access to a market and eliminate competition. After the competition is eliminated, the company
becomes a monopolist. Monopoly position is then used to increase the price. Anyway, there is a
disadvantage that former competitors may rejoin the market because of high profit margins.

Example,

Hitachi was accused of following predatory dumping for its EPROM (electrically programmable read
only memory) chips.

Zenith in USA accused Japanese Television manufacturers of using predatory dumping. A charge was
leveled against Japanese manufacturers for false billing and secret rebates to set low predatory
prices on T.V. sets in U.S markets. It was argued that they tried to drive U.S firms out of business in
order to gain a monopoly.

3. Persistent dumping (Long period dumping): Persistent dumping as the name itself implies is the
most permanent type of dumping. It involves consistent selling at lower prices in one market than in
the rest of the market. This practice is based on the fact that markets vary in terms of overhead
costs and demand characteristics. In persistent dumping, the firm may use marginal cost pricing
abroad while using full cost pricing (covering fixed costs at home) in domestic market.

Japan, for example, sold consumer electronics at high prices in its own country. This is because it has
no foreign competition. But it lowered prices in the U.S market in order to maintain market share.

4. Reverse dumping: Reverse dumping is followed in the overseas markets where the demand is less
elastic. Such markets tolerate a higher price. Thus, dumping is done in the manufacturer’s home
market by selling locally at a lower price.

Q7.Explain insta online account facility.

It's a completely online and Paperless Investment Account. It provides convenience of managing
your investments from the comforts at your home or office.
The main Benefits are

1. A completely paperless Investment Account opening

2. Dedicated Mutual Fund (MF) Research team that will help you make your Investment
3. Online Research views on your holdings
4. Get instant MF capital gain statement
5. Get Monthly MF update

We can invest in Mutual Funds with this account

The eligibility Criteria for this account is

1. Customer should be Individual Resident Indian

2. Customer should not hold ICICI Direct account
3. Customer should have PAN and Aadhaar Number
Features & Benefits of Insta Save Account

 pen a Savings Account with a Fixed Deposit instantly online using Aadhaar
 Open FD of min Rs.10,000 for 12 months and the benefits of a Savings
Account with no balance commitment is applicable
 An assured complimentary Credit Card with a limit of up to 90% on the FD
created
 Get 24x7 access to banking services
  Offers on Amazon, Flipkart, Bigbasket, Swiggy, Eros Now, PharmEasy and
more brands**
 Virtual Debit Card facility
 Complete your verification through Video KYC and get a full-fledged Digital
Account

Q8.How cultural factors do influences international business?

In a globalised economy, cultural sensitivity is essential. As more companies grow,

and the global marketplace becomes more accessible for small businesses,
multinational and cross-cultural teams are becoming more common. This means that
it is crucial, now more than ever, for businesses to understand the culture of their
foreign market if they wish to succeed internationally.

Culture is the ideas, customs, and social behaviour of a particular person or society.
But how does culture affect international business?
In a business context, culture relates to what behaviour is common and accepted
professionally in one location, compared to another. What may be acceptable
business practice in one country, may be very different from the approach that is
used by businesses overseas. Therefore, recognising how culture can affect
international business is something that should be understood in order to avoid
misunderstandings between colleagues and clients, and also to make sure that
businesses are presenting themselves to their new market in the best way they can.
Communication plays an important role in international business

Communication
Communication plays an important role in international business, and sometimes
effective communication can be the difference between succeeding or failing in a
new market. Effective communication is particularly important for international
businesses as there is a risk of your messages getting ‘lost in translation’. There are
several things that need to be considered when looking at how effective your
business’ communication is at an international level.
The first thing that should be considered when looking into communication is any
language barriers that may hinder the communication between you and your new
market. However, this goes deeper than just the language that is used to
communicate, it’s how the messages are conveyed that’s important. Language
barriers not only relate to people speaking different languages, but also to the tone
used in those languages. For example, in countries like the US or Germany, it is
common for people to speak loudly and be more assertive when sharing ideas
amongst colleagues. However, in countries like Japan people typically speak more
softly and have a more passive tone when making suggestions to colleagues.
Another thing to consider are the basic customs, mannerisms and gestures that are
commonly accepted in that culture. Behaviour that might be commonplace in one
culture could be unusual or potentially offensive to a client or colleague overseas. 
For example in some cultures, handshakes must involve the right hand only as the
left hand is seen to be less hygienic.
Businesses who are looking to operate internationally need to be aware of language
barriers, tone and body language. Cross-cultural communication can be a challenge,
but approaching cultural differences with sensitivity, openness, and curiosity can
help businesses succeed internationally.

Different cultures have different attitudes to organisational structure

Attitude
Businesses also need to be aware that different cultures have different attitudes
towards business.

Scandinavian countries such as Sweden emphasise social equality and therefore

they tend to have a relatively flat organisational hierarchy. This relates to their
informal approach to communication and cooperation normally at the heart of their
organisations. In Japan, their traditional values of relative status and respect for
seniority are reflected in their organisations and there is a very clear organisational
structure. This means that senior management command respect at all times and
expect a level of formality from junior members of their teams.

These different cultural attitudes towards management can, therefore, make it

difficult to define roles in multinational teams. Therefore, it is important for
businesses to be aware of their target market’s cultural approach towards the
organisational structure.

Businesses need to be aware of workplace etiquette when working internationally

Etiquette
Workplace etiquette is something else that businesses need to be aware of if they
are working internationally.
The formality of address is another key thing to consider within international
businesses when communicating with colleagues and clients from different cultures.
Are they comfortable with being approached on a first-name basis or do they prefer
titles and surnames? Asian countries such as China seem to prefer the latter,
whereas Americans usually use first names. Things such as formality of address
may not seem that important, but if you get off on the wrong foot with a potential
foreign client then that could ruin your chances of ever working with them in the
future. Therefore, it is important for businesses to know that their level of formality
will differ depending on the culture of the person they’re communicating with.

Workplace etiquette in some cultures also means they have a different approach
towards workplace confrontation, rules and regulations, and working hours. While
some may consider working long hours a sign of commitment and achievement,
others may consider these extra hours a demonstration of a lack of efficiency or the
lack of prioritisation of family or personal time.
Marketing Management

Q1.Explain main activities of ITPO.

Activities & Services

Managing the extensive trade fair complex, Pragati Maidan in the heart of Delhi

Organising various trade fairs and exhibitions at its exhibition complex in Pragati Maidan and
other centers in India.

Facilitating the use of Pragati Maidan for holding of trade fairs and exhibitions by other fair
organisers both from India and abroad.

Timely and efficient services to overseas buyers in vendor identification, drawing itineraries,
fixing appointments and even accompanying them where required.

Establishing durable contacts between Indian suppliers and overseas buyers.

Assisting Indian companies in product development and adaptation to meet buyers'

requirements.

Organising Buyer-Seller Meets and other exclusive India shows with a view to bringing
buyers and sellers together.

Organising India Promotions with Department Stores and Mail Order Houses abroad.

Participating in overseas trade fairs and exhibitions.

Arranging product displays for visiting overseas buyers.

Organising seminars/conferences/workshops on trade-related subjects

Encouraging small and medium scale units in export promotion efforts.

Conducting in-house and need-based research on trade and export promotion.

Enlisting the involvement and support of the State Governments in India for promotion of
India's foreign trade.

Trade information services through electronic accessibility at Business Information Centre.

Q2.Explain Promotion to the Dealer: Its demerits

Disadvantages of Sales Promotion

While sales promotion is a powerful and effective method to produce immediate short term positive
results, it is not a cure for a bad product or bad advertising.  In fact, a promotion is speed up the killing
of a bad product.

1. Increased price sensitivity

Consumers wait for the promotion deals to be announced and then purchase the product.  This is true
even for brands where brand loyalty exists.  Customers wait and time their purchases to coincide with
promotional offers on their preferred brands. Thus, the routine sales at the market price are lost and
the profit margin is reduced because of the discounts to be offered during sale-season.

‘The Diwali Bonanza Offers’ on electronic goods.

2. Quality image may become tarnished:

If the promotions in a product category have been rare, the promotions could have a negative effect
about its quality image. Consumers may start suspecting that perhaps the product has not been
selling well, the quality of the product is true compared to the price or the product is likely to be
discontinued because it has become outdated.

The Smyle Powder offer of “Buy 1 and get 2 free” went on and on. Ultimately people
stopped asking for the product as the on-going sales promotion strategy made the
customers perceive it to be a cheap and an inferior product.

3. Merchandising support from dealers is doubtful:

In many cases, the dealers do not cooperate in providing the merchandising support nor do they pass
on any benefit to consumers. The retailer might not be willing to give support because he does not
have the place, or the product does not sell much in his shop, or may be he thinks the effort required
is more than the commission/benefit derived.

4. Short-term orientation:

Sales promotions are generally for a short duration.  This gives a boost to sales for a short period. 
This short-term orientation may sometimes have negative effects on long-term future of the
organization.  Promotions mostly build short-term sales volume, which is difficult to maintain.  Heavy
use of sales promotion, in certain product categories, may be responsible for causing brand quality
image dilution.
Q3. Explain Significance of Branding.

Branding: Meaning, Definition and Significance of

Branding!
Meaning:
Branding has been around for centuries as a means to distinguish
the goods of one producer from those of another. A brand is a
specific term that may include a name, sign, symbol, design or a
combination of these, with an intention to identify goods or services
of a particular seller.

In fact, the word ‘brand’ is derived from the Old Norse word
brander, which means ‘to bum’. Branding helps to develop customer
loyalty and it is advertised by sellers under their own name. A good
brand develops a corporate image. Usually customers prefer brands
as they can easily differentiate the quality.

Significance of Branding:
Branding provides benefits to buyers and sellers.

To Buyer:
Branding: Meaning, Definition and
Significance of Branding
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Branding: Meaning, Definition and Significance of

Branding!
Meaning:
Branding has been around for centuries as a means to distinguish
the goods of one producer from those of another. A brand is a
specific term that may include a name, sign, symbol, design or a
combination of these, with an intention to identify goods or services
of a particular seller.

In fact, the word ‘brand’ is derived from the Old Norse word
brander, which means ‘to bum’. Branding helps to develop customer
loyalty and it is advertised by sellers under their own name. A good
brand develops a corporate image. Usually customers prefer brands
as they can easily differentiate the quality.

ADVERTISEMENTS:

Thus, branding facilitates product differentiation. Managing a

brand is a major task in marketing. The battle in the market takes
place not between companies but between brands, and every firm
tries best to develop its brand image.

Definition:
According to Kotler and Amstrong, ‘a brand is a name, term, sign,
symbol or design or a combination of these that identifies the maker
or seller of a product, or services’.

Significance of Branding:
Branding provides benefits to buyers and sellers.

To Buyer:
ADVERTISEMENTS:
1. A brand helps buyers in identifying the product that they
like/dislike.

2. It identifies the marketer.

3. It helps reduce the time needed for purchase.

4. It helps buyers evaluate quality of products, especially if they are

unable to judge a product’s characteristics

To Seller:
1. A brand differentiates product offering from competitors.

2. It helps segment market by creating tailored images.

3. It identifies the companies’ products making repeat purchases

easier for customers.

4. It reduces price comparisons.

5. It helps the firm introduce a new product that carries the name of
one or more of its existing products.

6. It promotes easier cooperation with intermediaries with well-

known brands

7. It facilitates promotional efforts.

8. It helps in fostering brand loyalty, thus helping to stabilize

market share.

9. Firms may be able to charge a premium for the brand.

Q4.Advertisement expenses are usually wasteful, with no guarantee of enhanced
sales or higher loyaltyfrom among the target audience” .Do you agree with this
statement ?Present your view – point.

Though advertising is one of the most frequently used medium of promotion of goods
and services, it attracts lot of criticism. The opponents of advertising say that the
expenditure on advertising is a social waste as it adds to the cost, multiplies the needs
of people and undermines social values. The proponents, however, argue that
advertising is
very useful as it increases the reach, brings the pay unit cost of production down and
adds to the growth of the economy. It is therefore, important to examine the major
criticisms against advertising and see the extent to which these are true. This is taken
up as follows:
1. Adds to Cost: The opponents of advertising argue that advertising unnecessarily
adds to the cost of product, which is ultimately passed on to the buyers in the form of
high prices. An advertisement on TV, for a few seconds, for example, costs the
marketers several lakhs of rupees. Similarly an advertisement in print media say in a
newspaper or a magazine costs the marketers a large amount of money. The money
spent adds to the cost, which in an important factor in fixation of the price of a product.
True, advertisement of a product costs lot of money but it helps to increase the demand
for the product as large number of potential buyers come to know about the availability
of the products, its features etc. and are persuaded to buy it. The increased demand
leads to higher production, which brings with it the economies of scale. As a result, the
per unit cost of production comes down as the total cost is divided by larger number of
units. Thus, the expenditure on advertisement adds to the total cost but the per unit cost
comes down which in fact lessens the burden of consumers rather than adding to it. 
2. Undermines Social Values: Another important criticism of advertising is that it
undermines social values and promotes materialism. It breeds discontent among people
as they come to know about new products and feel dissatisfied with their present state
of affairs. Some advertisements show new life styles, which don’t find social approval.
This criticism is not entirely true. Advertisement in fact helps buyers by informing
them about the new products, which may be improvement
over the existing products. If the buyers are not informed about these products, they
may be using inefficient products. Further, the job of an advertisement is to inform.
The final choice to buy or not to buy anyway rests with the buyers. They will buy if the
advertised product satisfies some of their needs. They may be motivated to work
harder to be able to purchase these products. 
3. Confuses the Buyers: Another criticism against advertisement is that so many
products are being advertised which makes similar claims that the buyer gets confused
as to which one is true and which one should be relied upon. For example, we may
note similar claims of whiteness or stain removing abilities in competing brands of
detergent powder or claims of whiteness of tooth or ‘feelings of freshness’ in
competing brands of toothpaste that it is sometimes confusing to us as to which one to
buy. The supporters of advertisement, however, argue that we are all rational human
beings who make our decisions for purchase of products on factors such as price, style,
size, etc. Thus the buyers can clear their confusion by analysing the information
provided on the advertisements and other sources before taking a decision to purchase
a product. However, this criticism cannot be completely overruled. 

4. Encourages Sale of Inferior Products: Advertising does not distinguish between

superior and inferior products and persuade people to purchase even the inferior
products. In fact superiority and inferiority depends on the quality, which is a relative
concept. The desired level of quality will depend on the economic status and
preferences of the target customers. Advertisements sell products of a given quality
and the buyers will buy if it suits their requirements. No advertisement should
however, make false claim about the quality of a product. If a firm makes a false
claims it can be prosecuted for the same.
5. Some Advertisements are in Bad Taste: Another criticism against advertising is that
some advertisements are in bad taste. These show something which in not approved by
some people say advertisements showing women dancing when not required or
running after a man because he is wearing a particular suit or using a particular
perfume are certainly not good. Some advertisements distort the relationship like
employer employee and are quite offensive.
Q5. “Ware – housing decision are growingly becoming more critical” . Discuss
quoting examples

Warehousing is no longer an unsophisticated business. Operators need to

embrace technology and understand it.As the omnichannel space matures,
warehousing and technology are increasingly connected. Companies have an
abundance of options in terms of materials handling systems, infrastructure,
mobility hardware, and software to plug and play different functionalities.