Chapter 7 - Functional Areas Or Scope of Management
B-Com Part 2 Management Notes
http://karachiboardnotes.blogspot.com/Chapter 7 - Functional Areas Or Scope of Management
* Production Management
* Nature & Importance of Production Management
* Advantages of Production Planning & Control
* Basic Functions of Marketing
* Stages or Steps in Marketing Research Process
Q.1. Define Production Management. Explain production planning and control. Discuss briefly the various techniques of production control.
OR
What is Production Management? Discuss the functions of production, planning and control.
OR
Define Production, Planning and Control. What are its main steps or elements? Discuss in brief.
Or
What are Production, Planning and Control? What are its objects and advantages? Outline the requirement of effective production control system.
Definition of Production Management
In modern competitive world, if an enterprise and master its production and marketing, it will be able to acquire and maintain a considerable market share.
Production may be define as the conversation of the raw material into finished goods are services through transforming process for purposes of supplying them into the market. Thus, it is process of creation of goods and services. The terms "production and manufacturing" are generally used as synonyms. Production activities are vital for the survival, growth and development of every enterprise.
Production to be successful has to be managed. Hence production management assumed great importance in every organisation.
Some important definition of production management may be given as follows:
Elwood Buffa
Production management deals with decision-making related to production process so that the resulting goods and services are produced according to the specifications in the amounts and by the schedule demanded and at minimum cost.
A.W.Field
Production management is the process of planning and regulating the operations of that part of enterprise which is responsible for actual transformation of materials into finished products.
Major Activities of Production Management
Production management deals with manpower and physical resources and facilities for transforming inputs into outputs. Production Management involves three major activities or fucntions:
1. Planning of Production Inputs
It includes determining of necessary inputs including raw materials, labour, electrical power, machines and equipments, facilities etc., required for production work.
2. Installation of the Necessary Inputs
It includes taking decisions with regard to designing of the plant, choice of the best machines and arrangement of other necessary facilities so that the production work can be started.
3. Co-Ordination and Control of the Production Process
An effective production system involves co-ordination among the various activities and affairs within the production department itself and also integration of its activities and decisions with other departments of the enterprise, such as finance, marketing, purchases, personnel, according and research and development. It also includes determining the necessary sequence of operations, preparing work schedules and assigning work to specific employees, so as to ensure smooth production operations. Control includes ensuring that the actual production performance meets the predetermined production plans and goals and also providing for proper feedback for taking corrective action.
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Q.2. Describe the nature & importance of production management?
Nature and Importance of Production Management
Production management has become an important now a day that it is treated to be a separate, independent functional area of management.
Production management has assumed its importance because of the following reason:
1. It is the foundation for earning profits - by producing goods or services and selling them into the market.
2. It ensures that produced goods or services are of desired quality, in required quantity and according to time-schedules.
3. It facilitates optimum inventory level.
4. It ensures proper co-ordination and necessary control, which are required for adequate, time and cost-conscious production.
5. It ensures coping with the changes in demands in the market and maintains stability in the production department.
Production Planning and Control
Production Planning, Planning is deciding in advance what to do, how to do it, when to do it, who is to do it. Then, production planning involves decision making in various production aspects, such as designing of production plans, programmes and goals, selection of production process, plant layout, provision of physical facilities (like material, tools, machines, equipments etc.) and preparation of time-schedules.
"Lawrence Bethel Observes" Production planning takes a given product or line of products and organizes in advance the manpower materials, machines and money required for a predetermined output in a given period of time. It starts with a product concept capable of being manufactured, a general idea of the process by which it can be made and a sales forecast for the descernible future.
Production Control
Control means ensuring that actual performance meets the predetermined standards. Then, "production control" refers to a set of steps for verifying whether production operations occur in conformity with the production plan adopted. It guides and directs the flow of production so that the goods of desired quality are manufactured at the right time and it maximum possible economic manner. It may be noted that "production control" is frequently used synonymously with "production planning and control" with planning being implied.
Spriegel and Lansburgh define production control as
the process of planning production in advance of operations, establishing the exact route of each individual item, part or assembly, setting, starting and finishing dates for each important item, assembly, and the finished products and releasing the necessary orders as well as initiating the required follow-up to effective the smooth functioning of the enterprise.
James Lundy says
Basically, the production control function involves the co-ordination and integration of the factors of production for optimum efficiency. The principal objective of production control is to facilitate the task of manufacturing and see that everything is being done strictly in accordance with the plan. It co-ordinates and integrates the factors of production for optimism and directs and checks the course and progress of work.
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Q.3. Describe the advantages of production planning & control?
Advantages of Production Planning and Control
Production planning and control yields the following main advantages,
1. Avoidance of Rush Orders
Production is well planned and its time aspects are well controlled. Therefore, production control reduces the number of risk-orders and overtime work on plant.
2. Avoidance of Bottlenecks
The incomplete work does not get accumulated because production control maintains an even flow of work.
3. Cost Reduction
Production control programmes minimizes the idleness of men and machines, keeps in process inventories at a satisfactory level, leads to a better control of raw materials inventory, reduces costs of storage and materials handling, helps in maintaining quality and containing rejection and thus reduces unit cost of production.
4. Effective Utilization of Resources
It reduces the loss of time by the workers waiting for materials and makes most effective use of equipments.
5. Co-Ordination
It serves to co-ordinate the activities of plant and results in a concerted effort by workmen.
6. Benefits to Workers
Adequate wages, stable employment, job Security, improved working conditions, increased personal satisfaction, high morale.
7. Efficient Service to Customers
It ensures better service to the customers by enabling production to be conducted in accordance with the time schedules and therefore deliveries are made on promised dates.
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Q.4. What are the Basic functions of Marketing?
Basic Functions of Marketing
The marketing process performs certain activities as the goods or services move from producer to consumer. Every firm does not perform all these activities or jobs. However, any company that wants to operate its marketing system successfully must carry them out. The following marketing tasks have been recognized for a long time.
1. Selling
It is core of marketing. It is concerned with the persuasion of prospective buyers to actually complete the purchase of an article. Setting pays an important part in realizing the ultimate aim of earning profit. Selling is enhanced by means of personal selling, advertising, publicity and sales promotion.
2. Buying
It involves what to buy, what quality, how much, from whom, when and at, what price. People in business buy to increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price. The products that the retailers buy for resale are determined by the need and preferences of their customers.
3. Transportation
Transport is the physical means whereby goods are moved from the places where they are produced to those they are needed for consumption. Transportation is essential from the procurement of raw materials to the delivery of finished products to the customers places. Marketing relies mainly on railroads, tracks, waterways, pipelines and air transport. The type of transportation is chosen on several consideration such as suitability, speed and cost.
4. Storage
It involves the holding of goods in proper condition from the time they are produced until they are needed by consumers (in case of finished products) or by the production department (in case of raw materials and stores). Storing protects the goods from deterioration and helps in carrying over surplus for feature consumption or use in production. Goods may be stored in various warehouses situated at different places. Storing assumes greater importance when production is seasonal or consumption may be seasonal. Retail firms are called "stores".
5. Standardization and Grading
The other activities that facilitate marketing are standardization and grading. Standardization means establishment of certain standards or specifications for products based on intrinsic physical qualities of any commodity. This may involved quantity (weight or size) or it may involve quality (colour, shape, appearance, material, taste, sweetness etc). Government may also set some standards e.g., in case of agricultural products. A standard conveys a uniformity of the products.
"Grading means classification of standardized products into certain well-defined classes or groups." It involves the division of products into clauses made up of unit processing similar characteristics of size and quality. Grading is very important for "raw material" (such as fruits and cerials), mining products" (such as coal, iron-ore and mangenese) and "forest products" (such as timber). Branded consumer products may bear grade levels, - A B C.
6. Financing
It involves the use of capital to meet financial requirements of the agencies dealing with various activities of marketing. The services of providing the credit and money needed to meet the cost of getting merchandise into the hands of the final user is commonly referred to as finance, function in marketing. In marketing, finances are needed for working capital and fixed capital, which may be secured from three sources - onward capital, bank loans and advances, and trade credit (provided by the manufactures to wholesaler and by the wholesaler to the retailers).
7. Risk Taking
Risk means lose due to some unforeseen circumstances in future. Risk-bearing in marketing refers to the financial risk inherent in the ownership of goods held for an anticipated demand, including the possible losses due to a fall in price and the losses from spoilage, depreciation, obsolescence, fire and floods or any other loss that may occur with the passage of time. From production of goods to its selling stage, many risks are involved due to changes in marker conditions, natural causes and human factors. Changes in fashions or interventions also cause risks. Legislative measures of the government may also cause risks.
8. Market Information
The only sound foundation, on which marketing decisions may be based, is correct and timely market information. Right facts and information reduce the aforesaid risks and thereby result in cost reduction. Business firms collect, analyze and interpret facts and information from internal sources, such as records, sales people and findings of the market research department. They also seek facts and information from external sources, such as business publications, government reports and commercial research firms. Retailers need to know about sources of supply and also about customers buying motives and buying habits. Manufacturers need to know about retailers and about advertising media. Firms in both these groups need information about competitors activities and about their markets. Even ultimate consumers need market information about availability of products, their quality standards, their prices, and also about the after-sale service facility Common sources for consumers are sales people, media advertisements, colleagues etc.
It may be noted that in addition to the mentioned jobs, the marketing manager is also involved in product planning, pricing of products, selection of distribution channels, framing of marketing objectives, environmental scanning, target market selection, market programming and developing marketing strategy.
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Q.5. Describe the various stages or steps in marketing research process.
Stages or Steps in Marketing Research Process
Marketing research exercise may take many forms but systematic enquiry is a feature common to all such forms. Being a systematic process. Though it is not necessary that all research processes would invariably follow a given sequence, yet marketing research aften follows a generalized pattern, which can be broken down and studied as sequential stages stages. The various stages or steps in the marketing research process may be discussed as follows:
1. Identification and Defining of the Problem
The market research process begins with the identification of a problem faced by the company. The clear cut statement of problem may not be possible at the very outset of research process because often only the symptoms of the problems are apparent at that stage. Then, after some explanatory research, clear definition of the problem is of crucial importance in marketing research because such research is a costly process involving time, energy and money. Clear definition of the problem helps the researcher in all subsequent research efforts including setting of proper research objectives, the determination of the techniques to be used and the extent of information to be collected. It may be noted that the methods of explanatory research popularly in use are : survey of secondary data, experience survey or pilot studies i.e. studies of a small initial sample. All this is also known as preliminary investigation.
2. Statement of Research Objectives
After identifying and defining the problem with or without explanatory research, the researcher must make a formal statement of researcher objectives. Such objectives may be stated in qualitative or quantitative terms and expressed as research questions, statement or hypothesis. For example, the research objective. "To find out the extent to which sales promotion schemes affected the sales volume" is a research objective expressed as a statement. On the other hand, a hypothesis is a statement that can be refuted or supported by empirical findings. The same research objective could be stated, "To test the proposition that sales are positively affected by the sales promotion schemes undertaken this winter." Example of another hypothesis may be. "The new packaging pattern has resulted in increase in sales and profit." Once the objective or the hypothesis are developed, the researcher is ready to choose the research design.
3. Planning the Research Design or Designing the Research Study
After defining the research problem and deciding the objectives, the research design must be developed. A research design is a master plan specifying the procedure for collecting and analyzing the needed information. It represents a framework for the research plan of action. The objectives of the study are included in the research design to ensure that data collected are relevant to the objectives. At this stage, the researcher should also determine the type of sources of information needed, the data collection method (e.g. survey or interview), the sampling methodology and the timing and possible costs of research.
4. Planning the Sample
Sampling involves procedures that use a small number of items or parts of the population (total items) to take conclusion regarding the population. Important questions in this regard are; who is to be sampled as a rightly representative lot? Which is the target - population? What should be the sample size - how large or how small? How to select the various units to make up the sample?
5. Data Collection
The collection of data relates to the gathering of facts to be used in solving the problem. Hence, methods of marketing research are essentially methods of data collection. Data can be secondary, i.e. collected from concerned reports, magazines and other periodicals, especially written articles, government publications, company publications, books etc. Data can be primary i.e. collected from the original base through empirical research by means of various tools. There can be broadly two types of sources - (i) Internal sources - existing within the firm itself, such as accounting data, salesmen's reports etc. (ii) External sources - outside the firm.
6. Data Processing and Analysis
Once data have been collected these have to be converted into a format that will suggest answer to the initially identified and defined problem. Data processing begins with the editing of data and its coding. Editing involves inspecting the data collection - forms for omission, legibility and consistency in classification. Before tabulation, responses need to be classified into meaningful categories. The rules for categorizing, recording and transferring the data to "date storage media" are called codes. This coding process facilities the manual or computer tabulation. If computer analysis is being used the data can be key-product and verified.
7. Formulating Conclusions, Preparing and Processing the Report
The final stage in the marketing research process is that of interpreting the information and drawing conclusion for use in managerial decision. The research report should clearly and effectively communicate the research findings and need not include complicated statement about the technical aspect of the study and research methods. Often the management is not interested in details of research design and statistical analysis but instead in the concrete findings of the research. If need to the researcher may bring out his appropriate recommendation or suggestions in the matter. Researchers must make the presentation technically accurate, understandable and useful.
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