BUSINESS STUDIES NOTES- SELECTED TOPICS

MANAGEMENT AS AN ART
Art is the skillful and personal application of existing knowledge to achieve desired results.

Features of Art Features of Management

1) Existence of theoretical knowledge: Art ➢ There is a lot of literature available in various
presupposes the existence of certain areas of management like marketing, finance
theoretical knowledge and human resources which the manager has
to specialise in. There is existence of
theoretical knowledge

2) The use of this basic knowledge varies ➢ A manager applies this acquired knowledge in
from individual to individual. Art, a personalised and skillful manner depending
therefore, is a very personalised concept on the situation. This gives rise to different
styles of management
3) Based on practice and creativity: All art is
practical. Art involves the creative practice ➢ There are various theories of management,
of existing theoretical knowledge. which prescribe certain universal principles. A
manager applies these scientific methods
knowledge to a given situation or problem in
his own unique manner. A good manager
works through a combination of practice,
creativity, imagination, initiative and
innovation

Conclusion: Since all the features of art are present in Management, so we conclude that Management is an
Art.

MANAGEMENT AS A SCIENCE
Science is a systematised body of knowledge that explains certain general truths or the operation of general
laws

Features of Science Features of Management

1) Science is a systematic body of knowledge. Its ➢ Management has a systematised body of
principles are based on a cause and effect knowledge. It has its own theory and
relationship. principles that have developed over a period
of time
2) Scientific principles are first developed
through observation and then tested through ➢ The principles of management have evolved
repeated experimentation over a period of time based on repeated
experimentation and observation in different
types of organisations.

➢ However, since management deals with

human beings and human behaviour, the
outcomes of these experiments are not
 capable of being accurately predicted.
Therefore, management can be called an
inexact science.

3) Scientific principles have universal validity and ➢ Since the principles of management are not
application. as exact as the principles of science, their
application and use is not universal. They
have to be modified according to a given
situation

Conclusion: Since all features of Management are not present in Science, we conclude that Management is
an Inexact Science

MANAGEMENT AS A PROFESSION
Profession is an occupation backed by specialised knowledge, skills & experience

Features of Profession Features of Management

1) All professions are based on a well-defined ➢ Management is based on a systematic body
body of knowledge of knowledge.
This knowledge can be acquired at different colleges
and professional institutes and through a number of
books and journals. The subject of management is
taught at different institutions

2) The entry to a profession is restricted through ➢ There is no restriction on anyone being

an examination or through acquiring an designated or appointed as manager in any
educational degree business enterprise. Anyone can be called a
manager irrespective of the educational
qualifications possessed

3) All professions are affiliated to a professional ➢ There are several associations of practising
association which regulates entry, grants managers in India, like the AIMA (All India
certificate of practice and formulates and Management Association) that has laid down
enforces a code of conduct a code of conduct to regulate the activities of
their members. There is, however, no
4) All professions are bound by a code of compulsion for managers to be members of
conduct which guides the behaviour of its such an association
members.

➢ Profit maximisation as the objective of

5) The basic motive of a profession is to serve management does not hold true and is fast
their client’s interests by rendering dedicated changing. Therefore, if an organisation has a
and committed service good management team that is efficient and
effective it automatically serves society by
providing good quality products at reasonable
prices.

Conclusion: By comparing the features of Profession with that of Management, it can be concluded that even
though Management is not a profession but it is fast moving in that direction
 SIGNIFICANCE OF MANAGEMENT PRINCIPLES

1) Providing managers with useful insights into reality:

• The principles of management provide the managers with useful insights into real world situations
• It enables managers to learn from past mistakes and solve recurring problems quickly
• management principles increase managerial efficiency.

2) Optimum utilisation of resources and effective administration:

• Resources both human and material available with the company are limited. They have to be put to
optimum use.
• By optimum use we mean that the resources should be put to use in such a manner that they should
give maximum benefit with minimum cost.
• With Management principles, managers learn to depend on their own judgement. Therefore,
wastages associated with a trial-and-error approach can be overcome.
• Effective management implies that decisions are taken objectively. Principles of management help
managers to take decisions that are free from personal prejudices and biases.

3) Scientific decisions:
• Decisions must be based on facts. They must be timely, realistic and subject to measurement and
evaluation
• They emphasise logic rather than blind faith. Management decisions taken on the basis of principles
are free from bias and prejudice.

4) Meeting changing environment requirements:

• Although the principles are in the nature of general guidelines but they are modified and as such
help managers to meet changing requirements of the environment.
• Eg: Based on the principle of Division of Labour, companies are specialising in their core competency
and divesting non-core businesses

5) Fulfilling social responsibility:

• The increased awareness of the public, forces businesses to fulfill their social responsibilities.
• Management principles have also evolved in response to these demands.
• Eg: Equity in today’s times does not apply to wages alone. It also includes value to the customer,
care for the environment & dealings with business associates

6) Management training, education and research:

• Management Principles are used as a basis for management training, education and research
• They are at the core of management theory

TYPES OF PLANS

• A single-use plan is developed for a one-time event or project. Such a course of action is not likely to be
repeated in future, i.e., they are for non-recurring situations.
• The duration of this plan may depend upon the type of the project. A project may sometimes be of only
one day, such as, organising an event or a seminar or conference.
• These plans include budgets, programmes and projects.
• A standing plan is used for activities that occur regularly over a period of time.
• It is designed to ensure that internal operations of an organisation run smoothly. Such a plan greatly
enhances efficiency in routine decision-making.
• It is usually developed once but is modified from time to time to meet business needs as required.
• Standing plans include policies, procedures, methods and rules.

OBJECTIVES
• Objectives, therefore, can be said to be the desired future position that the management would like to
reach.
• Objectives are very basic to the organisation and they are defined as ends which the management seeks to
achieve by its operations.
• For example, an organisation may have an objective of increasing sales by 10% or earning a reasonable rate
of return on investment, earn a 20% profit from business.
• They represent the end point of planning.
• They are usually set by top management of the organisation and focus on broad, general issues.
• Different departments or units in the organisation may have their own objectives.
• Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms, in
the form of a written statement of desired results to be achieved within a given time period.

STRATEGY
• A strategy is a comprehensive plan for accomplishing an organisation objectives.
• This comprehensive plan will include three dimensions,
(i) determining long term objectives,
(ii) adopting a particular course of action, and
(iii) allocating resources necessary to achieve the objective.
• Whenever a strategy is formulated, the business environment needs to be taken into consideration. The
changes in the economic, political, social, legal and technological environment will affect an organisation’s
strategy.
• Major strategic decisions will include decisions like whether the organisation will continue to be in the
same line of business, or combine new lines of activity with the existing business

POLICIES
• Policies are general statements that guide thinking or channelise energies towards a particular direction.
• They are guides to managerial action and decisions in the implementation of strategy. For example, the
company may have a recruitment policy, pricing policy within which objectives are set and decisions are
made.
• A policy is the general response to a particular problem or situation.
• There are policies for all levels and departments in the organisation ranging from major company policies
to minor policies.
• Major company policies are for all to know i.e., customers, clients, competitors etc., whereas minor polices
are applicable to insiders and contain minute details of information vital to the employees of an
organisation.
 PROCEDURES
• Procedures are routine steps on how to carry out activities.
• They detail the exact manner in which any work is to be performed. They are specified in a chronological
order.
• They are generally meant for insiders to follow.
• Methods provide the prescribed ways or manner in which a task has to be performed considering the
objective.
• It deals with a task comprising one step of a procedure and specifies how this step is to be performed.
• The method may vary from task to task. Selection of proper method saves time, money and effort and
increases efficiency.
• For imparting training to employees at various level from top management to supervisory, different
methods can be adopted. For example for higher level management orientation programmes, lectures and
seminars can be organised whereas at the supervisory level, on the job training methods and work-
oriented methods are appropriate.

RULES
• Rules are specific statements that inform what is to be done. They do not allow for any flexibility or
discretion.
• It reflects a managerial decision that a certain action must or must not be taken.
• They are usually the simplest type of plans because there is no compromise or change

PROGRAMMES
• Programmes are detailed statements about a project which outlines the objectives, policies, procedures,
rules, tasks, human and physical resources required and the budget to implement any course of action.
• Programmes will include the entire gamut of activities as well as the organisation’s policy and how it will
contribute to the overall business plan.
• The minutest details are worked out i.e., procedures, rules, budgets, within the broad policy framework.

BUDGET
• A budget is a statement of expected results expressed in numerical terms.
• It is a plan which quantifies future facts and figures. For example, a sales budget may forecast the sales of
different products in each area for a particular month.
• A budget may also be prepared to show the number of workers required in the factory at peak production
times.
• Since budget represents all items in numbers, it becomes easier to compare actual figures with expected
figures and take corrective action
• A budget is also a control device from which deviations can be taken care of. But making a
• Budget also involves forecasting, therefore, it is also a planning device
 MARKETING PHILOSOPHIES

PRODUCTION CONCEPT
• The focus of business activities under the Production Concept was on production of goods. It was believed
that profits could be maximised by producing at large scale, thereby reducing the average cost of
production.
• It was assumed that consumers would favour those products which were widely available at an affordable
price.
• Availability and affordability of the product were considered to be the key to the success of a firm.
• Therefore, greater emphasis was placed on improving the production and distribution efficiency of the
firms.

PRODUCT CONCEPT
• Product Concept assumes that low price of the product could not ensure increased sale, survival and
growth of the firm.
• Customers prefer products which are superior in quality, performance and features. Therefore, the
emphasis of the firms shifted from quantity of production to quality of products.
• Thus, product improvement became the key to profit maximisation of a firm, under the concept of product
orientation.
• The focus of business activity changed to bringing continuous improvement in the quality, incorporating
new features, etc.

SELLING CONCEPT
• The product quality and availability did not ensure the survival and growth of firms because of the large
number of sellers selling quality products.
• The business philosophy changed. It was assumed that the customers would not buy, or not buy enough,
unless they are adequately convinced and motivated to do so.
• Therefore, firms must undertake aggressive selling and promotional efforts to make customers buy their
products. The use of promotional techniques such as advertising, personal selling and sales promotion
were considered essential for selling of products.
• Making sale through any means became important.

MARKETING CONCEPT
• Marketing orientation implies that focus on satisfaction of customer’s needs is the key to the success of any
organisation in the market.
• All the decisions in a firm are taken from the point of view of the customers
• A pre-requisite for the success of any organisation, therefore, is to understand and respond to customer
needs.
• The marketing concept is based on the following pillars:
(i) Identification of market or customer who are chosen as the target of marketing effort.
(ii) Understanding needs and wants of customers in the target market.
(iii) Development of products or services for satisfying needs of the target market.
 (iv) Satisfying needs of target market better than the competitors.
(v) Doing all this at a profit.

SOCIETAL MARKETING CONCEPT

• The societal marketing concept holds that the task of any organisation is to identify the needs and wants of
the target market and deliver the desired satisfaction in an effective and efficient manner so that the
longterm well-being of the consumers and the society is taken care of.
• Thus, the societal marketing concept is the extension of the marketing concept as supplemented by the
concern for the long-term welfare of the society.
• Apart from the customer satisfaction, it pays attention to the social, ethical and ecological aspects of
marketing

FUNCTIONS OF MARKETING

1. Gathering and Analysing Market Information:

• One of the important functions of a marketer is to gather and analyse market information. This is necessary
to identify the needs of the customers and take various decisions for the successful marketing of the
products and services.
• This also helps in making an analysis of the available opportunities and threats as well as strengths and
weaknesses of the organisation and help in deciding what opportunities can best be pursued by it

2. Marketing Planning:
• Another important activity or area of work of a marketer is to develop appropriate marketing plans so that
the marketing objectives of the organisation can be achieved.
• For example a marketer of colour TV, having 10 per cent of the current market share in the country, aims
at enhancing his market share to 20 per cent, in the next three years. He will have to develop a complete
marketing plan covering various important aspects including the plan for increasing the level of production,
promotion of the products, etc., and specify the action programmes to achieve these objectives.

3 . Product designing & Development:

• Another important marketing activity or decision area relates to product designing and development. The
design of the product contributes to making the product attractive to the target customers. A good design
can improve performance of a product and also give it a competitive advantage in the market

4. Standardisation and Grading:

• Standardisation refers to producing goods of predetermined specifications, which helps in achieving
uniformity and consistency in the output. Standardisation ensures the buyers that goods conform to the
predetermined standards of quality, price and packaging and reduces the need for inspection, testing and
evaluation of the products.
• Grading is the process of classification of products into different groups, on the basis of some of its
important characteristics such as quality, size, etc. This is generally done for agricultural products, say
wheat, oranges, etc.
• Grading ensures that goods belong to a particular quality and helps in realising higher prices for high quality
output.
5. Packaging and Labelling:
• Packaging refers to designing and developing the package for the products.
• Labelling refers to designing and developing the label to be put on the package. The label may vary from a
simple tag to complex graphics.
• Packaging and labelling have become so important in modern day marketing that these are considered as
the pillars of marketing. Packaging is important not only for protection of the products but also serves as a
promotional tool. Sometimes, the quality of the product is assessed by the buyers form packaging.

6. Branding:
• A very important decision area for marketing of most consumer products is whether to sell the product in
its generic name or a brand name.
• Brand name helps in creating product differentiation, i.e., providing basis for distinguishing the product of
a firm with that of the competitor
• It also helps in building customer’s loyalty and in promoting its sale.

7. Customer Support Services:

• A very important function of the marketing management relates to developing customer support services
such as after sales services, handling customer complaints and adjustments, procuring credit services,
maintenance services, technical services and consumer information.
• All these services aim at providing maximum satisfaction to the customers, which is the key to marketing
success in modern days.
• Customer support services are very effective in bringing repeat sales from the customers and developing
brand loyalty for a product.

8. Pricing of Product:
• Price of product refers to the amount of money customers have to pay to obtain a product. Price is an
important factor affecting the success or failure of a product in the market.
• The marketers have to properly analyse the factors determining the price of a product and take several
crucial decisions in this respect, including setting the pricing objectives, determining the pricing strategies,
determining the price and changing the prices

9. Promotion:
• Promotion of products and services involves informing the customers about the firm’s product, its
features, etc., and persuading them to purchase these products. The four important methods of promotion
include advertising, Personal Selling, Publicity and Sales Promotion.

10. Physical Distribution:

• The two major decision areas under this function include
(a) decision regarding channels of distribution or the marketing intermediaries (like whole salers, retailers)
to be used and
(b) physical movement of the product from where it is produced to a place where it is required by the
customers for their consumption or use.
• The important decision areas under physical distribution include managing inventory (levels of stock of
goods), storage and warehousing and transportation of goods from one place to the other.
11. Transportation:
• Transportation involves physical movement of goods from one place to the other. As generally the users of
products, particularly consumer products are wide spread and geographically separated from the place
these are produced, it is necessary to move them to the place where it is needed for consumption or use
• A marketing firm has to analyse its transportation needs after taking into consideration various factors
such as nature of the product, cost and location of target market and take decisions in respect of mode of
transportation to be chosen and other related aspects.

12. Storage or Warehousing:

• Usually there is a time gap between the production or procurement of goods and their sale or use
• In order to maintain smooth flow of products in the market, there is a need for proper storage of the
products.
• Warehousing also protects the goods against unavoidable delays in delivery or to meet out contingencies in
the demand.
• In the process of marketing, the function of storage is performed by different agencies such as
manufacturers, wholesalers and retailers

MARKETING MIX

The marketing mix consists of various elements, which have broadly been classified into four categories,
popularly known as four Ps of marketing.

1. Product:
• Product means goods or services or ‘anything of value’, which is offered to the market for sale.
• From the customer’s point of view, a product is a bundle of utilities
• There can be three types of benefits a customer may seek to satisfy from the purchase of a product
(i) functional benefits, (ii) psychological benefits, and (iii) social benefits.
• The concept of product also include the extended product or what is offered to the customers by way of
after sales services, handling complaints, availability of spare parts
• The important product decisions include deciding about the features, quality, packaging, labelling and
branding of the products

2. Price:
• Price may therefore be defined as the amount of money paid by a buyer (or received by a seller) in
consideration of the purchase of a product or a services
• Pricing occupies an important place in the marketing of goods and services by a firm. No product can be
launched without a price tag or at least some guidelines for pricing
• Pricing is considered to be an effective competitive weapon.
• It is also the single most important factor affecting the revenue and profits of a firm
• Factors affecting Price Determination are as follows:
a) Product Cost
 b) The Utility and Demand
c) Extent of Competition in the Market
d) Government and legal Regulations
e) Pricing Objectives
f) Marketing Methods Used

3. Place (Physical Distribution):

• The physical handling and movement of goods from place of production to the place of distribution is
referred to as physical distribution. Through this component of marketing mix, the goods and services are
made available at right place, at right time to right people
• Components of Physical Distribution
a) Order Processing
b) Transportation
c) Warehousing
d) Inventory Control

4. Promotion:
• Promotion refers to the use of communication with the twin objective of informing potential customers
about a product and persuading them to buy it.
• Promotion mix refers to combination of promotional tools used by an organisation to achieve its
communication objectives. These include:
(i) Advertising
(ii) Personal Selling
(iii) Sales Promotion
(iv) Publicity
These tools are also called elements of promotion mix and can be used in different combinations, to
achieve the goals of promotion

REDRESSAL AGENCIES UNDER THE CONSUMER PROTECTION ACT

For the redressal of consumer grievances, the Consumer Protection Act 2019 provides for setting up of a
three-tier enforcement machinery at the District, State, and the National levels. They are briefly referred to
as the ‘District Commission’, ‘State Commission’, and the ‘National Commission’.

District Commission
• A complaint can be made to the District commission where the value of goods or services paid as
consideration does not exceed one crore rupees.
• If the District commission feels that there is a possibility of settlement between the parties, it may direct
them to give their consent for settlement within five days
• If the complaint involves defect in good which requires proper analysis or testing, the commission sends a
sample of goods to the appropriate authority for analysis. In case of services, any evidence provided by the
complainant or any required information/ document/records from the service provider may be considered
for settlement of dispute
• If any of the parties are not satisfied by the order of District Commission they can appeal against such
order to the State Commission within a period of forty five days from the date of order
 State Commission
• A complaint can be made to the state Commission where the value of goods and services paid as
consideration exceeds one crore but does not exceed ten crore rupees.
• If the State commission feels that there is a possibility of settlement between the parties, it may direct
them to give their consent for settlement within five days
• If the complaint involves defect in good which requires proper analysis or testing, the commission
sends a sample of goods to the appropriate authority for analysis. In case of services, any evidence
provided by the complainant or any required information/ document/records from the service
provider may be considered for settlement of dispute
• If any of the parties are not satisfied by the order of State Commission, they can appeal against such
order to the National Commission within a period of thirty days of such order.

National Commission
• A complaint can be made to the National Commission where the value of goods or services paid as
consideration exceeds ten crores of rupees.
• If the National commission feels that there is a possibility of settlement between the parties, it may
direct them to give their consent for settlement within five days
• If the complaint involves defect in good which requires proper analysis or testing, the commission
sends a sample of goods to the appropriate authority for analysis. In case of services, any evidence
provided by the complainant or any required information/ document/records from the service
provider may be considered for settlement of dispute
• If any of the parties are not satisfied by the order of National Commission can appeal against such
order to the Supreme Court of India within a period of thirty days of such order.