MBA - Series

MBA-Series VIJAY SHARMA
B.Sc., NET MBA
Few Modern Management Techniques
ERP Enterprise Resource Planning ( Baan, Scala, Oracle, SAP)

BPR Business Process Re-engineering
SCM Supply Change Management
TQM Total Quality Management
QC Quality Circles
JIT Just in Time
VE Value Engineering
CAD/CAM Computer Aided Design/Computer Added Manufacturing
SE Simultaneous Engineering
KAIZEN Continuous Improvement
MUDA Management of waste
POKA YOKE Mistake-proof Production Process
SHITAKO Develop Ancillaries
SOHO Small Office Home Office
The 5 S Model:
SEIRI Maintaining an efficient environment by removing unnecessary objects

SEITON Organizing procedure correctly
SEISO Keeping one’s workplace clean
SEIKETSU Maintaining very high standards
SHITSUKE Maintenance by will not by trace
Top Management Org. Mission, Objectives, Plan, Strategies, Budget

Middle Management Pricing , Revenue, Cost & Work Schedules, Measurement, Appraisal
Operational Management Good Services, Performance
Vijay Sharma 1
The author can be reached by :- vijaysharma07@gmail.com
copyright to Mr. Vijay Sharma

Marketing Management
Needs, Wants Products, goods, Values, Costs Exchange &

& Demands Services & Ideas & Satisfaction Transaction
Relationship
& Networks Markets Marketers & Prospects
Marketing is the social and managerial process by which individuals and groups needs
and wants are identified and respective product, services or idea is exchanged for a value
to satisfy the needs/demands of the targeted groups/ individual
Marketing Management:
 Identifying Marketing Opportunities
 Analyzing Marketing Opportunities
 Planning Marketing Programs
 Managing Marketing Efforts
Value chain:
Firm’s Infrastructure
Technological Development
Support
Activities Human Resource Management
Margins
Procurement ( Purchase of input for primary activities )
Inbound Operation Outbound Marketing Services

Logistics Logistics & Sales
Primary Activities
Business Strategic Planning:
External
Environment
,
Goal Strategy Program
Business Mission Implementation
Formulati Formulation Formulation
on
Internal
Environment
Feedback &
Control
Vijay Sharma 2
The author can be reached by :- vijaysharna@aol.in
Strategic Marketing Process :
 Segmentation
o Identifying segmentation variables & segment the market
o Develop profile of resulting segments
 Targeting
o Evaluate the attractiveness of the each segment profile
o Select the target segment
 Positioning
o Identify possible positioning planks for each target segment
o Select , develop and communicate the chosen positioning plank
Major Segmentation Variables:
o Geographic
Region City / Metro Density (Urban/Rural/ Semi Urban) Climate
o Demographic
Age Gender Family Size Income Class Education
Occupation Social Class Nationality Religion/Race
o Psychographics
Life Style Personality
o Behavioral
Occasion Benefits User Status Usage Rate Loyalty Status
Buyer’ Readiness Stage Attitude towards product
Major Positioning Planks:
Attribute Positioning Benefit Positioning Use/Application Positioning

User Group Positioning Competitor Positioning Product Category Positioning
Quality/Price Positioning
Marketing Mix:
Product Price Place Promotion

Varity List Price Channels Sales Promotion
Quality Discounts Coverage Advertising
Design Allowances Assortments Sales Force
Features Payment Period Location Public Relations
Brand Name Credit Terms Inventory Direct Marketing
Size Transportation
Services
Packaging
Warranties
Returns
Vijay Sharma 3
Marketing Research Process
- Define the Problem & Research Objectives

- Develop the Research Plan
o Data Source
 Primary
 Secondary
o Research Approach
 Observational Research
 Focus Group Research
 Survey Research
 Experimental Research
o Research Instruments
 Questionnaire
 Mechanical Instruments
- Probability Sampling
 Sampling Plan o Simple Random
 Sampling Units o Stratified Random
 Sampling Size o Cluster (Area/block wise)
 Sampling Procedure - Non-Probability Sampling
- Collect the Information o Convenience Sampling
o Judgmental Sampling
- Analyse the Information
o Quota Sampling
- Present the Findings
Vijay Sharma 4
Quantitative Tools used in Marketing Decision Support System
- Statistical Tools
o Factor Analysis: Utilized to determine few underlying dimensions of large
set of inter-correlated variables.
o Conjoint Analysis: Respondents are asked to rank the various factors as per
their preference, hence utility function & importance of
each attributes are find out.
o Cluster Analysis: Separating objects into specified mutually exclusive
groups such that these are relatively homogeneous.
o Discriminant Analysis: Analysis is done by categorizing a person / object in
two or more categories.
o Multiple Regression: Determines the changing value of dependent value
over the independent values
- Models
o Markov Process Model: Determines the probability of moving from current
state to any future state.
o Queuing Model: Implies to find out the waiting time and length of queue
- Optimization Techniques
o Differential Calculus: Technique to find out maximum and minimum value
associated with the functions.
o Decision Theory: utilized to determine the course of action, which produces
the maximum expected values.
o Game Theory: This allows to determine the course of action which will
minimize the maker’s maximum losses in th efface of the
uncertain competitive environment
o Mathematical Programming: This technique is utilize to find out the values
which would optimize some objective function that is
subjected to constraints.
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Demand Measurement:
(6x5x3 Matrix) World
India
Region
Territory
Customer Space Level
All Sales
Industry Sales
Company Sales Product Level
Product Line Sales
Product Form Sales
Product Item Sales
Short Run Medium Run Long Run
Time Level
Market Demand : Total volume demanded by the target customer group in a defined geographic area, with
in defined time frame, in specific environment & under a defined marketing program.
Market potential: Limit approached by the market demand, if total industry’s marketing expenditure is
made infinity.
Company Demand: Company’s estimated share in the market demand. Qc = Sc X Q
Total Market Potential: Maximum amount of sales which might be available to all the firms in the
Industry during a given period, defined marketing environment & marketing programs.
Q = npq , where n= total number of buyers, P= price of an average unit, q= avg. quantity purchased
Buying Behaviour
High Involvement Low Involvement
Significant Difference Complex Buying Behavior Varity Seeking Buying Behavior

between brands
Dissonance Reducing Habitual Buying Behavior
Few differences between
brands Buying Behavior
Consumer Buying Process:

 Problem Recognition
 Information Search
 Evaluation of alternatives
 Purchase Decision
 Purchase Behavior
An Expansion Plan:
Individual User Commercial/Industrial Educational/Institutional
Personal Computers
Hardware
software
Vijay Sharma 6
Pricing Strategies:
Price
High Medium Low
High
Premium High-Value Super-Value
Product Quality Medium Over Pricing Medium-Value Good-Value
Low Rip-off False Economy Economy
Setting Selecting the Analyze Select the Selecting

Pricing pricing Determine Estimate competitor’s cost, pricing the final
Policy objectives the demand the Cost price & offer method price
Various Pricing Strategies:
Geographic Pricing: Discrimination is done on the basis of difference in location viz. city, state, country.
Promotional Pricing
o Loss-Leader Pricing: Here superstores /super markets drop the price of well-known brands
o Special Event Pricing
o Cash Rebates
o Low Interest Financing
o Longer Payment Terms
o Warranties & Service Contracts
o Psychological Discounting: Putting the high priced tag on the item and then providing
rebates
Discriminatory Pricing:
o Customer Segment Pricing: Different customer groups are charged different prices
o Product Form Pricing: discriminate price on the basis of product form/version
o Image Pricing: Same product can be priced differently when packed/ presented differently
o Location Pricing: Discriminate on the basis of strategic locations of outlets, markets
o Time Pricing: Priced are varied on the basis of season, day or hour.
Product Mix Pricing
o Product Line Pricing; Pricing is done on the basis of product line viz- high line, low line etc
Like in Reebok- Prices are different for its product line
o Optional Feature Pricing: When an optional feature if offered along with the main product
Like in Cars- power steering, power windows, child lock etc.
o Captive Product Pricing: When the main product needs extra supply to use it viz. Camera,
needs film and Razors needs blades, Kodak has kept its camera at
low price and make money by selling films, the other camera
manufacturers, which doesn’t sell films has to keep the price high
for their cameras to make same overall profit.
o Product Bundling Pricing:
o Two-Part Pricing: As Telephone Bills are charged - Fix Fee + Usage Amount
o Byproduct Pricing: Some product viz. petroleum, meat products etc. gives byproducts,
hence such products whose byproducts have value for their
customer group has to be priced accordingly.
Vijay Sharma 7
Discounts:
 Cash Discounts
 Quantity Discounts
 Functional Discounts: granted by the manufacturer to the trade-channel members on
performing certain functions viz. selling, storing, record keeping etc.
 Seasonal Discounts
Allowances:
- Trade in Allowances: Offered when an old item is exchanged for a new one viz. Automobiles
- Promotional Allowances: price reductions or payments are made to channel members to
participate in advertising and sales support practices.
Managing Marketing Channels
Necessity of Channels: Channel Functions:

- Direct Marketing is not always  Flow of Information
feasible  Promotion
- Provides financial backup  Negotiation
-Retailing by the manufacturer  Ordering
may not offer good rate of  Financing
return to him  Risk Taking
 Physical Possession
 Payment
 Title Transfer
Levels of Channels:
o Zero Level Channel - Direct marketing channel , no intermediary is there between customer & mfr.
o One Level Channel – One selling intermediary such as retailers are there..
o Two Level Channel – Two selling intermediaries viz. wholesaler and retailer
o Three Level Channel – When three intermediaries are there viz. wholesalers-jobbers-retailers
Consumer Marketing Channel

M
A C
N O
U Retailer N
F S
A U
C Wholesaler Retailer M
T E
U R
R Wholesaler Jobber Retailer
Industrial Marketing Channel
M
C
A Distributor U
N
S
U
T
F Representativ O
A
M
C
E
T Sales Office
Vijay Sharma 8 R
U
The author can beR reached by :- vijaysharna@aol.in
Determinants of Consumer’s Desired Service Output Level:
o Lot Size
o Waiting Queue
o Product Variety
o Service Backup
Major Channel Decisions
Type of Intermediaries: No. of Intermediaries: Evaluation Criteria:
- Company Sales Force - Exclusive Distribution - Economic Criteria

- Mfrs’ Agency - Selective Distribution - Control criteria
- Industrial Distributor - Intensive Distribution - Adaptive Criteria
- Retailers
- Jobbers
Major Retail Types:
o Specialty Stores: Keep narrow product line with deep assortment within that line Like –
o Apparel Stores, Sports –goods Stores, Bookstores, Furniture Store
o Departmental Stores: Carry several product lines, each product line is managed as separate
department
o Supermarkets: Relatively large, high volume, low-cost, low margin, self-service outlets -
o Convenience Stores: Relatively small, located near the residential areas
o Discount Stores: Sell standard merchandise on low cost, low margin but on high volume
o Off-Price Retails: Buy at less then regular wholesale price & sell at price lower then retail.
 Factory Outlets: Owned and operated by manufacturer, normally carries surplus,
discounted or irregular (seconds) goods.
 Warehouse Clubs Sall limited section of branded products and providesd deep discounts to its
members who pay annual membership fees. (Co-operative, govt.-agencies)
o Superstores: Large spaced stores, cater to the customers routine food & non food needs
 Combination Stores: Generally keeps two or more diversified product lines viz food and
pharmaceutical items.
 Hypermarkets Large combine super market, discount & warehouse retailing practices.
Their product line goes beyond routine food/ non-food articals & include
furniture, appliances, clothing. Bulk display, self-service discount stores
o Catalog Showroom: Sell high mark-up. Fast moving, branded goods at discount price.
Customers order the goods from a catalog in showroom, then pick up
from the merchandize area of the store. (Otto-Burlington Stores)
Vijay Sharma 9
Major Types Of Non-Retailing Options
- Direct Selling
o One-to-One Selling : Sales person contact a single potential customer
o One-to-Many Selling : Sales person goes to a home/host who invites their friends &
neighbors. Sales person demonstrate the product & take orders.
o Multi-level Marketing: A variant of direct selling, in which companies recruit independent
business people who act as distributors for their products. This
distributors then recruit & sell to sub-distributors, who eventually
recruit others to sell their product s to customers. A percentage
of sales realization is distributed to entire sales group, apart from
this he may earn from the direct selling of product to the customers.
(AMWAY’s Network Selling)
- Direct Marketing : Started as mail and catalog marketing, now includes telemarketing,
television, online marketing (e-shopping)
- Automatic Vending : Vending machines are installed to dispense impulse and highly
convenience items viz. cigarette, news paper, hot/cold beverages.
- Buying Service : Type of store-less retailing which caters specific clients usually
employees of large organisations, schools, hospitals, unions &
government agencies. The organisation’s members become the
member of such services and are entitled to buy from the selective
list of retailers/outlets which provides discount to members of
Buying Service. Here retailer will pay a fees to the Buying Service.
Major Types Of Retailing Organisations
- Corporate Chain Stores : Two or more stores commonly owned and employ centrally buying
& merchandising practices for similar product lines. Viz
Warehouse, Weekenders, Mischief, Ebony etc.
- Voluntary Chains : Whole-seller sponsored group of retailers. Bulk buying and
common merchandising practices are undertaken by the chain
members.
- Retailer Cooperatives : Independent retailers set up a centrally buying organisation and
conduct joint promotional efforts
- Consumer Cooperatives : Retail firms owned by its consumers, The resident of a certain
locality contribute money to open up a retail counter which serve
them well and at lower cost.
- Franchise Organization : Contractual association between a Franchiser ( manufacturer,
whole-seller or service organisation) and Franchisee ( independent
business people who buy the right to own and operate on the behalf
of franchiser). Franchise organizations normally sells branded and
high equity articles with high franchiser’s goodwill.
- Merchandising Conglomerate: Corporation which combines several diversified retailing lines and
forms under central ownership. Such organisation do have certain
degree of integration in their distribution & management functions.
Vijay Sharma 10
Direct Marketing Techniques:
- Face-To-Face Marketing
- Direct-Mail Marketing
o Fax mails
o e-mails
o Voice Mails
- Telemarketing
- Catalog Marketing
- Kiosk Marketing (Like Nescafe Coffee, ATM Banking, Condom Distribution, Fountain Pepsi)
- Online Channels
- Network Marketing
Public Relations
- Press Relations
- Product Publicity
- Corporate Communication
- Lobbying
- Counseling ( Advising the management about public issues and product status)
Vijay Sharma 11
Management Concepts
Management is the process of designing and maintaining an environment in which individuals, working
together in groups, efficiently accomplish selected aims.
Functions of Managers :
- Planning
- Organizing Top Level
- Staffing Middle Level Management P O L C
- Leading First Level Supervisors (Lower Level Mgmt.)
- Controlling
P- Planning, O- Organizing, L- Leading, C- Controlling
Technical Skills C&D Top Mgmr.
Management Skills: Human Skills H Middle Mgmt.

Conceptual Skills T Lower Level
Design Skills
SYSTEM APPROACH OF MANAGEMENT Claimants

Employees
Consumers
Managerial Knowledge
Suppliers
Goals of Claimants Stockholders
Use of Inputs Governments E
Community x
t
Planning e
r
n
Organizing a
l
Communication
Re-engineering with external E
Staffing
the system environment n
v
i
Leading r
o
n
Controlling m
e
Outputs n
To Produce Output Product t
Services
Profits
Satisfaction
Goal Integration
Vijay Sharma 12
Modern Management Thoughts
Federick Taylor (1856-1912) Mechanical Engineer at Medieval Steels, Philadelphia, USA

 Replacing rule of thumb with science
 Obtaining harmony in group actions
 Achieving coopration of human beings rather then chaotic individualism
 Working for maximum output then restricted output
 Developing all workers to the fullest extent possible
Hennery L. Grantt ( 1861-1919) Mechanical Engineer at Medieval Steels, Philadelphia, USA

Worked with Taylor until 1901, best known for Gantt Charts – a method of graphically
describing the implementation and progress of plans. He emphasised importance of time as well as
cost in planning and controlling work.
Frank & Lillian Gilbreth (1868-1924) : Frank emphasized on the efficiency aspect of the work while his
wife emphasized human aspect oif the work.
Henri Fayol ( ) French Industrialist

According to Fayol activities of any industry can be divided into following 6 categories:
Financial
Commercial Security
Managers’
Activities
Technical Accounting
Managerial
- Planning
- Organizing
- Coordination
- Control
Fayols’ Principals of Management:

- Division of Labour - Centralization
- Authority & responsibilities - Scalar Chain
- Discipline - Order
- Unity of Command - Equity
- Unity of Direction - Stability of tenure
- Subordination - Initiative
- Remuneration - Esprit de corps
Vijay Sharma 13
Henri Mintzberg: Mintzberg identifies ten managerial roles, which are as follows-
- Interpersonal Role
o The Figurehead Role
o The Leader Role
o The Liaison Role
- Informational Role
o The Recipient Role
o The Disseminator Role
o The Spokesperson Role
- Decision Role
o The Entrepreneurial Role
o The Disturbance-handler Role
o The Resource-allocator Role
o The Negotiator Role
McKinsey ‘s 7 S Approach for Management Analysis:
Strategies Structure Systems Style

Staff Skills Shared Values
Management Process Approach
Applied System Socio-technical Cooperative Social Group Behaviour

Theory System System
Rational Choices Interpersonal

& Decisions Basic Management Behaviour
Science
Contingency Managerial 7-S Framework

Management
Sciences Theory Experience
Vijay Sharma 14
Planning
Process of selecting mission and objectives and finalizing the actions to achieve them
What kind of organisation structure to have
What kind of people we need and when

Plans
How much effectively to lead people
Furnish standards of control
Type of Plans
- Mission :
- Objectives : Important ends towards which organisation’s & individual activities are directed
- Goals :
- Strategies : Adoption of course of actions to achieve basic long term objectives
- Policies : Statements/understandings which guides manager’s thinking in decision making process
- Procedures : Plans which specifies the required method of handling activities in future
- Rules : Specific required actions & non-actions
- Programs : Arranged format of objectives, policies, strategies, procedures etc. supported with budget
- Budgets : Allocation of resources to achieve goals & objectives.
Steps in Planning :
- Awareness about the opportunities

 Market
 Competitor
 Customer Demand
 Firms’ Strengths & Weaknesses
- Setting Objectives & Goals
- Considering Planning Premises (Anticipating internal & external env. in which plans will operate)
- Identifying Alternatives and Evaluating them for final selection
- Selecting Alternative
- Formulating Supporting Plan
- Formulating Budget
Vijay Sharma 15
Strategic Planning:
External
Top mgmt. Environmen External
orientation t threats /
opportunity
Inputs
People
Capital
Enterprise Forecast of
profile future Development Evaluation &
Mgr. Skill
environment of alternative Strategic
Tech. Skill
strategies Choice
Purpose &
Objectives Resource Audit Internal Medium Range Planning
Weakness / Short Range Planning
strengths
Implementation
Consistency testing & Control
Contingency Planning
Major Kinds of Strategies & Policies :

Growth Finance Personal Organisation
Product & Service Marketing Public Relation
Industry Analysis & Generic Competitive Strategy :
Industry Analysis:
- Competition among companies
- Threat posed by the entries of new companies
Analysis the following five forces : - Possibility oof using substitute product or service
- Bargaining power of customer
- Bargaining power of supplier
Competitive Strategies:
a.) Over all cost leadership strategy
b.) Differentiation Strategy
c.) Focused Strategy : Low cost or Differentiation strategy for a specific group of customers, Product line,
geographical area or other aspect that become focal point of organisations’ efforts)
Decision Making:
- Premising (Anticipating the environment) Organizing:
- Identify Alternatives - Identify & classify the required activities
- Evaluate Alternatives - Grouping of those activities to attain objectives
 Qualitative & Quantitative Analysis - Assignment of each group to a manager
 Managerial Analysis - Delegation of authorities & responsibilities to mgr.
- Provision for coordination horizontally & vertically
 Cost Effective Analysis
-
- Choosing an alternative best suited
 Experience
Vijay Sharma 16
 Experimentation
 Research & Analysis
Modern Decision Making Approaches
- Risk Analysis
- Decision Tree
- Preference Theory
- Decision Support System (DSS)
- Creativity & Innovation
 Unconscious Scanning
 Intuition Brain Storming
 Insight Synthetics
 Logical Formulation Out of box thinking
Vijay Sharma 17
organisation Behaviour
Type A Personality :
- Are always moving, eating and walking rapidly
- Feel impatient with the rate at which most of the events take place
- Strive to think do two or more things at a time
- Can’t cope with leisure time
- Are obsessed with numbers, measuring their performance and success
Type B Personality
- Never suffers from the sense of time urgency
- Feel no need to display or discuss their achievements
- Play for fun or relaxation rather then prove their superiority
- Can relax without guilt
Theories of learning
- Classical Conditioning: Ivan Pavlov’s Experiments on dog, The theory infers about a kind of
conditioning in which an individual responds to some stimulus that would
not ordinarily produce such response.
- Operant Conditioning: This theory states that behavior is the function of its consequences &
people learn to get something they want or avoid some hing they don’t
want.
- Social Learning:
o Attention Process: People learn from model only after they recognize and pay attention to
critical factors
o Retention Process: Model’s influence depends on how well person remember his behavior
o Motor Reproduction Process : watching the behavior of model converted in doing
o Reinforcement Process
Halo Effect : Drawing a general impression about an individual on the basis of a single characteristics
Such as appearance, intelligence or sociability.
Ethical Decision Criteria -

 Utilitarianism: Do greatest good for the greatest numbers
 Focus on right
 Focus on Justice
Values: Basic conviction that a specific mode of conduct or end-state of existence is personally or socially
preferable to an opposite or converse mode of conduct or end-state of existence.
Cognitive Dissonance Theory: Incompatibility/inconsistency between two or more attitudes or behaviors.
Vijay Sharma 18
Theories of Motivation
- Hierarchy of Needs Theory (Maslow’s Theory):

 Self Actualization
 Esteem Needs
 Social Needs
 Safety Needs
 Physiological Needs
- Theory X & Theory Y:

Theory X depicts an assumption that employees dislike work, are lazy,
dislike responsibilities and place security above all other factors associated
with work and don’t display any ambition. Such employees must be coerced
controlled or threatened with punishment to achieve goals.
Theory Y refers to those employees who like work, seek responsibilities, are
active & creative, Such people are self directed and self controlled to
achieve their objectives .
- Motivation-Hygiene Theory : The theory states that certain characteristics tends to be consistently
(Fredrick Hertz berg’s Model) related wit the job satisfaction and other to the job dissatisfaction.
According to Hertzberg Satisfaction and Dissatisfaction are not
always opposite to each other, but opposite to ‘satisfaction’ is ‘no
satisfaction’ and opposite to dissatisfaction is no dissatisfaction’
Satisfaction Motivators No Satisfaction
No Dissatisfaction Hygiene Factors Dissatisfaction
According to Hertzberg the factors, which leads to job satisfaction

are separate and distinct from those lead to job dissatisfaction.
Hygiene Factors- The presence of which may not satisfy the people
and would be taken as normal (as minimum requirement) but their
absent will certainly leads to dissatisfaction. So their present is must
otherwise it could lead to dissatisfaction…(must to have factors)
Motivators- If these factors are their they will add-up the satisfaction
and rise the motivation but their absent will not tends to serious
dissatisfaction.
- ERG Model : Three groups of core needs Existence, Relatedness & Growth
- McClelland’s Theory of Need: This theory focus on the following three important needs which
determines the degree of motivation-
a. Achievements Need
b. Power Needs
c. Affiliation Need
Vijay Sharma 19
- Cognitive Evaluation Theory :
 Intrinsic Motivators Factors : Achievements, Responsibilities, Competence
 Extrinsic Motivator Factors : High Pay , Promotion, Good Supervision,
Pleasant Working Conditions
This theory suggest that introduction of extrinsic reward, such as
high pay, for work effort that had been previously intrinsically
rewarded (viz. due to the pleasure associated with the content of the
work itself) would tend to decrease the overall level of motivation.
- Goal-Setting Theory: This theory advocates that difficult & challenging goal leads to
higher motivational & performance outcomes.
- Reinforcement Theory: Behavior is function of its consequences & any consequence when
resulted in favorable outcomes then it increase the probability that
the same behavior will be repeated.
- Equity Theory: Individuals compare their job inputs and outcomes with those of
others and then respond in a way to eliminate any inequality.
- Expectancy Theory: The strength of a tendency to act in a certain way depends upon
the strength of the expectation that the act will be followed by a
given outcome and that will be attractive enough for the individual
to reinforce his behavior.
The theory focus on following three relationships-
 Effort-Performance Relationship
 Performance –Reward Relationship
 Reward-Personal Goals Relationship
Vijay Sharma 20
Theories of Leadership
- Cognitive Resource Theory :A Leader obtains effective group performance by first making
effective plans, decisions and strategies and then communicating them
through directive behavior.
- Contingency Model (Fiedler’s Model):Effective group performance depends upon proper match
between a leader’s style of interacting with subordinates & degree to
which situation gives control and influence to the leader
i.) Leader Member Relationship ii.) Task Structure
iii) Position Power
- Situational Leadership Theory: A Situational theory which focus on the followers

i.) Telling- Leader defines roles and tells what, when, how and
where to do various tasks
ii.) Selling- The leader provides both directive behavior and
supportive behavior.
iii.) Participating- The leader & follower share in decision making.
iv.) Delegating- The leader provides little direction and support.
- Leader Member Exchange Theory: LMX Theory- This theory states that because of pressures, the
leaders establish special relationship with a small group of their
subordinates, these individuals make up the in-groups, these are
trusted and are more likely to get privileges.
- Path-Goal Theory: The behavior of a leader is acceptable to his/her subordinates if

subordinates view his/her behavior as the source of their immediate
or future satisfaction.
- Attribute ional Theory: This theory suggest that leadership is merely an attribution that
people makes about the individual, that means people characterized
leaders as having traits such as intelligence, outgoing personality,
strong verbal skill, aggressive, understanding, industriousness etc.
- Charismatic Leadership Theory: An extension of attributional theory, where followers make

attributions of heroic or extraordinary leadership abilities when
they observes certain behaviors.
Key Characteristics of Charismatic Leaders:
 Self Confidence
 A vision
 Ability to articulate the vision
 Strong conviction about the vision
 Behavior that is out of the ordinary
 Perceived as being a change agent
 Environmental Sensitivity
Vijay Sharma 21
Power:
i.) Coercive power : Power based on fear
ii.) Reward Power : Derived by the ability to distribute awards, which others view as valuable.
iii.) Legitimate Power : Power resulted by the position held by the person in the hierarchy of org.
iv.) Expert Power : Influence based on special skills or knowledge
v.) Referent Power : Power derived from the possession of desirable resource or personal trait
Organisational Structure:
 Work Specialisation
 Departmentalization
Key factors to be consider  Chain of control
 Span of Control
 Centralization & Decentralization
 Formalization
Model of structures Mechanistic Model

Organic Model
Types of structures:
Simple Structure Bureaucratic Structure Team Structure
Matrix Structure Virtual Structure
Structure Technology
Change option in an organisation:
People Physical Setting
Levin’s Model:
Levin’s three step model represents the change process which take
place in an organisation under organizational development process.
Unfreeze Movement Freeze
Restricting Forces Desired State
Present State
Driving Forces
Time
Action Research:
 Diagnosis
 Analysis
 Feedback
 Action
 Evaluation
Vijay Sharma 22
Project Management
Forces Scientific Thinking Environment Scanning :

Measures Program’s Productivity Internal Factors External Factors
Provide Historic Data Base Strengths& Weakness of Org. Social
Right Attitude Economical
Anticipate the problems Financial Resources Cultural
Structured Scheduling Managerial Skills Political
Indicate schedule progress Technical
Measures need for resources Supplier
Competition
Feasibilities
 Financial Feasibility: Cost of Project, Means of Finance, Estimated Sales/Production,
Cost of Production, WC, Profitability, Break-even Analysis,
Cost Structures
 Technical Feasibility: IP& OP, Process, Technology, Plant location, Plant layout
Raw material availability, Work Schedules, Process Charts
 Marketing Feasibility: Market Potential, Level of Competition, Entry Barriers, Customer
Demand and Expectations, Advt. Media, Distribution & logistics
 Social Feasibility : Cost of rehabilitation, Pollution cost, Effect on Social Network etc.
Market Forecasting :
Moving Average Method Ft+1=S1+S2+S3+S4+….Sn/n Man
Trend Projection y=a+bx Money
Exponential Smoothing Method Ft+I=Ft+aet a=smoothening Parameter, et =Error Machine
Delphi Technique Material
Leading Indicator Method Methods
End User Method Projected O/p x Consumption Cofficient = Required quantity
Visual Curve Fitting Method
Past Sales Data
Experience
Corporate Appraisal Process :

 Market & Distribution : Market Image Product Line
Distribution Networks Suppliers
Market Share Growth
 Production & Operations: Production /Operation Feasibility
Technology
Raw Material Availability
Plant Location, Layout
Production Schedules
 R&D:
 Corporate Resource & HR: Corporate Image
Top Management
Inter-relationships
 Finance & A/Cs: Cost of Capital Liquidity
Financial Leverage Credit Status
Taxation Relation with shareholders
Vijay Sharma 23
Profitability :
A= Cost of Production + Sales Expenses + Administration Expenses + Royalty & Misc. Costs
B= Sales Figures x Price (Sales Realization)
Gross Profit (EBIT)= B-A
EBT = EBIT- Interest/Financial Expenses (1)-Depreciation(2)-Written off Expenses (3)
EAT= EBT-Taxes
Net Profit =EAT- Dividends on Preferential Shares (1) and Equity Capital (2)
Cash Accrual = Retained Profit + Depreciation + Expenses Written Off.
Project Appraisal Criteria:
1.) Net Present Value (NPV) :

CF0 CF1 CF2
NPV = ------- + ------- + ------- + ………… ‘Accept the proposal if NPV is +ve.’
(1+k)0 (1+k)1 (1+k)2
where
CF0 is cash flow in the first year, it would be –ve because of expenses
CF1 is cash flow after the end of first year
K= Cost of capital
Year Cash Flow
0 -10,000
1 20,000
2 30,000
3 44,000
2.) Benefit Cost Ratio (BCR) : BCR=Present Value of Benefits /Initial Investments
If BCR >1 accept the proposal
Initial Investments : 1,00,000/-

25,000/(1.12)1+40,000(1.12)2 +40,000(1.12)3+50,000(1.12)4
Benefits : Year 1: 25,000
1,00,000
Year 2: 40,000 = 1.145 since it’s +ve accept the proposal
Year 3: 40,000
Year4 : 50,000
3.) Internal Rate of Return (IRR): Here the factor ‘r’(Discounting Rate of Return) is found out which
make the NPV of the project equals to zero.
CF0 CF1 CF2

O = ------- + ------- + ------- + ………… make iterations to find out the appropriate value
(1+r)0 (1+r)1 (1+r)2 of ‘r’ which can make NPV=0.this will be the
minimum required value of ‘r’
Vijay Sharma 24
4.) Accounting Rate Return (ARR):
Average Income after taxes

A: --------------------------------
Initial Investment
Average Income after taxes

B: --------------------------------
Average Investment
Average Income after taxes but before interests

C: ---------------------------------------------------------
Initial Investment
Average Income after taxes but before interests

D: ---------------------------------------------------------
Average Investment
Average Income before Interest & taxes

E: --------------------------------------------------
Initial Investment
Average Income before Interest & taxes

E: --------------------------------------------------
Average Investment
5.) Payback Period Method :
Year Cash Flow of M/c A Cash Flow of M/c B

0 -1,00,000 -1,00,000
1 60,000 20,000
2 30,000 20,000
3 22,000 20,000
4 10,000 40,000
5 60,000
Since M/c A has early payback period (3Years) as compare to M/c B which has Payback period of 4Year, M/c A is preferable
over M/c B.
Discounted Payback Period Method:

Year Cash Flow Discounting Factor @10% PV Cumulative Sum
0 -10,000 1.000 -10,000 –10,000
1 3,000 0.909 2,727 -7,273
2 3,000 0.826 2,478 -4,795
3 4,000 0.751 3,004 -1,791
4 4,000 0.683 2,732 941
5 5,000 0.621 3,105
Payback period is 4 year
Vijay Sharma 25
Means of Finances:
Share capital : Raised in form of Equity Capital and Preferential Capital, the equity capital generally
doesn’t carries fixed rate of dividends, while Preference Capital which is contributed
by the Preference Shareholders, carries fixed rate of dividends.
Term Loans : Provide by FI’s ,in form of Rupee term Loans and Foreign currency Term Loans
Debenture Capital : Raised in form of Non Convertible/Convertible, Partially Convertible Debentures
which carries fixed rate of interest and maturity period.
Deferred Payments: Credit facility passed over by the suppliers of raw material, machinery etc.
Incentive Sources : Support provided by government or its agencies in form of Seed capital assistance,
tax exemption
Miscellaneous Sources viz. Unsecured Loans, Public Deposits , Leasing and Hire & Purchase Schemes
Cost of Capital :
Cost of Debt Capital : C= Annual Interest Payback

C(1-T) + ( F-P)/n N= Maturity Period
Kd= F= Redemption Value
P= Net amount realized as debt
(F+P)/2
Cost of Preferential Shares:

D+(F-P)/n D D= Expected Dividend
N= Maturity Period
Kp= ; Kp= F= Redemption Value
(F+P)/2 P P= Net Amount realized as debt
Cost of Equity and Retained Earning:

D1= Dividend expected after end of year
P0= Current Market Price of Share
D1 1-Tp G= Growth
Tp = Personalized Tax Rate
Ks= +G ; Kr= Ks Tg= Capital Gain Tax Rate
P0 1-Tg
Vijay Sharma 26
Break Even Analysis :
Fixed Cost
Break Even Point:
(In Units) Unit Selling Price – Unit Variable cost
Fixed Cost
BEP (In Rupee): x Expected Sales Realization in Year
Sales Realization –Variable cost
Fixed Cost
BEP (In Volume): x Expected Production in the Year
Sales Realization-Variable Cost
Example:
A= Sales Realization ( 180,000 Units @ Rs. 150/-) : 2,70,00,000/-
B= Variable Costs : 1,20,00,000/-
i.) Raw Material : 81,00,000/-
ii.) Consumable Stores : 20,00,000/-
iii.) Power fuel Water : 10,00,000/-
iv.) Selling Expenses : 9,00,000/-
C= Fixed costs : 80,00,000/-

i.) Wages & Salaries : 30,00,000/-
ii.) Repair & Maintenance : 3,00,000/-
iii.) Depreciation : 16,00,000/-
iv.) Rent, Insurance etc. : 2,00,000/-
v.) Administration Expenses : 8,00,000/-
vi.) Interests : 21,00,000/-
D= Contribution (A-B) : 1,50,00,000/-
Projected Balance Sheet:

Liabilities Assets
Share capital Fixed Assets
Reserves & Surplus Investments
Secured Loans Current Assets, Loans & Advances
Unsecured Loans Misc. Expenditures and Losses
Current Liabilities and Provisions
Vijay Sharma 27
Time Value of Money :
Future Value of a Single Amount : FV=PV(1+k) n

Where k= Intrest Rate ; n= Year
(1+k) n is known as FVIFkn i.e Future Value Interest Factor

Example : Deposite of 1000/- today in a bank which pays 10% interest compounded annually, the
deposit after 8 years and 12 years would be :
1000(1+10)8 = 2144 or 1000xFVIF10,8= 2144
1000(1+12)12= 3138 or 1000x FVIF10,12= 3138
Present Value of Single Amount : PV=FV (1+k) -n

Factor (1+k) -n Called as Discounting Factor or PVIFkn
Example: Find Present Value of 1000 recievable after 20 year hence, k=8 %
PV= 1000 PVIF8,20 = 1000x..214=214/-
Present Value of an Annuity : Suppose we are getting 1000/- for coming 3 years, discounting rate is10%
Present Value can be described as : 1000(1+.10)-1 + 1000(1+.10)-2+ 1000(1+.10)-3 = 2,478.8/-
Where as 1000(1+.10)-1 is amount realized after the end of first year, similarly 1000(1+.10)-2 is the amount realized
after the end of second year and 1000(1+.10)-3 is the amount realized after the end of third year. The cumulative
sum will not be equal to 3000/- as it seems but it will be less then that, this is so because every year value of rupee
falls(depreciated) which is denoted by discounting factor (as in this case by 10%)
Example: The Present Value of 4 year annuity of Rs. 10,000/- discounted at 10% will be :
10,000x PVIFA10,4 = 10000x3.170 = 31,700
Price Elasticity of Demand :
Change of demand of a commodity with respect to the change in its price, it depicts the responsiveness of
the demand to variation in the price.
Price Elasticity (Ep) = Q2-Q1 x P1+P2

P2-P1 Q1+Q2
Here Q1 = Quantity demanded in the base year, Q2= Quantity demanded in the following year
P1 = Price per unit in the base year, P2 Price per unit in the following year.
Income Elasticity of Demand :
Change of demand of a commodity with respect to the change in the income of the community, it depicts
the responsiveness of the demand to the variation in income.
Income Elasticity (Ei) = Q2-Q1 x I1+I2

I2-I1 Q1+Q2
Here Q1 = Quantity demanded in the base year, Q2= Quantity demanded in the following year
I1 = Income level in the base year, I2 Income level in the following year.
Vijay Sharma 28
MIS
Pascal 1643 Geared M/c for calculations

Leibntiz 1671 Multiplication, Addition
Charles Babbage 1812 Differential Engine
Hermon Holorith 1886 Punched Cards
Univ. of Pennsylvania 1947 ENIAC
Don Newmann 1950 Modern Computer
Characteristics of MIS :
Management Directed Ease in utilizing the data/information
Management Oriented Distributed data processing
Integrated Heavy planning element
Database Information as resource
Subsystem concept
MIS Plan :
o Corporate Guidelines
o Objectives and Mission of Organisation
o Plans, Strategies, Policies, Programs & Procedures
o Resource Allocation (Man, M/c, Material, Money, Methods)
o Budgeting
SAD : System Analysis And Design
System Analysis Design

a.) Review Existing System a.) General Design
b.) Establish System Objectives b.) Database Design
c.) Design Constraints c.) Detailed Design
d.) Requirement Definition
- Functional Specification
- User’s Specifications
Data Flow Diagrams: Symbolic representation of sequence of process and operations
Entity Process Direction of flow Data storage
Classification of Reports :
According to contents : i.) Comprehensive ii.) Summary iii.) Excerpt
According to time : i.) Status ii.) Historic iii.) Predictive
According to regularity : i.) Periodic ii.) Adhoc
Vijay Sharma 29
Dimensions of information:
Business Dimension: Unstructured Inexact
External Future
Non-programmed
Technical Dimension of information: Cost of acquiring the data

Cost of maintaining the data
Cost of accessing/retrieving the data
7 Efficiency Factors of Banks
- Capital Adequacy Ratio

- Coverage Ratio
- Return on Assets
- Net Interest Margin
- Ratio of Profit to Average Working Fund
- Ration of Cost to Income
- Ratio of Staff cost to income
ALTMAN’s Model : A= Net Working Capital / Total Assets (%)

B= Real Earning / Total Assets (%)
Z= 0.012xA + 0.014xB + 0.033xC + 0.0066xD + 0.999xE C= EBIT / Total Assets (%)
D= MV/BV (%)
If Z > 2.675 than bank is said to be healthy
E= Sales /Total Assets
Vijay Sharma 30
Business process re-engineering:
Customer Power
Information Power
6 Forces which have stimulated the Business : Global Investor Power
Power of Market Place
Power of Simplicity
Power of the Organisation
Changes in Attributes due to BPR :
Attributes Before BPR After BPR

Work Unit Functional Process
Job Skills Simple uni-task Multi-functional, Multi-skilled
People Controlled Empowered
Job Preparation Performance Ability
Values Protective Productive
Executive Mind Set Gate Keepers Leaders
Relationships Controlled Trust Relationship
Management Efforts Profit Oriented Customer Satisfaction
HR Behaviour Protective Introvert Competitive Extrovert
BPR Plan
 Develop the business vision and objectives of the process
 Select the process to be redesign - Priority Approach
- Critical Success factor
 Understand and measure the existing process - Data Flow Diagrams
- Entity Relationship (ERD)
- Structured System Analysis & Design SSAD
 Redesign the process and develop the prototype - Process Maps
- Benchmarking
- Creativity & Out of Box thinking
 Implement the redesigned process
 Evaluate and Appraisal
 Continuous Process Improvement
BPR Model :
Diagnostic Phase - Process Analysis - Process Selection - Process Design- Evaluation-Appraisal
BPR Rules :
 Generalized are preferred over Specialist
 Information can be shared
 Simultaneous use of decentralization and centralization techniques
 Things speaks about their where about
 Decision making is part of job
 Effective contact as compare to personal contact with buyer/supplier
Vijay Sharma 31
Entrepreneurship:
Objectives of Industrialization- Economic Development Entrepreneurship

Employment Capital
Income Generation Human Resources
Foreign Trade Infrastructure
Strengthen Social Fabric Market /Technology
Induces Social Changes Govt. Policies
Some Qualities of an Entrepreneur :

Vision, Clear Objectives, Innovation, Organizing Skills/Human Relation Ability, Motivation, Self
Confident , Risk Taking, Communication Ability, Pride, Aptitude, Flexibility , Will Power, Creativity ,
Dynamics, Technical Knowledge, Commitment.
Various Banks/ Financial Institutes which provides assistance to the Entrepreneur:

IDBI, SIDBI , ICICI, NABARD, NSIC, State Financial Corporations (Like RFC), District Industry
Centers, DRDA , EXIM Banks
Classification of Entrepreneur:
 According to type of business : Trading, Industry, Agricultural, Retailing, Services
 According to Technology desired : Technical, Non-technical, High/low Tech., Professional
 According to Growth : Growth, Super Growth, Under Growth
 According to Stage of development : First Generation (Innovative) , Classical, Modern
 According to Area : Rural, Urban
 According to Gender/Age : Men, Women , Young, Old, Middle Age
 According to motivation : Pure (for personal satisfaction) , Induced, Motivated
Vijay Sharma 32
Advertising
Advertisement Agencies
HTA ( J.W. Thomsons) Chetra Burnet
Lintas McCann Erickson
O&M (Ogilavy & Mather) Trikaya Grey
Mudra Maa Bozzel
FCB Ulca (Foot Cone & Belding) TBVA Anthem
Redifussion DY&R ( Dentsu Young & Rubicam) Clarion
RK Swamy-BBDO Contract
Percept Pentagon
Ambiance Enterprise Nexus
Everest
Framework of Advertising Planning & Decision Making :
Consumer / Market Analysis

Situational Analysis (CMS) Competitive Analysis
Marketing Programs Role of Advertising, Sales force

Promotion, Price, Public Relations
Communication Objectives, Segmentations, Positioning

Persuasion Process Advertising Plan Message Strategies & Message Tactics
Media Strategies & Media Tactics
Facilitating Agencies
Implimientation Social & Legal Constraints
Communication & Persuasion Process:
Awareness/ Familiarity with brand
Information regarding brand attributes & benefits
Creation of brand image /personality Brand Purchase

Attributes Behaviour
Ad Exposure
Association of feelings with brand
Linkage of brand with peers/experts & group norm
Reminder or inducement about brand trail
Vijay Sharma 33
Action Oriented Communication: Hierarchy of effect of advertising -
Retail Advertising Brand Awareness
Cooperative advertising Brand Comprehension
Reminders Brand Image & Brand Personality
Point of Purchase Material Brand Attitude
In- Store Advertising Association of feeling with brand
Merchandising Environment Purchase Action
Vijay Sharma 34
Message Strategies & Tactics
Message Strategies: This denotes the efforts put-in by the ad maker so that the advertisement can gain the
attention of the target audience
1.) Attention & Comprehension: Believability, Likability & Communicability
2.) Association of Feeling with brand :

Positive Feeling - Happiness, Warmth, Energy, Vitality, Fun, Humor, Belongingness
Negative feeling - Shame, Sadness, Dislike, Fear, Anxiety, Anger
3.) formation of Brand Equity, Brand Image, Brand Personality
Brand Loyalty
Name Awareness Brand Equity
Perceived Quality
Brand Association
Proprietary Brand Assets
Brand Recall
Brand Awareness
Brand Recognition
Brand Knowledge
Attributes#
Type of Brand Association Benefits*
Brand Image Favorability of Brand Association Attitudes
Strength of Brand Association
Uniqueness of Brand Association
# Product Related & Non-Product Related Attributes
* Functional Benefits, Experiential Benefits, Symbolic Benefits
Image of Maker Image of Product Image of User
Brand Image
Market Growth Margins
All non-image factors Brand Equity Market Value of a Brand
Vijay Sharma 35
Massage Tactics
Physiological needs Feature of a Massage:
Safety need - Style (Form of ad.)
- Tone (Rational, emotional, +/-Ve
Human Needs : Social needs - Words
Esteem needs - Format (Size, Color, Illustration)
Self-actualization needs
Rational Appeal – High Quality Longer Life Performance

Low Price. Resale Value
Emotional Appeal – Positive (Love, Warmth, Happiness, Joy, respect)
Appeals : Negative (Shame, Sad, Fear, threat, unhygienic)
Moral Appeal - Ethical, Patriotic, Righteous
Direct Appeal
Indirect Appeal
Different forms of headlines of an ad copy: Forms of Advertisements:

- Direct Promise - Musical
- News providing - Slice of Life
- Curiosity - Use of Endorser
- Selective - Demonstration
- Commanding - Animated
- Challenging - Use of animals
- Negative - Humorous
- Affirmative - Colloquial (Informal)
- Technical edge - Comparative Analysis
- Technical Feature
Art of Copy Righting

Copywriting - Putting words on paper particularly those of main body of ad.
Illustration – Artwork mainly involves pictures, photographs, symbols, logo to convey
central idea.
Layout – Activity to bring all the pieces of ad together,
While finalizing any ad, consider following five points -
a.) Balance
b.) Contrast
c.) Proportion
d.) Gaze Movement
e.) Unity of idea, appearance & design
Vijay Sharma 36
Copy Testing
- Order of Merit Test
- Paired Comparison Tests
Pre-Testing - Portfolio Test [Dummy ads+ Regular ads]
- Magazine Test
- Direct Questioning
- Sales Experiment Test
- Perceptual Mapping
- Physiological Measures: Eye camera, Pupillometrics, Psychogalvano Meter
- In-House Projector Test
- Live Telecast Test For Broadcast Media Ads.
- Theater Test
- Penetration Test:
a.) Recognition Test: N- Noted, RM- Read Most , SA- Sean Associated
b.) Mc-Grown’s Formula:
Post Tests Readers/Rupee= (Noted % )x( Mag’s Primary Readers)
Space Cost
c.) Gallop –Robinson Test: Respondents are queried regarding whether
they read a particular issue of magazine or not, if read then they are asked
certain questions regarding the advertising published in the issue, if
respondent succeed in satisfying the investigator ‘Proved Name
Registration’ PNR is allotted.
- Progress Test:
a.) Netapps Method : Ratio of Reader purchase & non-reader purchase
b.) Purchase Behaviour: Coupons, Trade Inquiries
c.) Sales Results Test
d.) Attitude Test
- Recall Test: Day After Recall Test (DAR)
Vijay Sharma 37
Media Strategies & Tactics
Media Strategies :
Setting Media Budgets : - Percentage of sales method
- All you can afford method
- Competitive Parity Method
- Objective & Task Method
Factors to be consider while deciding upon Advertising Budget:

Stage in PLC
Market Share & Consumer Base
Competition & Clutter
Advertising Frequency
Product’ Desired Image
Media Tactics:
Media Schedule: It specifies how budget should be spent, it generally includes the specifications of
following four type of media factors-
a.) Media Class : Type of media such as Electronic Media viz. Television, Radio and Print
Media viz. News Papers, Magazines, Billboards etc.
b.) Media Vehicle: This provides immediate environment to the ad, Like within the media
class television which program to be choose ( as News, Weather
Forecasting News, Movies, Serials etc.) and with in Print media which
type of magazine to be choose as Vogue, Time, Gladrags, India Today,
Business India etc.
c.) Media Option: This is detailed description of an advertisement and specifies the
characteristics viz. Size (Full Page, Half Page), Length ( 15Sec., 30
Sec., 60Sec.) , Color (Black & White or Four Color) or Location
(inside Front Cover, Back Page, or Interior Location)
d.) Scheduling & Timing: This specifies how media options would be scheduled over the
time viz Continuous, Pulsing
Cost Per Thousand (CPT): Cost per thousand audience members.

Example: for HLL, if CPT is Rs.5000/- then it means that it cost Rs.
5000/- to HLL, to reach its 1000 members of its target audience.
Gross rating Points (GRP): A commercial’s Rating is percentage of potential audience (like children
below 19 year in case of Maggi Noodles) tuned in to the commercial
Total GRP for a 3 showings in a time slot with 12 Rating =36 GRP
commercial which 4 showings in a time slot with 4 Rating = 16 GRP
run 17 time in a week 10 showings in a time slot with 9 Rating = 90 GRP
Total GRP for week = 142 GRP
Vijay Sharma 38
Reach: It refers to number of people/households, which will be exposed to an advertising schedule at
least once over a specified period of time viz a month. ( the duplication of exposure of ad will
be counted one like if a house hold is able to see an ad 17 times in a specified time then also it
will be counted as one house hold) in other words we can say reach of an ad determines the
number of households which were able to see a commercial at least once in a specified period
of time.
Frequency: It refers to the number of times some one sees an ad within a specified period of time i.e.
how much time a house hold or a person is exposed to a advertising schedule.
Advertising Timing Patterns
Concentrated
Continuous
Intermittent
Level Rising Falling Alternative
Media Plan:
a.) Collect information about the market

b.) Prepare advertisement and evaluate its nature
c.) Search for appropriate match between media class & media vehicle and the target audience.
d.) Calculate expected reach (r)
e.) Calculate expected frequency (f)
f..) Calculate Impact (i) i.e. qualitative value of the ad exposure
g.) Calculate total no. of exposure e = r x f
h.) Determine weighted no. of exposures We = r x f x i
Considerations in Media Plan: - Objectives of the Advertising

- Market & Product consideration
- Image consideration
- Distribution channels
- Advertising copy
- Pictures & Photographs
Vijay Sharma 39
Sales & Distribution
Advertising
Price
Distribution Influence
Packaging Sales
Product Features
Competition
Consumer Taste
Theory of Sales : Sales Forecasting Methods :

- DAGMAR Approach
- AIDAS (Attn., Interest, Desire, Action, Satisfaction) - Jury/Expert Opinion
- Right set of circumstances - Delphi Technique
- Buying formula (Need—Solution—Purchase) - Sales Force recommendations
- Behavioral equation B= PDKV - Statistical Tech
P=Predisposition (Inward response tendency), D=Present Desire Level
K= Incentive Potential , V=Intensity of all cues i.e. product, promotion
Selling Process Internal External

Prospecting
Pre-approach R&D Suppliers
Demonstration Production Customers
Sales Resistance: - Sales Obstacle A/c & Finance Sales Warehouse
Marketing Distributors
- Sales Objections Dept.
Advertising Wholesaler
Closing Sales: - 123 Close Sales Government
- Re-describe the +ve points Distribution Society
- write order & handover to ctmr. Press etc.
- Concession
Sales Related Market Policies:

Product Pricing Distribution
Consistent with objectives Competitive +, - ,= Level of distribution
Differentiation of product Discount - Trade Strategies -Mass
Full knowledge of product - Quantity -Selective
Full cost -Exclusive
Price: Contribution
Promotional
Vijay Sharma 40
Market planning :
Pricing: Ex-factory price Distribution: Packaging
Taxes & Duties Transportation Arrangement
Trade Margins Channel of Distribution
Discounts Role of Distributors, Wholesaler
Final Price Role of retailers
Promotion: Branding Services: Installation

Advertising User Education
Personal Selling Warranties
Promotional Efforts After Sales services
Sales Promotion:
Consumer Promotion Dealer Promotion
Symbols Dealers Loaders:
Demonstration & Hand on experience - Merchandise deal
Coupons - Price deals
Samples - Gifts & Travels
Price Packs Dealers Coupons
Money Refund Offers POP Promotion:
Premiums & Gifts - Dealers Sales Contests
Travels - Dealer Stock Display Contest
Sweep Stakes Exhibitions
Subsidized Financing Publicity
Public Relations
Kind & Size of Sales Force :
Kind: Size: Sales Organisation

Market - Work Load Method - Line
- Product Specialist Total Work Load o Product
- Market Specialist Productivity of one SP o Geography
Selling Style o Customer
- Technical - Incremental Method o Distribution Channel
- New Business - Sales Potential Method - Line & Staff
- Trade N= S (1+T) - Functional
- Missionary P - Committee
Role of SP S= Forecasted Sales Volume
P= Productivity of one SP
- Order taker T= Employees Turnover
- Getter
Vijay Sharma 41
Sales Compensation Methods: - Salaried holidays /Leaves
- Straight Salary - Education / Medical/ Insurance
- Straight Commission + Bonus & Fringe Benefits - Finance
- Automobile & Accommodation
- Combination - Club Memberships/ Entertainment
- Golden Handshake
- Retirement Plan
Sales Quota Sales Territory

- Sales Volume Quota Assign group of customers to sales person
 Unit Sales Volume for -
 Rupee Sales Volume Proper market coverage
 Point Sales Volume To curb sales expenses
- Activity Quota (According to no. of calls) Control & monitoring the efforts
- Budget Quota (Target aligned with expenses) of sales force
Job Analysis:
Job Description Job Specifications

Job Objectives Physical Characteristics
Role of SP Qualifications
Authority & Responsibility Analytical Skills
Reporting Psychological Skills
Job Performance Criteria
Recruitment Selection Training
Job Specification
Job Analysis
Job Evaluation Job Description
Compensation & Motivation Plan Performance Evaluation
Sales Training:
ACMEE: Aim – Content – Method – Execution – Evaluation
Sales Training Methods: Lectures Case Discussions On the Job Training

Role Playing Demonstrations Programmed Learning
Personal Conference Gaming Correspondence Courses
Vijay Sharma 42
Sales Budget: Mechanism of control
Instrument of planning
North Region South Region Western Region East Region

Product A 80 78 56 34
Product B 123 452 234 543
Product C 78 67 86 89
Product D 12 16 26 37
*In ,000 units
Qualities required in a good Sales Executive :

- Understand company’s policies and objectives
- Well verse with product, its features, technical and functional aspects.
- Communicating and convincing ability
- Time management
- Must be having go-getter instinct
Vijay Sharma 43
International Business Management
EPRG Model
Ethnocentric
Polycentric
Regiocentric
Geocentric
Methods of Entering into Foreign Market:
- Indirect Export ( Though export agencies or export houses)
- Direct Export
- Licensing
- Joint Venture
- Forien Direct Investment
Marketing Research
Markets Products Price

- Test - Add - Price/Demand
- Enter - Delete - Relationship
- Leave - Change - Profitability Analysis
-
Marketing Research
Promotion Distribution
- Copy Design - Location
- Media selection - Channels
- Compensation - Policies
- Control
International management Practices:
Le Plan & Cadre : France’s government planning on national scale, which helps to coordinate the plans of
individual industries and companies.
Along with this, government has identified few elite universities which supplies
cadre ‘managerial elite’
Authority & Codetermination: German managerial style in which labour members participate in the
managerial and supervisory practices. The labour is granted membership in the
Supervisory Boards and Executive Committees of certain large corporations.
Vijay Sharma 44
Inhwa: Korean style of management which emphasis on harmony, the organisations are hierarchical with
family members on the key positions. ( Autocratic/ Paternalistic Leadership style)
Theory Z: Japanese believe on giving lifetime employment and consensus decision making.
Vijay Sharma 45
Product Brand Management
Five Product Levels
Potential Product
Augmented Product
Expected Product
Basic Product
Core Benefits
Product Classification:
On the basis of durability

i.) Non-Durable Goods ii.) Durable Goods iii.) Services
Consumer Goods Classification
i.) Convenience Goods: Goods, purchased frequently with minimum efforts & distinctions
ii.) Shopping Goods: Consumer compares the characteristics of various brands on the basis of
different attributes viz. stability, quality, price, durability, service etc.
iii.) Specialty Goods: Products with unique characteristics or brand differentiation
iv.) Unsought Goods: The consumer doesn’t know much or not normally think about the
product viz. smoke detector, life insurance)
Industrial Goods Classification

i.) Materials & Parts
 Raw Material
 Farm Product (Wheat, Livestock, Fruits, Vegetables)
 Natural Product ( Fish, Lumber, Salt, Iron, Crude)
 Manufactured Material
 Component Material (Iron, Yarn, Cement, Wires)
 Component Parts
ii.) Capital Items
 Installations (Factories, Offices)
 Equipments
 Factory Equipments
 Office Equipments
iii.) Supplies & Business Services
 Operating Supplies
 Maintenance/Repair Items
 Maintenance Services
 Business Services
Vijay Sharma 46
Product Mix Decision:
Width of Product Mix: No. of different product lines viz. for P&G –5
Length of Product Mix : Total number of items in the product mix, ForP&G-25
Depth of Product Mix: How many variants are offered in each product line, viz.-A detergent comes in
three sizes and two formulations (mild & concentrate) then depth will be 2x3=6
Consistency of Product: Mix: the degree of closeness between the product lines.
Product Mix For P&G

Detergent Soap Toothpastes Disposable Diapers Tissue Papers
Ivory Snow Cleem Ivory Pampers Charmin
Dreft Crest Kirk’s Luvs Puffs
Tide Lava Banner
Cheer Zest Summit
Oxydol Camay
Dash Safe guard
Bold Coast
Gain Oil of Olay
Era
Product Line decisions:
Line Stretching : Upward Stretching, Downward Stretching, Two way stretching

Line Filling : Adding more items in present line’ present range
Line Pruning
Line Featuring : introduce Traffic Builder)
Product Line Analysis:

- Product Line Sales & Profit
- Product Line Market Profile
Brand name selection process :

i.) Prepare Check Points for different Values :
Associational Value
Memorization Value
Motivational Value
Descriptional Value
Repurchase Value
ii.) Making Search for Name
iii.) Rating these names for Various Values
iv.) Analysis to evaluate ‘Marketing Potentiality’ of brand names
v.) Selecting the appropriate Brand Name
Vijay Sharma 47
NPL Practices :
Positioning Strategies:
- Concept Statement
 Product Attributes
- Product Screening
 Problem-Solution Plank
- Business Analysis
 Customer Class
- Product Development & Testing
 Occasion
- Test Marketing
 Competitive
 Product Class Disassociation
 Price-Quality Ratio
Differentiation Strategies :
Product : Product Attributes, Functioning, Uses, Aesthetics, Size, Shape, Distribution
Services : Finance, ASS, Installation, Training, Guarantee
Personnel : Courtesy, Responsiveness,
Image : Logo, Punch Line,
New Product Development :
Corporate Mkt. Planning

Program
Objectives Screening  Concept Development
 Tech. Feasibility
Market Strategies  Product Testing
 Profitability Analysis
Idea Generation  Test Marketing
 Market Introduction
Situational Analysis  Pricing
(CMS)  Advertising
 Sales
Brand Building Process:
Inputs Assessment Output

i.) Identify Key Segments i.) Customer dealer Feedback i.) Increased Market Share
ii.) Customer Confidence ii.) Develop Customer Satisfaction Scale ii.) Customer Loyalty
iii.) Total Brand Management iii.) Brand Strength score iii.) Profitability
iv.) Competitive Strategies iv.) Brand Image
I/P
Vijay Sharma 48
Definitions:
Bran Image : Totality of impression about a brand [ Aura, Reputation, Symbolic Meaning ]
Brand Equity : Psychological Differentiation, value received by customer in terms of Logo, Symbol,
Brand Name, Punch Line
Brand Loyalty: Feeling of confidence which reduce the dissonance in the mind-set of customer
Brand Strength : Brand’s ability to associate itself with positive motives (Gel- Colgate, Balm- Zandu)
Brand Personality: Human characteristics of brand [Intangible assets + Symbolic Value + Outer face of Brand]
Brand Perception :
Brand Positioning : Package of benefits for a specific target segment, Giving a distinct image in the
mind set of customer, Functional attributes to place brand in a specific market
Brand Repositioning: Endeavor to fulfill following objectives
 New market /customer exploration
 To curb falling sale
 To stabilize the image
 For competitive advantage
 To cope up with new market situation
Product Support Services
Client’s worries:
 Reliability & Failure Frequency
 Customer’s worry about Downtime duration
 Cost of maintenance and Service
Vijay Sharma 49
Business Policy & Strategic Management
Dimensions of business Definitions:

Customer Functions
Customer Group
Alternative Technologies
- Mission :
- Objectives : Important ends towards which organisation’s & individual activities are directed
- Goals :
- Strategies : Adoption of course of actions to achieve basic long term objectives
- Policies : Statements/understandings which guides manager’s thinking in decision making process
- Procedures : Plans which specifies the required method of handling activities in future
- Rules : Specific required actions & non-actions
- Programs : Arranged format of objectives, policies, strategies, procedures etc. supported with budget
- Budgets : Allocation of resources to achieve goals & objectives
Types of Planning:
- Operational Planning: Managing day-to day functions

- Project Planning
- MBO
- Contingency Planning : Planning about environment and situation where organisation exists
- Short-range Planning
- Long-range Planning
- Corporate Planning
- Strategic Planning : Process of setting goals & objectives by scanning &apprising internal &
external environment and accordingly formulating plans, Procedures, Policies
Strategic Management:
Business Definition,
Mission, Purpose & Objectives
- Environmental Appraisal
- Organisational Appraisal
Implementation of Strategies:
- Project Implementation
Strategic Alternative & Choices
- Procedural Implementation
- Structural Implementation Evaluation o f Strategies
- Functional Implementation
- Behavioral Implementation
Vijay Sharma 50
Organisational Capability Profile:
Capability Factors Weakness Normal Strengths

- Financial Capability Factors
o Sources of Funds
o Uses of Funds
o Management of Funds
- Marketing Capability Factors
o Product related
o Price Related
o Promotion Related
o Integrative & Systematic
- Operational Capability Factors
o Production System
o Operation & Control System
o R&D System
- Personnel Capability Factors
o Personnel System
o Organisational Characteristics
o Employee Characteristics
o Industrial Relations
- General Mgmt. Capability Factors
o General Mgmt. System
o External Relations
o Organisational Climate
Strategic Advantage Profile (SAP):
Capability Factors Competitive Strengths or Weaknesses

Finance High Cost of capital, Reserve & Surplus position unsatisfactory
Marketing Fierce Competition in industry, At present company’s position secure
Operations Plant &M/c in excellent condition, strategic location (near market)
Personal Quality of management & workers are competitive with other firms
General Mgmt. High quality & experienced top-mgmt, Participative decision making
Competitive Advantage Profile
Competitive Company’s Competitors Importance of Affordability Competitors’ Recommendation

Advantage Standing Standing improvement & Speed Ability to
of standing Improve
Technology 8 8 L L M Hold
Cost 6 8 H M M Monitor
Quality 8 6 L L H Monitor
Service 4 3 H H L Invest
Vijay Sharma 51
Strategic Alternatives:
Grand Strategies
- Stability strategies : Incremental improvement of functional performance
- Expansion Strategies : Broadening of scope in terms of Customer groups, customer functions &
alternative technologies
- Retrenchment Strategies : Reducing the scope of either of its customer group, customer function
or alternative technologies
- Combination Strategies : Mixture of stability, expansion and retrenchment strategies
Modernization strategies
- Technological up-gradation : to improve productivity, efficiency & lowering the cost
- R&D
Diversification & Integration Strategies

- Vertical Integration : When firm starts making new products which servers its own needs
- Horizontal Integration : Merger between two firms, working at same functional performance
level i.e. customer group, customer function & alternative technologies
- Concentric Diversification: Taking up new venture which is related to its existing business in
- terms of either customer group, customer function or alternative tech.
- Conglomerate Diversification: Taking up new venture which is un-related with the existing
business definition of the firm in terms of customer group, customer
function & alternative technologies
Mergers, Takeovers, Joint Venture Strategies

Mergers :
- Horizontal Mergers Strategic Issues
- Vertical Mergers Issues in mergers Financial Issues
- Concentric Mergers Managerial Issues
- Conglomerate Mergers Legal Issues
Take Over Strategies:

Joint Venture
Vijay Sharma 52
Turnaround, Divestment, Liquidation Strategies
Turnaround:
Strategy to ‘reversing the negative trend’ in terms of profits, cash flow, market share,
physical facilities and to become competitive in market and curb the mismanagement.
Action Plan for turnaround

- Analysis of product, market, production process, competition and market segment position
- Clear & logical thinking about market place
- Formulation of strategic plan for turnaround
- Implementation, Feedback and remedial actions
Divestment:
It’s a rehabilitation or restructuring plan which refers to the sale or liquidation of
- a portion of business
- a major division
- Profit center
- SBU
It is generally applied when turnaround strategy proved unsuccessful.
Liquidation:
Taken-up as the last option, which involves closing down of firm, selling its assets. The liquidation
end up the serious consequences viz. loss of employment, termination of opportunities and stigma of
failure
Vijay Sharma 53
Strategic Choices
Process of Strategic Choice

- Focusing on Alternatives
- Considering the selection factor
- Evaluating the strategic alternatives
- Making the final decision
Corporate Portfolio Analysis Techniques
This is the set of techniques which helps the strategist to take strategic decision with regards to the
individual product line or business of an organisation’s portfolio.
Experience Curve
The experience curve correlates the unit cost of the product, market share of the firm and other
aspects with the firms experience in the field
It states that unit costs decline as the firm accumulates experience in terms of cumulative volume
of production.
This curve results from number of factors viz. Learning Effects, economy to scale, product
redesign & technological improvements.
Product Life Cycle Maturity

Growth
Introduction Decline
BCG Matrix
High
Stars Question Mark
Industry Growth Rate

Cash Cows Dogs
Low
High Low
Relative Market Share
Vijay Sharma 54
GE Nine Cell Matrix
Strong Average Weak
Invest / Expand
High
Select / Earn
Industry
Attractiveness Medium
Harvest/ Divest
Low
Business Strength/ Competitive Position
Hofer’s Product Market Evaluation Matrix
Strong Average Weak
A
Development Each circle depicts one
B business viz. Business
Growth A , B, C, D & E .
The diameter of circle
Product’ Market C depicts the size of
Evaluation Shakeout industry while the
Stage black portion depicts
D the market share of
Maturity that business in the
respective industry.
Decline E
Competitive Position
Directional Policy Matrix
Business Sector Prospects

Unattractive Average Attractive
Divestment Imitation / Phased withdrawal/

Weak Phased Withdrawal Cash Generation
Firm’s
competitive Phased withdrawal/ Maintain Position/ Expansion/
Average
ability Merger Market Penetration Product differentiation
Strong Diversification/ Growth/ Market Leadership/

Cash Generation Market Segmentation Innovation
Vijay Sharma 55
Industry, Competitor, SWOT Analysis
Industry & Competitor Analysis

Porters’ Five Force Model of Competitive Analysis
Potential threats from firms
which make substitute
product/service
Forces of competition
Suppliers’ Bargaining Power within the industry due to Buyers’ Bargaining Power
rival firms
Potential threats from entry

of new firms
These five forces determines the intensity of the industry competition and profitability
SWOT Analysis
SAP : Strategic Advantage Profile

QUEST: Quick Environmental Scanning Technique
ETOP : Environmental Threats & Opportunity Profile
ETOP Sector Impact SAP Impact Factor

Social Finance
Political Marketing
Economical Operations
Market Personnel
Supplier General Management
Technological
Regulatory/Legal
Strategic Control: Strategic Momentum Control

- Premise Control - Responsibility Control Centers
- Implementation Control Evaluation Techniques - Underlying Success factors
- Strategic Surveillance - Generic Strategies
- Special Alert Control Strategic Leap Control
- Systems Modeling (Computer)
- Strategic Field Analysis
- Strategic Issue Management
- Scenario
Operational Control:
- Setting Standards of Performance Financial Techniques
Economics
- Measurement of Performance - Financial Analysis
- Analyzing Variance Evaluation Technique - Zero Base Budgeting
Vijay- Sharma
Taking Corrective actions 56 MBO
The author can be reached by :- vijaysharna@aol.in Memorandum of Understanding
Strategic Control: Strategic Momentum Control
- Premise Control - Responsibility Control Centers
- Implementation Control Evaluation Techniques - Underlying Success factors
- Strategic Surveillance - Generic Strategies
- Special Alert Control Strategic Leap Control
- Systems Modeling (Computer)
- Strategic Field Analysis
- Strategic Issue Management
- Scenario
Operational Control:
- Setting Standards of Performance Financial Techniques
- Measurement of Performance - Financial Analysis
- Analyzing Variance Evaluation Technique - Zero Base Budgeting
- Taking Corrective actions MBO
Memorandum of Understanding
Tips for managers:
 Identify your strengths

 Be positive in your thoughts
 Review your past success
 Have a vision
 Turn the vision in well define attainable objective
 Visualize the objective
 Act to achieve the objectives
The Organisation Source of Business Values

Improve it - Product Promotion
- New Sales Channel
- Direct Savings
- Time to Market
- Customer Services
- Brand Image
Transform it - Technological and Organizational Learning

- Customer Relationship
Redefine it - New Product Capabilities

- New Business Model
Vijay Sharma 57
Leadership : Commitment towards the work
- Socio-economic status Technical background
- Higher level of education Strive for the Excellence
- Realistic self-concept Flair of technical skills
- Realistic goals Think ahead of time
- High frustration level Good interpersonal skills
- Ability to express hostility tactfully
- Ability to accept success and failures
- Ability and willingness to communicate with others
- Willingness to work for the group rather than for individual
Common Qualities Of Good CEO:

 Very good interpersonal skill
 Excellent oral communication skill
 High commitment on improving technical and managerial knowledge
 Ability to analyse the opportunities, strategically plan and take timely decisions
 Good time management for work, self-development, professional activities & friends.
Steps to the Road of Success:

 Identify your strengths
 Be positive in your thoughts
 Have a vision
 Live at present (Smiling at child, helping the friends, reading good books)
 Take control of your time; while setting big goals, break them in daily bits & achieve them.
 Emphasize the positives and take steps to keep check on negative emotions
 Don’t be idle, involve your self in work which utilize your skills
 Take advantage of ‘momentum of early start’.
 Review your past success
 Give priority the close relatives (friends, spouse)
 Take care of the soul, Have faith and be religious
Golden Principles:
 Respect the important person involved with issue

 Have self-confidence, mould your self as a capable and suitable person
 Everyday, at first instance, handle the most difficult work, afterwards you will
feel happiness while dealing with the easy work.
 Discipline your work.
 Don’t be afraid of criticism
 Be happy at other people’s happiness and their victory, study their methods & procedures.
 Don’t fall into wrong track because of dissatisfaction.
 Be loyal towards your work and organisation.
 Be enthusiastic, it spreads from one to another.
Vijay Sharma 58
Emotional Intelligence:
Components Definitions Hallmarks

The ability to recognize and understand 1.) Self Confidence
Self-Awareness moods, emotions & drives as well as 2.) Realistic Self-assessment
there effects on others. 3.) Sense of Humor
The ability to control or redirect the 1.) Trust Worthiness and Integrity
Self-Regulation disruptive impulses and moods 2.) Comfort with ambiguity
3.) Openness to change
A passion to work for reasons that go 1.) Strong drive to achieve
Motivation beyond the money or status, a 2.) Optimism, even in the face of
propensity to pursue goals with energy failure
and persistence 3.) Organisational Commitment
The ability to understand the emotional 1.) Expertise in building and
Empathy makeup of the people, skill in treating retaining talents.
people according to their emotional 2.) Cross Cultural Sensitivity
reactions. 3.) Services to clients & customers
Proficiency in managing relationship 1.) Effectiveness in leading change
Social Skills and building networks, an ability to find 2.) Persuasiveness
common ground and build rapport. 3.) Expertise in building & leading
teams.
Vijay Sharma 59
Economics
Utility: It is the ability of a commodity to satisfy the human needs
Total Utility :
If a consumer consume three commodities and utility derived from these three
commodities are Ua, Ub, Uc than total utility will be-
Tu= Ua + Ub + Uc
Marginal Utility: Change in total utility

MU= ----------------------------
Change in quantity consumed TU
MU TU
Exp.- MU of nth unit = TUn-TUn-1
Quantity
MU
Law of Diminishing Marginal Utility
Demand Curve
Law of Demand:
The demand for a commodity increase when its
P3 price decrease while other things remain
constant, similarly the demand decrease with
increase in price of commodities.
MU/Price
P2
P1
Price Demand curve
MU
Q1 Q2 Q3 Quantity
Quantity
Factors Behind Demand Curve:
P3 - Substitution Effect
- Income Effect
Price P2 - Utility Maximization Behavior
Exceptions of Law of Demands :

P1 Demand Curve
- Status Goods
- Giffen Goods (Inferior Commodities)
Q1 Q2 Q3 Quantity
Vijay Sharma 60
D1 D2 D3
Shift In demand curve
Price
- Fall in the consumer’s income

- Advertisement may change preference or taste of the consumers Q1 Q2 Q3
- Decrease in the price of substitute of commodity may decrease the consumption of commodity.
- Increase in the price of complementary goods, which compel consumer to buy less
- Demand for commodity may decrease if it go out of fashion / Quality deteriorate / Product ‘s
seasonality/ introduction of new technology/ feature in product.
Budgetary Line:
Px .Qx + Py.Qy = M M/Py

M= Consumer’s money income
Budget Line
Qy Qy= M/Py- [Px/Py].Qx
M/Px
Quantity of X [Qx]
Equilibrium of Consumer
M/Py
Qy
Budget Line
Demand curve
M/Px
Quantity of X [Qx]
Income Consumption Curves:
Vijay Sharma 61
Income & Substitution Effect on the Price:
Income effect results from the increase in the real income due to decrease in the price of
commodity, While Substitution Effect emerges due to consumer’s tendency to substitute the
expensive goods from cheaper goods.
Hicksian Approach for Income & Substitution Effect on the Price
Price Effect: X1X3

Income Effect: X1X3 - X1X2= X2X3
Substitution Effect: X1X3 - X2X3 = X1X2
Slutsky Approach For Income & Substitution Effect on the Price
Substitution Effect : PE – IE = SE
X1X3 - X2X3 = X1X2
Vijay Sharma 62
Demand
Determents of Market Demand:

o Price of Product
o Price of Relate Goods – Substitutes, complimentary & supplement
o Income Level
o Consumer’s tastes & preferences
o Advertising of the product
o Consumer’s expectation about future price and supply position
o Demonstration Effect
o Consumer’s Credit Facility
o Population of Country
o Distribution pattern of nation al income
Elasticity of Demand
Price Elasticity of Demand: Percentage change in the demand as the result of one percent change in the
price of commodity
ep = Percentage change in the quantity demanded

Percentage change in the price
ep = Q x P
P Q
Income Elasticity of Demand: Responsiveness of the demand to the change in the income
ei = Percentage change in the quantity demanded

Percentage change in the income
Q x I
ei =
 Q
Advertising & Promotional Elasticity:
ea S
= x A
 S S- Sales , Adverting Expenses
Cross Elasticity :
Percentage change in the demand of Tea
ec = Percentage change in the price of coffee
Such elasticity emerges when demand of a commodity changes (say tea)

with change in the price of its substitute (say coffee)
Vijay Sharma 63
Price Elasticity & Total Revenue :
TR= Q.P
Total Revenue
Quantity
e>1
Price/MR
e=1
e<1
Demand Curve
Quantity
Marginal Revenue
Elasticity Co-efficient Change in Price Change in Demand

e=0 Increase Increase
Decrease Decrease
e<1 Increase Increase
Decrease Decrease
e=1 Increase No Change
Decrease No change
e>1 Increase Decrease
Decrease Increase
Vijay Sharma 64
Theories of Economic Growth
Human resource & its quality

Determinants of Economic Growth: Natural Resources
Capital Formation
Technological Developments
Harrod-Domar Model:
Growth rate Yt / Yt is equal to the output\capital ratio (k) time the constant propensity to save (s)
Yt / Yt = k . s
Assumptions ; a.) Constant Capital-output Ratio (k)

b.) Constant Saving Income Ratio(s)
Where S= Saving per unit of time /National output & k= National Output/ Total stock of capital
Neo-Classic Theory:
Y= F ( K,L,T) ; Rate of Economic Growth is the function of growth rate

of Capital Stock, Labour Supply & Technology
Y b [K] (1-b)L T
------ = ------------- + -------------- + ------------
Y K L T
Here b and (1-b) represents the responsiveness of output to the change in the K and L
Phase in Business Cycles:

Expansion
Peak Recession
Prosperity
Expansion
Prosperity Steady Growth Line
Depression
Recovery
Trough
Vijay Sharma 65
Theories of Production
Production Function
Q= F ( K. L)
Q= Quantity Produced, K= Capital, L= Labour
Law of Production:
Short Run Law: In short run input-output relationships are studied with one variabl input
keeping others constant. This is known as The Law of Variable Proportions. While in long
run all the inputs are considered as variables, these relations are studies under
Law of Return to Scale.
Law of Variable Proportions:

Also known as ‘Law of Diminishing Returns’, applied in the short run where only one input is considered
as the variable while others are kept constant. The law states when more and more units of a variable
input are applied to a given quantity of fixed inputs, the total output may initially increase at an increasing
rate and then at a constant rate but eventually increase at diminishing rates. In other words we can say that
the marginal increase in the total output eventually decrease when additional units of variable factor is
applied to a given quantity of fixed factor.
Exp. Let following function represents labour-output relationship in a production process
Q= - L3 + 15L2 +10L
Well for example if L=5 than Q= 5 x 5 x 5 + 15 x 5 x 5 + 10 x 5 = 300
No. of workers Total production Marginal Product Average Product Stage of Production
1 24 24 24
2 72 48 36
Increasing &
3 138 66 46
Constant Return
4 216 78 54
5 300 84 60
6 384 84 64
7 462 78 66
8 528 66 66 Diminishing Return
9 576 48 64
10 600 24 60
11 594 -6 54
Negative Return
12 552 -42 46
Vijay Sharma 66
National Income Concepts:
National income is the money value of the end result of all economic activities in the nation.
While ‘National Income at Factor Costs’ depicts the sum of National Income + factor earnings
i.e. earnings in form of factor payments-wages, salaries, interests, rents, earning of self-employed.
(This sum is further adjusted for the indirect taxes and subsidies)
GNP: Gross National Product

Values of all final goods and services produced in a specific period generally one year. GNP can
also termed as the GNI ( Gross National Income) , the only difference is GNP is estimated on the
basis of product-flows, while GNI is estimated on the bases of money income flow i.e. salaries,
wages, profits, interest etc.
NNP : GNP- Depreciation
Accounting Relations:
GNP = GNI ( Gross National Income measured in money income values)

GDP = GNP- Net Income from Abroad
NNP = GNP – Depreciation
NDP = NNP- Net Income from Abroad
Methods of measuring National Income:
- Net Product Method: Here entire national economy is considered as the aggregation of producing units.
Step1: Estimate the gross value of domestic output in various branches of production
Step 2: Determine the cost of material & services used & depreciation on the physical assets
Step 3: deduct the costs and depreciation to obtain the net value of the domestic output.
- Factor Income Method: Here national economy is considered as combination of factor owners & users.
Under this method the NI is calculated by adding up all the incomes accruing to the basic
factors of production used in producing the national product, these factor of productions are
classified in to Land, Labour, Capital & Organization
National Income: Rents+ Wages+ Interests+ Profits
- Expenditure Method: Here national economy is viewed as the spending units.

First Method: All the money expenditure at the market price are computed & added up together
Private Consumption Expenditure
Direct tax Payments
Payments to non-profit making institutes
Private Savings
Second Method: Values of all the final products disposed are computed & added up
Private Consumer Goods & Services
Public Goods & Services
Private Goods & Services
Net Investment Abroad
Vijay Sharma 67

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MBA-Series VIJAY SHARMA

B.Sc., NET MBA

Few Modern Management Techniques

ERP Enterprise Resource Planning ( Baan, Scala, Oracle, SAP)

SEIRI Maintaining an efficient environment by removing unnecessary objects

Top Management Org. Mission, Objectives, Plan, Strategies, Budget

copyright to Mr. Vijay Sharma

Needs, Wants Products, goods, Values, Costs Exchange &

Inbound Operation Outbound Marketing Services

Business Strategic Planning:

Major Segmentation Variables:

Major Positioning Planks:

Attribute Positioning Benefit Positioning Use/Application Positioning

Product Price Place Promotion

- Define the Problem & Research Objectives

High Involvement Low Involvement

Significant Difference Complex Buying Behavior Varity Seeking Buying Behavior

Consumer Buying Process:

Low Rip-off False Economy Economy

Setting Selecting the Analyze Select the Selecting

Various Pricing Strategies:

Managing Marketing Channels

Necessity of Channels: Channel Functions:

Consumer Marketing Channel

Industrial Marketing Channel

Major Channel Decisions

Type of Intermediaries: No. of Intermediaries: Evaluation Criteria:

- Company Sales Force - Exclusive Distribution - Economic Criteria

Major Retail Types:

Major Types Of Retailing Organisations

Technical Skills C&D Top Mgmr.

Management Skills: Human Skills H Middle Mgmt.

SYSTEM APPROACH OF MANAGEMENT Claimants

Federick Taylor (1856-1912) Mechanical Engineer at Medieval Steels, Philadelphia, USA

Hennery L. Grantt ( 1861-1919) Mechanical Engineer at Medieval Steels, Philadelphia, USA

Henri Fayol ( ) French Industrialist

Fayols’ Principals of Management:

McKinsey ‘s 7 S Approach for Management Analysis:

Strategies Structure Systems Style

Management Process Approach

Applied System Socio-technical Cooperative Social Group Behaviour

Rational Choices Interpersonal

Contingency Managerial 7-S Framework

What kind of organisation structure to have

What kind of people we need and when

Furnish standards of control

- Awareness about the opportunities

Major Kinds of Strategies & Policies :

Industry Analysis & Generic Competitive Strategy :

Ethical Decision Criteria -

Cognitive Dissonance Theory: Incompatibility/inconsistency between two or more attitudes or behaviors.

- Hierarchy of Needs Theory (Maslow’s Theory):

- Theory X & Theory Y:

Satisfaction Motivators No Satisfaction

No Dissatisfaction Hygiene Factors Dissatisfaction

According to Hertzberg the factors, which leads to job satisfaction

- Situational Leadership Theory: A Situational theory which focus on the followers

- Path-Goal Theory: The behavior of a leader is acceptable to his/her subordinates if

- Charismatic Leadership Theory: An extension of attributional theory, where followers make

Model of structures Mechanistic Model

Unfreeze Movement Freeze

Restricting Forces Desired State