Tag: Principles

  • Why Project Life Cycle is Make you know About Everything?

    Why Project Life Cycle is Make you know About Everything?

    Project Life Cycle: A Life Cycle or Lifecycle is a progression of changes that a thing or practical movement changes or develop through from the earliest starting point of the life, creation, or framework until’ the very end including propagation, at project management. The Project Life Cycle is a meaning and phase of the project’s reformist work measures from the earliest starting point to the furthest limit of the project. The Project Management essay Life Cycle comprises of the project inception, arranging, usage, and execution controlling and checking, and close-out movement.

    Here is the article to explain and discuss, Does the Project Life Cycle is Make you know About Everything.

    Each project has certain periods of advancement. An away from of these stages permits directors and chiefs to keep up control of the project all the more proficiently. By definition, a project has a start and an end and goes through a few periods of improvement known as life cycle stages.

    These stages shift relying on the business included however all follow similar essential advances. Realize that the project life cycle for each project may contrast, in both the number of stages it might have and the detail inside every one of these stages, at project management.

    Principles or phases periods of the Project life cycle:

    The five principle and phases periods of the project life cycle are as per the following:

    • Idea and Start-UP: This stage is the place where the project destinations characterize and the applied parts of the project concur upon. This might be the stage where an issue distinguishes and potential arrangements recommend.
    • Definition: Once the project goals have been obviously characterized then the examination of the arrangements is led as far as dangers, monetary responsibility, and advantages. The extent of work presently characterizes in detail.
    • Planning and Arranging: This stage is the place where the project separates into sensible territories of work and arrange regarding time, cost, and assets. This is a ceaseless cycle and will reach out all through the execution period of the project.
    • Execution and strategy: During this stage, the work actualizes, control, and check. The strategy of a plan of action or policy design to achieve a major or overall aim.
    • Success and Close-OUT: The last period of the project life cycle is close-out and deactivation, where assets reassign, the project gives over and the post-project survey is done.

    It is imperative to guarantee the project life cycle utilize on your project is suitable to the work being completed and part into unmistakable, phases and reasonable stages. The project life cycle additionally considers the door technique to utilize, most use in project management. This an attempt and trie technique for conveying projects on schedule, inside spending plan, and to the normal quality targets. At each stage, endorsement by and large needs from outside the project group before continuing to the following stage.

    Phases or Periods of a Project Life Cycle:

    A project is a grouping of exercises that has an unequivocal beginning and finish, a recognizable objective, and an incorporated arrangement of complex yet associated connections. Project Life Cycle comprises of successive stages through which projects go through, their phases very useful for project management. What do Only Men know About the Project Manager Role? The stages are significant in arranging a project since they give a system for planning, labor, asset distribution, booking project achievements, project audits, and so on All projects experience the accompanying stages whether large or little.

    Project Idea/Conception:

    A thought concerning intercession in a particular region to address and distinguish an issue create or shape. Wellsprings of thoughts incorporate;

    • Market request where one might be confronting expanding request in this way turning into an issue.
    • Mechanical changes-this powers an association to change to utilize the innovation.
    • Regular disasters like fire, floods, avalanches, dry season, and so on.
    • Asset accessibility utilizes the accessible assets.
    • Political contemplations.
    • Need to profit essential prerequisites or necessities to a local area.
    Project Identification:

    After the origination of thoughts, potential projects emerging from the thoughts solidified above are distinguished. The data might be caught as a proposition or recommendations and submitted to a specialist or office for thought and target judgment to evaluate the potential and support for the mediation before the thought goes to the following stage in the cycle.

    Project Preparation:

    Includes a more exhaustive and definite assortment of information and data on the proposed project. This is typically done by individuals with specialized and logical abilities in meeting the objective gainfully. The goal of the project characterizes and elective arrangements portray. Its normally led by individuals with specialized and scientific abilities to decide if the project can be accomplished and to set up whether the project is achievable. Practicality includes feasibility of the project for example expenses of the project and advantages of the project.

    The plausibility contemplates include:

    • Monetary possibility.
    • Financial practicality.
    • Specialized plausibility.
    • Climate plausibility.
    • Market plausibility.
    • Lawful plausibility and Social achievability.
    Project Appraisal:

    This includes the further far-reaching and methodical examination of the proposed projects by an autonomous group of specialists in an interview with the partners of the project, to survey whether the proposition support before a lot of cash submits. The impacts of the project on the association and society research and archive. In light of the examination, a choice makes on if to proceed with the project where a basic view finishes by a group of free specialists who do not engage with possibility contemplates done before. This gives a chance to rethink each part of the project before reserves raise submit.

    Project Selection:

    From the examination, a few projects might discover to be advantageous. In any case, not all feasible projects can actualize. We, accordingly, need to pick one or a couple of dependent on accessible assets and the needs of the investors. Where all projects are practical we may likewise require to focus on them arranged by conceivable usage. This is because of the shortage of assets for project execution

    Arrangement and Financing:

    When the project to actualize chose and settle upon, the following stage is to haggle for financing and other related angles for example conditions for awards, reimbursement period, loan fees, beauty period, the progression of assets, commitments from partners, and so on This finishes into a limiting record for all concerned.

    Making arrangements for Implementation:

    This is done before the last usage of the project. This stage includes all partners including implementers, recipients, financing offices. It empowers the Project Manager to address issues like the project destinations, the extent of the project, monetary courses of action, usage plans, project climate, the probability of changes to the plan, checking, and assessment plans, and so forth It empowers the meaning of goals, yields, inputs, exercises that will go into the project, the pointers, methods for the check, and presumptions of the project. The main results of such arranging incorporate time plans. The financial plan submitted for different exercises and quality plans. It is additionally critical to concoct project log outlines (legitimate equation) for example PPM (project arranging grid), particularly for the formative projects.

    Project Implementation:

    It is the most pivotal stage for most projects since project exercises are done at this stage. Numerous projects that bomb ordinarily do as such at this stage. Observing progress and detailing are urgent. Usage view as a ‘small scale cycle’ inside the project life cycle. It has three stages: Investment, improvement, and the full advancement stage.

    • Speculation period: It can require 1-3 years to rely upon the project. Significant ventures like purchasing capital things, stockrooms, and so on of the project attempted.
    • Advancement period: This happens when creation develops and the genuine exercises are being finished.
    • Full advancement period: This arrives at when creation gets and proceeds until the project closes.
    Checking and Reporting:

    This is an on-going action during usage. Observing is the assortment of information on project usage. The point is to guarantee that the exercises continue as indicated by the plan. Any issues can effectively identify and a remedial move makes. It very well may finish by recipients, executing staff, administrative staff, and the Project Management group. Correspondence channels ought to be clear and simple to permit straightforwardness and responsibility of those included.

    Assessment:

    It includes a precise audit or assessment of the component of accomplishment and disappointment in projects. The data gathered from checking is the fundamental contribution to the assessment. Is directed at three phases:

    • Ex-Ante assessment done before execution done for example abilities, assets required.
    • Simultaneous/continuous Evaluation-done during the interaction of users.
    • Ex-Post Evaluation-done toward the finish of the usage for example What has been accomplished? What isn’t accomplished? Why we didn’t accomplish it? and so forth.

    Characteristics of Project Life Cycle:

    The project life cycle characterizes the stages that associate the start of a project with its end. For instance, whenever an association recognizes a chance to which it might want to react; it will regularly approve an achievability study to choose whether it ought to attempt the project. How to become a Product Manager and what does a do they? The project life cycle definition can help the project director explain whether to treat the possibility concentrate as the primary project stage or as a different, independent project. Where the result of a particularly fundamental exertion isn’t plainly recognizable; it is ideal to regard such endeavors as a different project. The periods of a project life cycle are not equivalent to the Project Management Process Groups.

    Why Project Life Cycle is the Only Skill You Really Need?

    The change starting with one stage then onto the next inside a project’s life cycle by and large includes, and typically characterized by, some type of innovation move or handoff. Expectations from one stage typically evaluate for fulfillment and exactness and endorsed before work begins the following stage. Notwithstanding, it isn’t remarkable for a stage to start before the endorsement of the past stages expectations when the dangers included consider worthy. This act of covering stages, typically done in succession, is an illustration of the utilization of the timetable pressure method called optimizing.

    There is no single most ideal approach to characterize an ideal project life cycle. A few associations have set up strategies that normalize all projects with a solitary life cycle; while others permit the project supervisory group to pick the most suitable life cycle for the group’s project. Further, industry basic practices will frequently prompt the utilization of a favored life cycle inside that industry.

    Project life cycles by and large characterize:
    • What specialized work to do in each stage; for instance, in which stage should the engineer’s work be performed?
    • At the point when the expectations are to create in each stage and how every deliverable survey, check and approve.
    • Who associated with each stage; for instance, simultaneous designing necessitates that the implementers engage with prerequisites and plan.
    • The most effective method to control and favor each stage.
    • Project life cycle portrayals can be extremely broad or exceptionally point by point. Profoundly point by point portrayals of life cycles can incorporate structures, diagrams, and agendas to give construction and control.
    Most project life cycles share a few basic characteristics:

    Stages are by and large successive and normally characterized by some type of specialized data move or specialized part handoff. Cost and staffing levels are low toward the beginning, top during the transitional stages, and drop quickly as the project makes an inference.

    The degree of vulnerability is most elevated and, consequently, the danger of neglecting to accomplish the targets is most prominent toward the beginning of the project. The conviction of finish, by and large, improves as the project proceeds.

    The capacity of the partners to impact the last characteristics of the result of the project and the last expense of the project is most noteworthy toward the beginning and gets logically lower as the project proceeds. A significant supporter of this marvel is that the expense of changes and amending blunders by and large increments as the project proceeds.

    The Hidden Mystery Behind Project Life Cycle:

    Albeit many project life cycles have comparative stage names with comparative expectations, barely any life cycles are indistinguishable. Some can have four or five stages, however, others may have at least nine. Single application zones know to have huge varieties. One association’s product improvement life cycle can have a solitary plan stage; while another can have separate stages for the compositional and definite plans. Subprojects can likewise have particular project life cycles.

    For instance, a compositional firm employed to plan another place of business is first associated with the proprietor’s definition stage while doing the plan, and in the proprietor’s usage stage while supporting the development exertion. The planner’s plan project, in any case, will have its own arrangement of stages from the calculated turn of events, through definition and execution, to a conclusion. The planner can even treat planning the office and supporting the development as discrete projects, each with its own arrangement of stages.

    Why Project Life Cycle is Make you know About Everything Image
    Why Project Life Cycle is Make you know About Everything? Image from Pixabay.
  • Corporate Governance (CG): Meaning, Definition, Principles, and Need

    Corporate Governance (CG): Meaning, Definition, Principles, and Need

    What does mean Corporate Governance (CG)? Corporate governance as a subject, along with its models, has been in existence since the time businesses came into being. It is a set of rules and regulations according to which the behavior of a company is affected. This explains the article of Corporate Governance (CG) and their concept, Meaning, Definition, Need, and Principles. By Wikipedia, Corporate governance is the collection of mechanisms, processes, and relations by which corporations control and operate. Often it views as a statutory requirement guided through the regulatory body that concern with company affairs.

    Here are read and learn; Corporate Governance (CG): Meaning, Definition, Principles, and Need.

    Corporate governance (CG) sees, until recently, as limited to listed companies that needed to comply with disclosure norms to protect investor rights, especially those of minority shareholders. As long as management and investors were balancing the affairs of the business in a congenial atmosphere, there was no special attention being diverted to this subject.

    Another aspect of it is that it also concern with the relationships which exist among different stakeholders of the company and with the goals which the company has in view. Also, Shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large are the main stakeholders of a business.

    Gabrielle O’Donovan defines corporate governance as an internal system encompassing policies, processes, and people, which serves the needs of shareholders and other stakeholders, by directing and controlling management activities with good business know-how, objectivity, accountability, and integrity. Sound CG is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes.

    Definition of Corporate Governance (CG):

    Corporate governance is a collective term encompassing various issues concerning top management, the board of directors, shareholders and the corporate stakeholders. The following definition of corporate governance below are;

    “A system by which business corporations direct and control. Corporate governance structures specify the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company’s objectives are set and the means of attaining those objectives and monitoring performance.”

    Report of SEBI committee (India) on Corporate Governance defines corporate governance as;

    “The acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and their role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.”

    CG has several areas of discussion such as the effect of a system of corporate governance in economic efficiency whereby more emphasis has to be put on shareholder’s welfare.

    Principles of Corporate Governance (CG):

    Several principles underpin effective corporate governance. Honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization forms an essential part of CG. Also, the most important part of corporate governance is to see whether the management has been able to develop a model that is in line with the standards of the corporate participants.

    In addition to this, they must evaluate this model from time to time to ensure that it is effective. Hence the management should do their work honestly and ethically, particularly concerning conflicts of interest and disclosure in financial reports.

    Commonly accepted principles of corporate governance include:

    1] Disclosure and transparency Principles:

    Transparency means the quality of something which enables one to understand the truth easily. In the context of CG, it implies an accurate, adequate and timely disclosure of relevant information about the operating results, etc. of the corporate enterprise to the stakeholders. Also, Transparency is the foundation of corporate governance; which helps to develop a high level of public confidence in the corporate sector.

    For ensuring transparency in corporate administration, a company should publish relevant information about corporate affairs in leading newspapers, e.g., on a quarterly or half-yearly or annual basis. As well as, Organizations should simplify and make publicly known the roles and responsibilities of board; and, management to provide shareholders with a level of accountability.

    They should also implement measures to independently validate and safeguard the integrity of the company’s financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

    2] Accountability Principles:

    Accountability is a liability to explain the results of one’s decisions taken in the interest of others. In the context of CG, accountability implies the responsibility of the Chairman, the Board of Directors and the chief executive for the use of the company’s resources (over which they have authority) in the best interest of the company and its stakeholders.

    3] Independence Principles:

    Good corporate governance requires independence on the part of the top management of the corporation i.e. the Board of Directors must be strong non-partisan body; so that it can take all corporate decisions based on business prudence. Without the top management of the company being independent; good CG is only a mere dream.

    4] In other words:

    The following are;

    • Rights and equitable treatment of shareholders: the company should respect the rights of shareholders; and, help shareholders to implement those rights. They can help shareholders exercise their rights by effectively communicating understandable information; and, accessible and encouraging shareholders to participate in general meetings.
    • Interests of other stakeholders: Organizations should be aware of the legal and other obligations that all legitimate stakeholders have.
    • Integrity and ethical behavior: Ethical and responsible decision making is not only important for public relations; but, it is also a crucial part of risk management and avoiding lawsuits. businesses should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that reliance by a company on the integrity and ethics of individuals is bound to eventual failure. Because of this, many organizations establish Compliance and Ethics Programs to minimize the risk that the firm steps outside of ethical and legal boundaries.
    • Role and responsibilities of the board: The board needs a variety of skills and understanding to be able to deal with various business issues and have the aptitude to review and challenge management performance. It needs to be of adequate size and have an apt level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors.

    Need for Corporate Governance (CG):

    As a result of globalization and the increasing complexity of the business; there is a greater reliance on the private sector as the engine of growth in developed and developing countries. Organizations do not exist in a vacuum; they rather interrelate with several interest groups, known as stakeholders.

    These stakeholders include shareholders, governments, regulatory bodies, creditors and the general public. Also, Stakeholders are impacted by the activities of companies. In this regard, and the context of this study, adequate and effective corporate governance disclosure becomes relevant to investors and other stakeholders from several standpoints.

    The need for corporate governance highlight by the following factors:

    1] Wide Spread of Shareholders:

    Today a company has a very large number of shareholders spread all over the nation and even the world; and, a majority of shareholders being unorganized and having an indifferent attitude towards corporate affairs. The idea of shareholders’ democracy remains confined only to the law and the Articles of Association; which requires a practical implementation through a code of conduct of CG.

    2] Changing Ownership Structure:

    The pattern of corporate ownership has changed considerably, in the present-day-times; with institutional investors (foreign as well Indian) and mutual funds becoming the largest shareholders in large corporate private sectors. These investors have become the greatest challenge to corporate management; forcing the latter to abide by some established code of corporate governance to build up its image in society.

    3] Corporate Scams or Scandals:

    Corporate scams (or frauds) in the recent years of the past have shaken public confidence in corporate management. The event of the Satyam Scam or scandal, Harshad Mehta scandal; which is perhaps, one biggest scandal, is in the heart and mind of all, connected with corporate shareholding or otherwise being educated and socially conscious. The need for CG is, then, imperative for reviving investor’s confidence in the corporate sector towards the economic development of society.

    4] Greater Expectations of Society of the Corporate Sector:

    Society of today holds greater expectations of the corporate sector in terms of reasonable price, better quality, pollution control, the best utilization of resources, etc. To meet social expectations, there is a need for a code of CG; for the best management of the company in economic and social terms.

    5] Hostile Take-Overs:

    Hostile takeovers of corporations witnessed in several countries put a question mark on the efficiency of the management of take-over companies. These factors also point out the need for corporate governance, in the form of an efficient code of conduct for corporate management.

    6] Huge Increase in Top Management Compensation:

    It has been observed in both developing and developed economies that; there have been a great increase in the monetary payments (compensation) packages of top-level corporate executives. There is no justification for exorbitant payments to top-ranking managers, out of corporate funds; which are property of shareholders and society. This factor necessitates CG to contain the ill-practices of top management of companies.

    7] Globalization:

    The desire for more and more Indian companies to get listed on international stock exchanges also focuses on a need for CG. Also, CG has become a buzzword in the corporate sector. There is no doubt that the international capital market recognizes only companies well-managed according to standard codes of corporate governance.

    Corporate Governance (CG) Meaning Definition Principles and Need Image
    Corporate Governance (CG): Meaning, Definition, Principles, and Need, Image from Pixabay.

    So, this oversight and accountability combined with the efficient use of resources improved access to lower-cost capital; and, increased responsiveness to societal needs and expectations leads to improved corporate performance. As well as, Good corporate governance helps to bridge the gap between the interests of those that a company, by increasing investor confidence and lowering the cost of capital for the company.

    Furthermore, it also helps in ensuring company honors, its legal commitments, and forms value-creating relations with stakeholders. Companies with better corporate governance enjoy a higher valuation. Good corporate governance, resulting in better decisions at all levels of the organization, not at top-management and board levels; but, also in the better performance of the organization.

    Reference:

    • en.wikipedia.org/wiki/Corporate_governance
    • www.yourarticlelibrary.com/corporate-governance/what-is-corporate-governance/99690
    • www.mbaknol.com/business-ethics/corporate-governance-concept-need-and-principles/
    • www.yourarticlelibrary.com/business/corporate-governance-business/corporate-governance-in-india-concept-needs-and-principles/69978
  • Plant Layout: Meaning, Definition, Objectives, and Principles

    Plant Layout: Meaning, Definition, Objectives, and Principles

    Plant layout means the disposition of the various facilities (equipment, materials, manpower, etc.) within the area of the site selected. This article explains the Plant layout – with their concepts – meaning, definition, objectives, and principles. Plant layout begins with the design of the factory building and goes up to the location and movement of work. All the facilities like equipment, raw materials, machinery, tools, fixtures, workers, etc. are given a proper place.

    Here is the article explains – Plant Layout: Meaning, Definition, Objectives, and Principles.

    Plant layout is the plan for arranging the physical facilities and manpower requires to manufacture a product to utilize them effectively. It is a plan for effective utilization of facilities for the manufacture of products – involving a most efficient and economical arrangement of machines, materials, personnel, storage space, and all supporting services, within available floor space.

    Meaning of Plant layout:

    They also know as facilities design. Plant layout constitutes planning of the amount of space required for all kinds of activities in an industry, i.e., equipment, machinery, furniture and fittings, offices, restrooms, warehouses, etc. It is a “Technique of locating different machines and plant services within the factory so that the greatest possible output of high quality at the lowest possible total cost can be available”. Also, The primary objective of plant layout is to minimize the movement of men and materials in the plant.

    Definition of Plant layout:

    More definition of plant layout as follows:

    “Plant layout is a plan of optimum arrangement of facilities including personnel, equipment’s, storage space, material handling equipment and all other supporting services along with the decision of best structure to contain all these facilities.”

    In the words of James Lundy,

    “It identically involves the allocation of space and the arrangement of equipment in such a manner that overall costs are minimized.”

    According to Mo Naughton Waynel,

    “A good layout results in comforts, convenience, appearance, safety, and profits. A poor layout results in congestion, waste, frustration, and inefficiency.”

    It is very complex as it involves concepts relating to such fields as engineering, architecture, economics, and business administration. Since a plant layout, when properly designed, encompasses all production’ and service facilities and provides for the most effective utilization of men, with materials and machines constituting the process, is a master blueprint for coordinating all operations.

    The objective of a Good Plant Layout:

    The principal objective of a proper plant layout is to maximize production at the minimum of the costs. Also, This objective should keep in mind while designing a layout for a new plant as well as while making the necessary changes in the existing layout in response to changes in management policies and processes, and techniques of production. Besides, it must satisfy the needs of all people associated with the production system, i.e. workers, supervisors, and managers.

    If a layout is to fulfill this goal, it should plan with the following clear objectives in mind:

    • There is the proper utilization of cubic space (Le. length, width, and height). Maximum use of volume available should make. For example, conveyors can be run above head height and used as moving work in progress, or tools and equipment can suspend from the ceiling. Also, The principle is particularly true in stores where goods can store at considerable heights without inconvenience.
    • Also, the Waiting time of the semi-finish products minimize.
    • Working conditions are safer, better (well-ventilated rooms, etc.) and improve.
    • Material handling and transportation minimize and efficiently control. For this, one has to consider the movement distances between different work areas – as well as the number of times such movements occur per unit period.
    • The movements made by the workers are minimizing, and.
    • Also, Suitable spaces are allocating to production centres.
    More Objectives:
    • Plant maintenance is simpler.
    • There increases flexibility for changes in product design and future expansion. It must be capable of incorporating, without major changes, new equipment to meet technological requirements or to eliminate waste.
    • A good layout permits materials to move through the plant at the desired speed with the lowest cost.
    • There are increasing productivity and better product quality with reduced capital cost.
    • Boosting up employee morale by providing employee comforts and satisfaction.
    • The workers should so arrange that there is no difficulty in supervision, coordination, and control. There should be no “hiding-places” into which goods can mislay. Goods – raw materials and ready stocks – must be readily observable at all times. Also, They will reduce the pilferage of material and labor.

    It should note here that the above-stated objectives of plant layout are laudable in themselves. It is often difficult to reconcile all of them in a practical situation. And as such, the highest level of skill and judgment are requiring to exercise. For this, the close association between the entrepreneurs and experienced engineers is a must.

    Plant Layout Meaning Definition Objectives and Principles
    Plant Layout: Meaning, Definition, Objectives, and Principles.

    Principles of Plant layout:

    While designing the plant layout – the following principles must keep in view:

    • Movement: Materials and labor should move over minimum distances – saving cost and time of transportation and material handling.
    • Space Utilization: All available cubic space should effectively utilize – both horizontally and vertically.
    • Flexibility: Layout should be flexible enough to be adaptable to changes required by expansion or technological development.
    • Interdependence: Interdependent operations and processes should locate near each other; to minimize product travel.
    • Overall Integration: All the plant facilities and services should fully integrate into a single operating unit – to minimize the cost of production.
    • Safety: There should be an in-built provision in the design of the layout – to provide for the comfort and safety of workers.
    • Smooth Flow: The layout should so design to reduce work bottlenecks and facilitate the uninterrupted flow of work throughout the plant.
    • Economy: The layout should aim at affecting the economy in terms of investment in fixed assets.
    • Supervision: A good layout should facilitate the effective supervision of workers.
    • Satisfaction: A good layout should boost up employee morale – by providing them with maximum work satisfaction.
  • Process Costing: Meaning, Characteristics, and Objectives

    Process Costing: Meaning, Characteristics, and Objectives

    Process Costing is a method of costing used to ascertain the cost of a product at each process or stage of manufacture. You will be able to understand the Process Costing based on the points given to them; 1) introduction, 2) meaning of process costing, 3) definition of process costing, 4) characteristics of process costing, 5) objectives of process costing, and 6) principles of process costing. In this method, the costs of materials, wages and overheads are accumulated for each process separately, for a gives period, and then carrying forward cumulatively from one process to the next process till the last process complete.

    This article explains the topic of Process Costing: Introduction, Meaning, Definition, Characteristics, Objectives, and Principles.

    Process costing is probably the most widely used method of cost ascertainment. Records are also maintaining to account for process losses. These losses may be normal or abnormal. Separate accounting is done for normal and abnormal losses, opening and closing work-in-progress and inter-process profits, if any. This method of costing used in those industries where mass production of identical units undertakes continuously and finish products are subject to several production stages call processes before completion.

    The system of process costing is suitable for industries involving continuous production of the same product or products through the same process or set of processes. It is in use in the plant producing paper, rubber products, medicines, chemical products. It is also very much common in flour mill, bottling companies, canning plants, breweries, etc.

    Meaning of Process Costing:

    They refer to a method of accumulating the cost of production by the process. It uses in mass production industries producing standard products like steel, sugar, chemicals, oil, etc. In all such industries, goods produced are identical and all factory processes are standardizing. Output in such industries consists of like units and every unit of the product undergoes a similar operation in the process.

    So it implies that the same cost of material, labor and overhead charges to each unit of the production process. Under this method, costing an individual unit is impossible. It so-calls because under process costing cost of the product ascertain process-wise.

    They also know as “Continuous Costing” because industries that adopt process costing undertake the production of goods continuously. They also know as “Average Costing” because the cost per unit of each process ascertains by averaging the expenditure incurred on that process during a period by the number of units produced in that process during the period.

    Definition of Process Costing:

    After their meaning, Process Costing defines by different scholars as under:

    According to Wheldon,

    “Process costing is a method of costing used to ascertain the cost of the product at each process, operation or stage of manufacture.”

    According to the Institute of Cost and Management Accountants, London,

    “Process costing is that form of operation costing which applies where standardized goods are produced.”

    Characteristics or Features of Process Costing:

    It is that aspect of operation costing which uses to ascertain the cost of the product at each process or stage of manufacture. Where processes are carrying on having one or more of the following characteristics of Process costing:

    • Production over having a continuous flow of identical products except. Where plant and machinery are shut-down for repairs, etc.
    • Clearly defined process cost centers and the accumulation of all costs (materials, labor, and overheads) by the cost centers.
    • The maintenance of accurate records of units and part units produced and cost incurred by each process.
    • The finished product of one process becomes the raw materials of the next process or operation and so on until the final product obtains.
    • Avoidable and unavoidable losses usually arise at different stages of manufacture for various reasons. Treatment of normal and abnormal losses or gains is to study in this method of costing.
    Extra characteristics:
    • Sometimes goods are transferring from one process to another process, not at cost price but transfer price just to compare this with the market price and to have a check on the inefficiency and losses occurring in a particular process. The elimination of the profit elements from stock is to learn in this method of costing.
    • To obtain accurate average costs, it is necessary to measure the production at various stages of manufacture. As all the input units may not convert into finish goods; some may be in progress. The calculation of effective units is to learn in this method of costing.
    • Different products with or without by-products are simultaneously producing at one or more stages or processes of manufacture. The valuation of by-products and apportionment of the joint cost before the point of separation is an important aspect of this method of costing. In certain industries, by-products may require further processing before they can sell.
    • The main product of one firm may be a by-product of another firm and in certain circumstances. It may be available in the market at prices which are lower than the cost to the first-mentioned firm. It is essential, therefore, that this cost knows so that advantages can take of these market conditions.
    • The output is uniform and all units are identical during one or more processes. So the cost per unit of production can ascertain only by averaging the expenditure incurred during a particular period.

    Process Costing Meaning Characteristics and Objectives
    Process Costing: Meaning, Characteristics, and Objectives, #Pixabay.

    Objectives of Process Costing:

    How do you know what cost you need? If you know the total cost of production of each process. The following are the main objectives of process costing:

    1. To Ascertain the Cost of Each Process: It is necessary to know the cost at every stage of production and this fulfills by the process costing method. On this basis, management can decide concerning the make or buy the required commodities.
    2. To Ascertain the Cost of Bye-Product: Bye-product is that which obtains with the main product in the course of the production. For example; while producing mustard oil, the cake also obtains. Which terms as bye-product and the cost of which is necessary to know the actual cost of the main product? Cost of bye-product ascertains by preparing bye-product Account, under process costing.
    3. To Know the Wastage in Each Process of Production: During the courage of production, different wastages, such as; loss in weight, normal wastage, and abnormal wastage, etc. may arise. Management of any concern may know about these wastages by Process Costing Account.
    4. To Ascertain the Profit or Loss of Each Process: The output or the part of output at the stage of every process can sell out either at profit or loss. Thus the management can know about the profit or loss at every process by preparing Processes Account.
    5. The base of the Valuation of Opening and Closing Stock of Each Next Process: If the total cost of production of any process divides by the number of units, we get the cost of production per unit of that particular process and on this basis opening and closing stock of next process value.

    Principles of Process Costing:

    The essential stages in principles of process costing are:

    The factory divide into several processes and an account maintains for each process. Each Process Account debit with material cost, labor cost, direct expenses, and overheads allocate or apportion to the process.

    The output of a process transfer to the next process in the sequence. In other words, the finished output of one process becomes input (materials) of the next process. The production records of each process are keeping in such a way as to show. The quantity of production and the wastage and scrap and the cost of production of each process for each period.

    Extra things:
    • In some cases, the whole output of one process not transfers to the next process. A part of the output may transfer to the next process. And, a certain portion of the output may sell in semi-finish form or may keep in stock and transfer to Process Stock Account. If the output of any process sells at a profit in semi-finish form. Then profit on that particular sale will show on the debit side of that concerning profit, as profit on goods sale or transfer.
    • In case there is loss or wastage of units in any process. The loss has to born by the good units produced in that process and as a result. The average cost per unit increases to that extent. It may note that, if there is loss or wastage in any process, the quantity of loss or wastage should enter on the credit side of the concerned Process Account in the quantity column. In case the wastage has some scrap value. It should appear on the credit side of the concerned Process Account in the value column against the entry for wastage. But, if the scrap value of the wastage does not specifically give in the problem. It should take as nil.

    The total cost of production of each process for a particular period divided by the number of units produced in that process during that period. And, the average cost per unit of production for a period obtain. The finished output of the last process transfer to the Finish Goods Account.

  • Personal Selling; Introduction, Meaning, Definition, and Theory

    Personal Selling; Introduction, Meaning, Definition, and Theory

    Personal Selling defines as a hand-to-hand exchange of goods and money or Face-to-face selling in which a seller attempts to persuade a buyer to make a purchase. In the competitive marketplace, the product must be communicated across to the customers. Traditionally, advertising is a tool for communication. However, as the competition has increased, the process of communication has also become more and more complex.

    Here are explain Personal Selling; Introduction, Meaning, Definition, and Theory.

    Personal selling is one of the forms of promotion or marketing communications used by organizations to communicate with the marketplace and drive purchases of their products. Along with advertising, public relations, and sales promotion – personal selling makes up the promotions mix or marketing communications mix of a company. What is the importance and process of Decision-Making?

    #Meaning:

    Meaning of Personal selling; Personal selling or salesmanship are synonymous terms; with the only difference being that the former term is of recent origin, while the latter term has been traditionally in usage, in the commercial world. Since a salesman, in persuading a prospect to buy a certain product, follows a personal approach; salesmanship, in the present-day times is often popularly called personal selling.

    It is the most traditional method, devised by manufacturers, for the promotion of the sales of their products. Before the development of the advertising technique, it used to be the only method used by manufacturers for the promotion of sales. It is, in fact, the forerunner of advertising and other sales promotion devices.

    #Definition:

    Personal selling can define as; direct person-to-person communication between sellers and potential customers, to persuade potential customers to purchase products.

    According to Philips and Duncan,

    “Salesmanship is the art of presenting an offering so that the prospect appreciates the need for it and a mutually satisfactory sale follows.”

    They often occur face-to-face, however, they can also take place through telephone conversations, online video conferencing, or online text communication. Also, Personal selling is an effective way to promote and sell high-priced and/or complex products.

    This is because the person-to-person approach allows for a detailed explanation of products and any individual questions or concerns the customer has can be immediately addressed.

    Personal selling Introduction Meaning Definition and Theory
    Personal selling; Introduction, Meaning, Definition, and Theory. Russia cotton Candy Hands #Pixabay.

    #Introduction, How to Sale?

    Introduction to Personal selling; The marketers of today cannot rely on only advertising the marketing communication mix comprises 5 modes of communication as explained herein;

    • Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.
    • Sales promotion: A variety of short-term incentives to encourage the trial or purchase of a product or service.
    • Public relations and publicity: A variety of programs designed to promote or protect a company’s image or its products.
    • Personal selling: Face-to-face interaction with one or more prospective purchasers to make presentations, answer questions, and procure orders.
    • Direct marketing: Use of mail, telephone, fax, e-mail or internet to communicate directly with or solicit & a direct response from specific customers and prospects.

    The present article deals with personal selling as one of the modes for selling. The topic falls within the scope of both marketing communication and sales management. It is the most effective tool, especially in the later stages of the buying process. It is very useful in building buyer preference, convictions, and action.

    Distinctive qualities:

    Personal selling has three distinctive qualities;

    1. Personal confrontations: They involve an immediate and interactive relationship between two or more persons each party can observe the other’s reactions at close hand.
    2. Cultivation: It permits all kinds of relationships to spring up, ranging from matter-of-fact selling relationships to deep personal friendships. Also, Sales representatives usually have the customer’s best interests at heart.
    3. Response: It makes the buyer feel under some obligation for having listened to the sales talk.

    Theory of Personal selling:

    Personal selling is more of an art. Often effective salespersons have an instinct. Yet, it is realizing that proper training can enhance the skills of good salesmen. In present times, it is becoming more and more customer-oriented because no more do are have a buyer’s market.

    Theory of Personal selling - List
    Theory of Personal selling – List

    Three major aspects of personal selling are;

    1. Professionalism.
    2. Negotiations, and.
    3. Relationship marketing.

    Now, explain each;

    Professionalism:

    The belief that good sales are born is giving way to a professional approach to sales activity. As well as, the sales managers realize the importance of training the sales force and spend huge sums of money each year for the same. We find the market flooded with training aids comprising books, video and audio cassettes, CDs, and many more.

    Also, The aim of sharpening the skills of a salesman is to make him more and more effective. All sales training approaches try to convert a salesperson from a passive order taker into an order setter. An order taker is passive and stands dominated by the situation. In order Getter molds the situation in his favor and takes charge to achieve his objectives. What is the IT Professionalism in Information Technology Essay? Also, The modern professional approach to salesmanship stands customer-oriented.

    The act of selling stands projected as aimed at solving the problems of the customers. Such an approach is satisfying the customers more thereby making sales activity more and more effective. Furthermore, the sales personnel are trained to understand the situation and they formulate their reaction because no single approach works in all situations.

    Negotiation:

    Negotiation skills are one of the most important skills of a salesman. Likewise, The two parties need to reach an agreement on price and other terms of sales. A good salesman wins the order without making deep .concessions that will hurt his profitability.

    Also, he must not unduly extract the customer because such an approach will be detrimental in the long run. This process of exchange by way of negotiation is more of an art. Learned by a salesman over time. The professional approach to negotiation identifies the zone of agreement between the seller’s surplus and the buyer’s surplus.

    Such an understanding helps in reaching the agreement point where both parties feel satisfied. Negotiation involves communication that is Focused and planning. Also, A good salesman understands his customer well and then formulates a negotiation strategy.

    Relationship marketing:

    As the salesman becomes close to the customers, the Transactional nature of the selling approach gives way to the relationship approach. Furthermore, the Transactional approach is deal to deal approach centered on short-term gains. Also, The relationship approach is long-term and establishes a relationship between the buyer and the seller.

    Both understand each other and support each other. Sales managers have to realize that it is far easier to get sales from an old customer as compared to getting the same from a new customer. So, it is important to retain existing customers. As well as, Personal selling is the most effective method of building relationships.

    No other means can establish relationships as effectively as personal selling does. So modern salesmen work with a long-term perspective, establishing close customer associations. Such a practice is most evident in banking, airlines, insurance, and investment industries.

  • Communication; Introduction, Meaning, and Definition

    Communication; Introduction, Meaning, and Definition

    Introduction; Communication is important from the point of view of understanding it in terms of a process, system, interactional base, and structuring. There are various objectives of communication in business organizations. We are living in a world which is totally networked with communication. With the advent of fast technology, the world has become a global village.

    Discussion the topic Communication essay; Introduction, Meaning, and Definition.

    The information sharing among various groups in society at national and international levels has become very smooth, effective and efficient. With the click of the small button on a computer, you can easily get any information according to your needs and choice. You cannot just think of a world or situation where there is no exchange of ideas, feelings, emotions, reactions, propositions, facts and figures.

    From time immemorial, they have been the most important activities of human lives. The integration of the world economy has been made possible with a strong and efficient channel of communication. The nature of communication has gone a significant change during the last dealers. Now the economic power lies in the hands of the countries having very sound information technology network.

    Meaning and Definition of Communication:

    There are various definitions and meaning interpreted by different scholars. T.S. Matthews says that Communication is something so difficult that we can never put it in simple words. But we do need a definition to understand the concept. In his book Communication in Business, Peter Little defines communication as the process by which information is transmitted between individuals and/ or organizations so that an understandable response results. W.H. Newman and C.F. Summer Jr. define communication as, “Communication is an exchange of facts, ideas, opinions, or emotions by two or more persons”.

    “Administrative communication is a process which involves the transmission and accurate replication of ideas ensured by feedback for the purpose of eliciting actions which will accomplish organizational goals.”

    Obviously, “information” is the keyword in the first definition. But this definition does not indicate the objects about which information is to transmit. This is precisely what is provided in the second definition. They transmit information not only about tangible facts and determinable ideas and opinions but also about emotions. When a communicator passes on or transmits some information, he may also, either intentionally or unconsciously, be communicating his attitude or the frame of his mind. And sometimes the latter may be more relevant to the reality that is communicating.

    Communication Definition:

    The following definition offered by William Scott in his book “Organisation Theory” should appear comprehensive and especially satisfying to the students of “business communication” since it touches all aspects of the communication process:

    According to McFarland communication is,

    “a process of meaningful interaction among human beings. More specifically, it is the process by which meanings are perceived and understandings are reached among human beings.”

    Newman and summer defined as,

    “an exchange of facts, ideas, opinions or emotions by two or more persons.”

    This definition emphasizes four important points:

    1. The process of communication involves the communication of ideas.
    2. The ideas should accurately replicate (reproduce) in the receiver’s mind, i.e., the receiver should get exactly the same ideas as were transmitted. If the process of communications perfect, there will be no dilution, exaggeration or distortion of the ideas.
    3. The transmitter is assured of the accurate replication of the ideas by feedback, i.e., by the receiver’s response which communicated back to the transmitter. Here it suggested that communications a two-way process including the transmission of feedback.
    4. The purpose of all communications to elicit action.

    It is a quite comprehensive definition and covers almost all aspects of communication. But two comments can make on it:

    1. The concept of ideas should adequately enlarge to include emotions also.
    2. Even in administrative communication, the purpose may not always be to elicit action. Seeking information or persuading others to a certain point of view can be equally important objectives of communication.

    Nature of communi­cation:

    The exchange of information or passing of information, ideas or thought from one person to the other or from one end to the other is communication. Communication is the process of passing information from one person to another. The purpose of communication understands information. Whatever one wants to say to someone should clearly understand by him else the very purpose of the communication would defeat. In an organization, communication facilitates the flow of information and understanding between different people and departments through different media using all the channels and networks.

    This flow of information is vital for managerial effectiveness and decision making in general and for human resource manager in particular as he has to be in contact with the managers of various departments, employees and workers and trade union leaders. Communication thus helps understand people better removing misunderstanding and creating clarity of thoughts and expression. It also educates people.

    They may written or oral, formal, informal, and upward, downward, horizontal, diagonal, interpersonal, intrapersonal, interdepartmental, intra-organisational. Communication brings people together, closer to each other. Communications an important management function closely associated with all other managerial functions.

    It bridges the gap between individuals and groups through the flow of information and understanding between them. Information is the most vital aspect of communication. It is the information which is transmitted, studied, analyzed and interpreted and stored. The manager, therefore, has to spare time to collect, analyze and store the information for decision-making and routine day to day business.

    Communication Introduction Meaning and Definition
    Communication; Introduction, Meaning, and Definition. #Pixabay.

    Principles of Communication:

    In order to be effective and meaningful, the managerial function of communication essay must be guided by the following principles:

    Understanding:

    It must be such, as transmits the understanding of their message to the recipient as per the intentions of the sender. A practical application of this principle requires that the message must clearly express whether made orally or in writing. Further, the message must be complete – leaving no scope for any doubts likely to confuse the recipient and compel him towards a misinterpretation of the message.

    Attention:

    They must make in such a manner, that it invites the attention of the recipient to it. For a practical application of this principle, it is imperative that not only must the message expressed in a pleasant and sound manner; but also the purpose of the sender in making communication, must be absolutely clarified.

    Brevity:

    The message to communicated must be brief; as usually the recipient, especially an executive, would not have much time to devote to a single piece of communication. However, the brevity of the message must not be sought at the cost of clarity or completeness of the message. The sender must strike a balance among these three factors -brevity, clarity, and completeness.

    The Timeliness:

    They must be timely i.e. it must make at the high time when needed to communicate to the recipient. An advanced communication carries with it the danger of “forgetting”, on the part of the recipient; while a delayed communication loses its purpose and charm, and becomes meaningless when the right time for action on it has expired.

    The Appropriateness or Rationality:

    It must be appropriate or rational, in the context of the realization of organizational objectives. They must be neither impracticable to act upon; nor irrational, making no contribution to common objectives.

    Feedback:

    They must be a two-way process. The feedback (or reaction or response) of the recipient to the message, must be as easily transferable to the sender, as the original communication made by the sender. The idea behind emphasizing on the feedback aspect of communications that it helps the sender to modify his subsequent communications in view of the reactions of the recipient – making for better and improved human relations.

    The Constructive and Strategic Use of Informal Groups:

    The management must not hesitate in making constructive and strategic use of informal groups, for ensuring and facilitating speedier communication in emergency situations. Such use of informal groups would also help develop good human relations by upgrading the status of informal groups and their leaders. However, management must assure itself that rumors not spread by informal groups, and for this, a guard over the manner of functioning of informal groups, while transmitting a formal exchange, is but imperative.

  • Decision-Making: Nature, Characteristics, and Principles

    Decision-Making: Nature, Characteristics, and Principles

    What does Decision Making mean? Decision-making means to select a course of action from two or more alternatives. A decision may define as “A course of action which is consciously chosen from among a set of alternatives to achieve the desired result.” It represents a well-balanced judgment and a commitment to action. Discussing of Topic; Decision-Making; Explanation of Decision-Making, Meaning of Decision-Making, Definition of Decision-Making, Nature, and Characteristics of Decision-Making, and finally the Principles of Decision-Making.

    Know and Understand the Explanation of Decision-Making; Meaning, Definition, Nature, Characteristics, and Principles.

    Decision-Making is an important function in management since decision-making is related to the problem, effective decision-making helps to achieve the desired goals or objectives by solving such problems. Thus the decision-making lies all over the enterprise and covers all the areas of the enterprise. What does Welfare Economics mean? Measuring and Value decisions!

    It is rightly said that the first important function of management is to take decisions on problems and situations. Decision making pervades all managerial actions. It is a continuous process. Decision-making is an indispensable component of the management process itself. This clearly suggests that decision-making is necessary for planning, organizing, directing, controlling and staffing.

    For example, in planning alternative plans are prepared to meet different possible situations. Out of such alternative plans, the best one (an i.e., plan which most appropriate under the available business environment) is to select. Here, the planner has to take the correct decision. This suggests that decision-making is the core of the planning function. In the same way, decisions are required to take while performing other functions of management such as organizing, directing, staffing, etc. This suggests the importance of decision-making in the whole process of management. The effectiveness of management depends on the quality of decision-making.

    In this sense, management is rightly describing as a decision-making process. According to R. C. Davis, “Management is a decision making process.” Decision-making is an intellectual process which involves selection of one course of action out of many alternatives. Decision-making will follow by the second function of management called planning. The other elements which follow planning are many such as organizing, directing, coordinating, controlling and motivating.

    Meaning of Decision-Making:

    Decision-Making is an important function in management since decision-making is related to the problem, effective decision-making helps to achieve the desired goals or objectives by solving such problems. Thus the decision-making lies all over the enterprise and covers all the areas of the enterprise.

    Scientific decision-making is the well-tried process of arriving at the best possible choice for a solution with a reasonable period of time. The decision means to cut off deliberations and to come to a conclusion. Decision-making involves two or more alternatives because if there is only one alternative there is no decision to make.

    Decision-making has priority over planning function. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as such operating decisions as training of manpower and so on. Without such decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible.

    Definitions of Decision-Making:

    According to Trewatha & Newport,

    “Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem.”

    R.S. Davar defined decision making as,

    “The election based on some criteria of one behavior alternative hum two or more possible alternatives. To decide means ‘to cut off’ or in practical content to come to a conclusion.”

    Henry Sisk and Cliffton Williams defined,

    “A decision is the election of a course of action from two or more alternatives; the decision-making process is a sequence of steps leading lo I hat selection.”

    George Terry defines,

    “As the selection of one behavior alternative from two or more possible alternatives.”

    In the words of D. E. Mcfarland,

    “A decision is an act of choice wherein an executive forms a conclusion about what must be done in a given situation. A decision represents behavior chosen from a number of alternatives.”

    Nature and Characteristics of Decision-Making:

    Nature of Decision-Making: A decision is always related to some problem, difficulty or conflict. Decisions help in solving problems or resolving conflicts. There are always differences of opinions, judgments, etc. The managerial decision helps in maintaining group effectiveness. All problems may not require decision- making but merely the supply of information may be sufficient.

    For example, when will different groups report for re-orientation? The supply of information about the training program may be enough. Decision problems necessitate a choice from different alternatives. A number of possibilities are selected before making a final selection. Decision-making requires something more than a selection. The material requiring a decision may be available but still, a decision may not reach.

    A decision needs some sort of prediction for the future on the basis of past and present available information. The effect of a decision is to be felt in the future so it requires proper analysis of available material and a prediction for the future. If decision premises do not come true, then the decision itself may be wrong. Sometimes decisions are influenced by adopting a follow-the-leader practice.

    The leader of the group or an important manager of concern sets the precedent and others silently follow that decision. Whatever has been deciding by the leader becomes a guide for others and they also follow suit. The decisions may also emerge from answers to pertinent questions about the problem. Such answers try to narrow down the choice and help in making a decision.

    Now discuss the Characteristics of Decision-Making:

    The following Characteristics below are;

    Continuous activity/process.

    Decision making is a continuous and dynamic process. It pervades all organizational activity. Managers have to make decisions on various policy and administrative matters. It is a never-ending activity in business management.

    Based on reliable information/feedback.

    Good decisions are always based on reliable information. The quality of decision-making at all levels of the organization can improve with the support of an effective and efficient management information system (MIS).

    Time-consuming activity.

    Decision making is a time-consuming activity as various aspects need careful consideration before making the final decision. For decision-makers, various steps are required to complete. This makes decision-making a time-consuming activity.

    Needs effective communication.

    Decision-taken needs to communicate to all concerned parties for suitable follow-up actions. Decisions taken will remain on paper if they are not communicating with concern persons. Following actions will not be possible in the absence of effective communication.

    Responsible job.

    Decision making is a responsible job as wrong decisions prove to be too costly to the Organization. Decision-makers should mature, experienced, knowledgeable and rational in their approach. Decision-making need not treat as routing and casual activity. It is a delicate and responsible job.

    Decision making implies choice.

    Decision making is choosing from among two or more alternative courses of action. Thus, it is the process of selection of one solution out of many available. For any business problem, alternative solutions are available. Managers have to consider these alternatives and select the best one for actual execution. Here, planners/ decision-makers have to consider the business environment available and select the promising alternative plan to deal with the business problem effectively.

    It is rightly said that “Decision making is fundamentally choosing between the alternatives”. In decision-making, various alternatives are to consider critically and the best one is to select. Here, the available business environment also needs careful consideration. The alternative selected may be correct or may not be correct. This will decide in the future, as per the results available from the decision already taken.

    In short, decision-making is fundamentally a process of choosing between the alternatives (two or more) available. Moreover, in the decision-making process, information is collecting; alternative solutions are deciding and consider critically in order to find out the best solution among the available.

    Every problem can solve by different methods. These are the alternatives and a decision-maker has to select one alternative which he considers as most appropriate. This clearly suggests that decision-making is basically/fundamentally choosing between the alternatives. The alternatives maybe two or more. Out of such alternatives, the most suitable is to select for actual use. The manager needs the capacity to select the best alternative. The benefits of correct decision-making will be available only when the best alternative is select for actual use.

    Decision-Making Nature Characteristics and Principles
    Decision-Making: Nature, Characteristics, and Principles, #Pixabay.

    Principles of Decision-Making:

    The effective decision involves two important aspects—the purpose for which it is intending, and the environmental situation in which it takes. Even the best and correct decision may become ineffective if these aspects are ignored; because in decision-making, there are so many inside and outside chains of unavoidable reactions. If certain principles are following for decision-making, such multidimensional reactions can mostly be overcome.

    These principles as follows below are:

    Subject-matter.

    Decisional matters or problems may divide into groups consisting of programmed and non-programmed problems. Programmed problems, being of routine nature, repetitive and well-founded, are easily definable and, as such, require a simple and easy solution. The decision arrived in such programmed problems has, thus, a continuing effect. But in non-programmed problems, there is no continuing effect because they are non-repetitive, non-routine, and novel. Every event in such problems requires individual attention and analysis and its decision is to arrive at according to its special features and circumstances.

    Organizational Structure.

    The organizational structure, having an important bearing on decision-making, should readily understand. If the organizational structure is rigid and highly centralized, decision-making authority will remain confined to the top management level. This may result in a delayed and confusing decision and create suspicion among the employees.

    On the contrary, if the organizational structure provides scope for adequate delegation and decentralization of authority, decision-making will be flexible and the decision-making authority will be close to the operating centers. In such a situation, decision-making will be prompt and expect to be more effective and acceptable.

    Objectives and Policies.

    Proper analysis of the objectives and policies is the need for decision-making. The clear definition of objectives and policies is the basis that guides the direction of decision-making. Without this basis, decision-making will be aimless and unproductive.

    Analytical Study of the Alternatives.

    For decision-making, analytical study of all possible alternatives of a problem with their merits and demerits is essential. This is necessary to make out a correct selection of decision from among the alternatives.

    Proper Communication System.

    Effective decision making demands a piece of machinery for proper communication of information to all responsibility centers in the organization. Unless this structure is built up, ignorance of decision or ill-inform decision will result in misunderstanding and lose coordination.

    Time of Sufficient.

    Effective decision making requires sufficient time. It is a matter of common experience that it is usually helpful to think over various ideas and possibilities of a problem for the purpose of identifying and evaluating it properly. But in no case a decision can delay for an indefinite period, rather it should complete well in advance of the scheduled dates.

    Study of the Impact of a Decision.

    The decision is intending to carry out for the realization of the objectives of the organization. A decision in any particular area may react adversely in other areas of the organization. As all business activities are inter-related and require coordination, it is necessary that a study and analysis of the impact of any decision should precede its application.

    Participation in the work of the decision-maker.

    The decision-maker should not only be an observer while others will perform as per his decision. He should also participate in completing the work for which decision was taken by him. This experience will help him in decision-making in the future. The principle of participation in the work of the decision-maker will enable him to understand whether the decision take is practical and also guide him in forthcoming decisional matters.

    The flexibility of Mind for decision.

    This is essential in decision-making because decisions cannot satisfy everybody. Rigid mental set-up of the decision-maker may upset the decisions. The flexible mental disposition of the decision-maker enables him to change the decision and win over the co-operation of all the diverse groups.

    Consideration of the Chain of Actions.

    There is a chain relationship in all the activities of any organization. Different activities are tied up in a chain sequence. Any decision to change a particular work brings change in other related works also. Similarly, decision-making also proceeds following the chain of action in different activities. Therefore, before taking a decision one should consider the chain relationship among different activities.

  • Public Expenditure: Meaning, Definition, Classification, Types, and Principles

    Public Expenditure: Meaning, Definition, Classification, Types, and Principles

    What does Public Expenditure mean? Expenditure is the action of spending funds. Public expenditure refers to the expenses which the Govern­ment incurs for its maintenance as also for the economy as a whole. The Concept of Public Expenditure: Meaning, Definition, Classification, Types, and Principles.

    Here are explained the Concept of Public Expenditure with their point of Meaning, Definition, Classification, Types, and Principles.

    Public expenditure can define as, “The expenditure incurred by public authorities like central, state and local governments to satisfy the collective social wants of the people is known as public expenditure.” Earlier it was thought that “Every tax is an evil” and public expenditure is “unproductive”.

    Such ideas are no more nowadays. It means that the least amount of tax is to collect to meet “Three duties of the sovereign”. The three duties are the maintenance of internal law and order, defense from foreign attack and issue of currency.

    Nowadays, public authorities have to incur expenditure on the protection of citizens as well as of public welfare and the promotion of socio-economic development. However, after the great depression of 1930 and war and post-war years, increasing attention was paid to the study of public expenditure. So, they refer to the expenses of public authorities like the central, state and local governments.

    Meaning of Public Expenditure:

    To carry on their functions, governments must obtain the services of labor and other factor units and (except in a completely socialist economy) acquire goods produced by private business firms.

    Public expen­diture consists of expenditure by the central government, state governments, and local authorities (such as municipalities and public corporations), with the central government accounting for the major portion of such expenditure.

    Thus, the state is required to maintain good roads, bridges, defense activi­ties, canals, and harbors, to protect trade, to maintain the coinage and to provide social security, education, and religious instruction.

    As well as, Government expenditure:

    They refer to the expenditure incurred by the central government. There are different types of such expenditure. The usual distinction is between consumption expenditure and investment expenditure. Another distinction is between revenue expendi­ture and capital expenditure.

    The main items of government spending are the following:

    Social services such as education, health and welfare and social security; defence, that is the cost of maintaining the armed forces; environmental services, that is, spending on roads, transport services, law and order, housing and the art; national debt interest, that is, interest payments on money borrowed by the government. At present, this is about one-third of India’s national income.

    Since national income is a fixed number, spending in one direction can achieve only at the expense of spending elsewhere. Thus, if the govern­ment spends a larger part of the national income on defense, less will remain with the people for their consumption, thereby leading to a reduction in their standard of living.

    Similarly, too large an expenditure on the social services at the expense of defense expenditure may put a threat to national security – and social security is meaningless if it is at the expenses of national security. As a result, the actual amount spent in each direction represents a compromise between competing desires. So, there is always a need for careful planning of public expenditure.

    Definition of Public Expenditure:

    The theory of public expenditure has been more or less confining to that of generalities in terms of the effects of public expenditure on employment and price level. Even though public expenditure has increased rapidly during the last two centuries, in almost every state the area of them re­mains relatively unexplored.

    Further, the level of public expenditure depends on government programs, which are the outcome of po­litical decisions.

    Gerhard Colm points out,

    “The determination of gov­ernment programmes is a political procedure and as such is carried on in a milieu, usually called ‘Politics’ which includes vote gathering, pressure by lobbies, log rolling and competition among political ri­vals.”

    Classification of Public Expenditure:

    It is conventional in every textbook of public finance to classify public expenditures into various economic categories. Also, The classification of public expenditure refers to the systematic arrangement of differ­ent items of state expenditure, on some specified economic basis.

    Classification is always done on some logical and rational economic basis. Classification of public expenditure is important to understand the nature and effect of public expenditure. Through this classifica­tion, the state executive maintains effective control over them and prevented public funds leakages and wastages, di­versions and misappropriations.

    Classification of public expenditure is good for auditing and public funds can better safeguard against misappropriation. Classification of expenditure helps us to understand the relative importance of each head of expenditure at different times.

    According to Prof. Shirras, the test of public expenditures not the aggregate expenditure but it is the relative amounts which are as­signed to different heads from time to time. Hence classification of expenditure is important for a clear understanding of the nature and effects of them.

    Economists have proposed various methods of classifying pub­lic expenditures. However, the methods differ widely from one an­other. This is because; there is little agreement between authorities of public finance regarding the best way of arranging the various kinds of state outlays.

    Hence a completely satisfactory method is yet to emerge. Hence Mill, Roscher, Plehn, Nicholson, and Bastable have their methods. In this context, Shulz observes “Nineteenth-century fiscal writers devoted considerable space to the subject of the proper classification of government expenditure, but no two even agreed upon the same classification”.

    Extra Classifications:

    There are a variety of ways in which they can classify but broadly it is classifying under the following heads:

    According to the authority which spends the money viz;

    • Federal or Union or Central expenditure.
    • State or Provincial expenditure, and.
    • Local expenditure or expenditure of municipalities and other local bodies.

    According to the object of expenditure viz;

    • Development activities like providing subsidies, electric power, transport service, welfare activities, employment opportunities, and price stability, etc.
    • Non-developmental activities like money spent on administrative machinery, law and order, interest payment on public debt and defense, etc.

    According to the nature of expenditure via;

    • Revenue Expenditure, and.
    • Capital Expenditure.

    Revenue Expenditure is current expenditure e.g. administrative and maintenance expenditure. This expenditure is of a recurring type which Capital Expenditure is of capital nature and is incurred once for all. It is non-recurring expenditure e.g. expenditure for building multipurpose projects or a setting up big factories like steel plants, money spent on land, machinery, and equipment.

    Types of Public Expenditure:

    The main bases of Types of public expenditure are as follows:

    Capital And Revenue Expenditure:

    Capital Expenditure of the government refers to that expenditure that results in the creation of fixed assets. Also, They are in the form of investment. They add to the net productive assets of the economy. Capital Expenditure is also known as development expenditure as it increases the productive capacity of the economy. It is an investment expenditure and a non-recurring type of expenditure.

    For example; Expenditure, on agricultural and industrial development, irrigation dams, public -enterprises, etc, are all capital expenditures. Revenue expenditures are current or consumption expenditures incurred on civil administration, defense forces, public health and, education, maintenance of government machinery, etc.

    Development And Non–Developmental Expenditure/Productive And Non–Productive Expenditure:

    Expenditure on infrastructure development, public enterprises or development of agriculture increase productive capacity in the economy and bring income to the government. Thus they are classified as a productive expenditure. All expenditures that promote economic growth development are termed as development expenditure.

    Unproductive (known–development) expenditure refers to those expenditures which do not yield any income. Expenditure such as interest payments, expenditure on law and order, public administration, do not create any productive asset which brings income to the government such expenses are classified as unproductive expenditures.

    Transfer And Non-Transfer Expenditure:

    Transfer expenditure refers to those kinds of expenditures against there is no corresponding transfer of real resources i.e., goods or services. Such expenditure includes public expenditure on; National Old pension Scheme, Interest payments, subsidies, unemployment allowances, welfare benefits to weaker sections, etc. By incurring such expenditure, the government does not get anything in return, but it adds to the welfare of the people, especially to weaker sections of society. Such expenditure results in redistribution of money incomes within the society.

    The Non-transfer expenditure relates to that expenditure which results in the creation of income or output The Non-transfer expenditure includes development as well as Non-development expenditure that results in the creation of output directly or indirectly. Economic infrastructure (Power, Transport, Irrigation, etc.), Social infrastructure (Education, Health and Family Welfare), Internal law and order and defense, public administration, etc. By incurring such expenditure, the government creates a healthy environment for economic activities.

    Plan And Non-Plan Expenditure:

    The plan expenditure incurs on development activities outlined in the ongoing five-year plan. In 2009-10, the plan expenditure of the Central Government was 5.3% of GDP. Plan expenditure incurs on Transport, rural development, communication, agriculture, energy, social services, etc.

    The non-plan expenditure incurs on those activities, which are not included in the five-year plan. It includes development and Non-development expenditure. It includes; Defence, subsidies, interest payments, maintenance, etc.

    Other types of Public Expenditure:

    Mrs. Hicks classified the types of Public Expenditure based on duties of government. It is as follows:

    Defense Expenditure: It is expenditure on defense types of equipment, wages, and salaries of armed forces, navy, and air-force, etc. It incurs by the government to provide security to citizens of the country from external aggression.

    Civil Expenditure: Government/incurs this expenditure to maintain law and order and administration of justice.

    Development Expenditure: It is expenditure on the development of agriculture, industry, trade and commerce, transport and communication, etc.

    Public Expenditure Meaning Definition Classification Types and Principles
    Public Expenditure: Meaning, Definition, Classification, Types, and Principles, #Pixabay.

    Principles of Public Expenditure:

    As the public is an important part of fiscal policy, certain principles or canons are laid down to which public expenditure should conform.

    These principles of public expenditure or canons are as follows:

    The principle of Maximum Social Advantage:

    The government’s expenditure should so arrange as to secure the greatest possible net advantage, i.e., it should maximize the difference between the addition to welfare obtained by its expenditure and the social cost involved in obtaining the money. This principle has been calling by Dalton the Principle of Maximum Social Advantage.

    The principle of Economy:

    This principle says that the government should economies its expenditure and avoid wasteful and extravagant expenditure. The principle requires that the revenue collecting from the tax-payer should be judiciously spent. As too much they lead to inflation and adversely affects savings, the economy in government expenditure is cardinal.

    The principle of Sanction:

    According to this principle, expenditure should incur only if it has been sanction by a competent authority. It usually sees that unauthorizing spending leads to extravagance and overspending. But when a competent authority looks into the pros and cons and then gives its verdict to incur the expenditure it means that the expenditure incurred will provide genuine utility and serve its definite purpose.

    The principle of Elasticity:

    This principle states that it should be possible for public authorities to vary the expenditure according to need or circumstances. It means that they should be fairly elastic and flexible but not rigid. Rigidity proves to be a handicap in times of trouble alternation in the upward direction is not difficult but elasticity also needs in the downward direction.

  • Learn Investment Banks with their Principle and Functions

    Learn Investment Banks with their Principle and Functions

    Investment Banks: This is because of the profit motive as a result of which all companies have to do something to increase their portfolios and get better funds as well. Learn Investment Banks with their Principle and Functions; A lot of this comes in the form of bonds, stock transfer etc. but the biggest contribution is made through investments. Investment banking is a post that helps companies get these investments.

    Here are explained; What is Investment Banks? with their Principle and Functions.

    Investment banking is a field that involves many levels of division of work. The investment banking advice given would differ in different stages, from the smaller levels of the organizations to the higher levels. The magnitude of the advice given would vary with the level, of course. The clients are to be advised on matters of business, especially financial.

    Issues relating to mergers, acquisitions, bonds, strategies regarding investments, the sale of company stocks to public etc. are also to be discussed. These are the most important financial aspects of running a company and these are the strategies that would determine a company’s success or failure in the future. Global investment banks typically have several business units, each looking after one of the functions of investment banks.

    For example, Corporate Finance, concerned with advising on the finances of corporations, including mergers, acquisitions and divestitures; Research, concerned with investigating, valuing, and making recommendations to clients – both individual investors and larger entities such as hedge funds and mutual funds regarding shares and corporate and government bonds; and Sales and Trading, concerned with buying and selling shares both on behalf of the bank’s clients and also for the bank itself.

    Investment banks management of the bank’s own capital, or Proprietary Trading, is often one of the biggest sources of profit. For example, the banks may arbitrage stock on a large scale if they see a suitable profit opportunity or they may structure their books so that they profit from a fall in bond price or yields.

    #Principal Functions of Investment Banks:

    The principal functions of investment banks include:

    • Raising Capital.
    • Brokerage Services.
    • Proprietary Trading.
    • Research Activities, and.
    • Sales and Trading.

    Now, explain;

    Raising Capital:

    Corporate finance is a traditional aspect of Investment banks, which involves helping customers raise funds in the capital market and advising on mergers and acquisitions. Generally, the highest profit margins come from advising on mergers and acquisitions.

    Investment bankers have had a palpable effect on the history of American business, as they often proactively meet with executives to encourage deals or expansion.

    Brokerage Services:

    Brokerage services typically involve trading and order executions on behalf of the investors. This in turn also provides liquidity to the market. These brokerages assist in the purchase and sale of stocks, bonds, and mutual funds.

    Proprietary Trading:

    Underinvestment banking, proprietary trading is what is generally used to describe a situation when a bank trades in stocks, bonds, options, commodities, or other items with its own money as opposed to its customer’s money, with a view to making a profit for itself.

    Though investment banks are usually defined as businesses, which assist other business in raising money in the capital markets (by selling stocks or bonds), they are not shy of making the profit for itself by engaging in trading activities.

    Research Activities:

    Research is usually referred to as a division which reviews companies and writes reports about their prospects, often with “buy” or “sell” ratings.

    Although in theory, this activity would make the most sense at a stock brokerage where the advice could be given to the brokerage’s customers, research has historically been performed by Investment Banks (JM Morgan Stanley, Goldman Sachs etc).

    The primary reason for this is because the Investment Bank must take responsibility for the quality of the company that they are underwriting vis a vis the prices involved to the investor.

    Sales and Trading:

    Often referred to as the most profitable area of an investment bank, it is usually responsible for a much larger amount of revenue than the other divisions. In the process of market making, investment banks will buy and sell stocks and bonds with the goal of making an incremental amount of money on each trade.

    Sales are the term for the investment banks sales force, whose primary job is to call on institutional investors to buy the stocks and bonds, underwritten by the firm. Another activity of the sales force is to call institutional investors to sell stocks, bonds, commodities, or other things the firm might have on its books.

    #Functions of Investment Banks:

    The following functions below are; Basic functions:

    Consultative:

    Investment banking is all about financial planning and consultation. After all, this is the primary function of investment banking. The functions of an investment banker who is working as a consultant would involve guiding the companies and providing them with advice on their activities pertaining to investments. Investment banking would also influence a company’s mergers or acquisitions as well.

    It involves providing companies with some advice on how they manage public assets and affairs as well. In fact, this is a very strategic field of study and work. The functions of an investment banker might also collide and complement with the works of a private broker who also give advice regarding buying and selling assets to companies, so brokerage and investment banking are related fields.

    Transactions:

    Investment banking also involves taking practical steps towards achieving what has been advanced on. In larger firms and companies, the functions of investment banking would be limited to an advisory capacity, because the larger firms prefer to contemplate on the advice given and make the decisions themselves.

    However, for smaller companies that wish to expand, getting an outside consultant to help out with the implementation of the advice given through investment banking professionals would be a really good option. Smaller companies to require more guidance.

    Learn Investment Banks with their Principle and Functions
    Learn Investment Banks with their Principle and Functions, #Pixabay.

    Important Functions:

    Bills of Exchange:

    This instrument safeguards that a bill is accepted so that control is not lost of the item’s involved. A “bill of exchange” contains a stated date of payment that must be concluded on that date irrespective of any disputes concerning the item named. There are legal measures to prevent payment, termed “non-honoring”, which are subject to different rules depending upon the country involved.

    Corporate Finance:

    This aspect of investment banking represents a specific finance area that deals with corporate financial decisions as well as the tools and analysis formulas and processes utilized to arrive at these decisions. It is divided into “short-term” and “long-term” techniques and decisions whereby the objective is to enhance corporate value through ensuring the “return on capital” is more than the “cost of capital”. The equation rests on a conservative application of risks.

    Corporate finance is related to managerial finance, although the latter is larger in scope as it entails financial techniques that are possible in all business forms, whether they are corporate or non-corporate.

    A. IPO’s:

    Termed “Initial Public Offerings”, IPO’s represent the beginning of a publicly listed company and as such those investors who are in position at this stage are poised to reap almost immediate gains if the stock rises on opening day. Similarly, these same investors stand to lose money if the opening price drops substantially.

    During the last few years, the offering prices have tended to average out as being overpriced. This is borne out by the fact that the closing price, on average, the day of opening generated an annual return of just 2%. In terms of profitability, IPO’s generate large fees for the participating firms and represent the most profitable underwriting area. Fees generally average seven percent (7%).

    After the various splits between managing underwriters, brokerage firms, law firms, and staff the profit hovers in the 34% through 40% range. This service is a cornerstone in aiding firms to float securities needed to expand or underwrite operations and as such represents one of the more important functions performed by investment banks.

    B. Rights Issues:

    These are equity issues whereby shareholders of record have the right to purchase new shares that have a fixed exercise price.

    C. Mergers & Acquisitions:

    Investment banks act in the capacity as advisors in merger and acquisition deals. In working with both the target’s of acquisition as well as the acquirer’s, investment banks provide their information expertise to help arrive at the “reservation price”. They also calculate the potential for gains and the risks in the transaction.

    And while investment banks have a vested interest in these deals, their pragmatism is an effective counterweight in maintaining a balance between undervaluing and overvaluing. Operating under banking regulations, investment banks represent a sort of intermediary that engenders public trust in the legitimacy of the transaction and is a part of a system that represents checks and balances over these types of transactions.

    Commercial banks might have potential conflicts of interest in these types of deals, so even while they have recently taken on this role, the majority of these transactions are still funneled through investment banks.

    Investment Management:

    As the term implies, investment management is also known as portfolio management as well as money management. It is a segment of investment analysis that examines the management of money relating to securities purchases as well as their sale.

    A. High Net Worth Individuals:

    Investment banking services for individuals of high net worth has been a long-standing feature for an elite group whose banking investment needs exceed the capabilities of commercial banks and traditional specialists. The complex variable regarding the client’s return targets and relative degrees of risk along with long as well as short-term requirements represent specialized analysis.

    The resources of an investment bank are suited to meet the demanding requirements of these types of individuals as well as confidentiality. The extremely sophisticated variables comprising recommendations and placement in various instruments are crafted to fit an approved plan of action.

    Because high net worth individuals have access to their own channels of information, the demands of these types of clients in terms of sophistication requires the resources of a specialized institution.

    B. Corporations:

    The investment management of corporations entails handling a number of asset management areas. As is the case with high net worth individuals, it entails an extensive analysis of the goals and objectives desired as well as the cash availability requirements for specific periods of time.

    The preceding represents a valuable service as a result of the high-level contacts and access to specialized information, opportunities, and rates of return with the moderate risk that investment banks can avail themselves of.

    C. Pension Funds:

    These funds represent extremely large sums that require placement in investment avenues that contain high degrees of safety as well as meeting return rates in established parameters.

    The important nature of these retirement funds requires an institution to pay close attention to risk avoidance as well as any potential changes and shifts in the market that could potentially affect the money in the Fund.

    D. Mutual Funds:

    In terms of mutual funds, there are literally hundreds of fund types to select from as a result of the classifications within this group. One particular type of fund which investment banks have an advantage over commercial banks is in hedge funds. These types of funds are unregulated and usually governed by unconventional strategies.

    Hedge funds trade in equities, money markets and bonds and offer yields as well as risks that exceed traditional long stock and bond methodologies. The secretive nature of these funds and the fact that they cater to institutions, corporations and high net worth individuals only is within the purview of investment banks.

  • Communication: Definition, Principles, and Elements

    Communication: Definition, Principles, and Elements

    Communication Essay: They refer to all behavior, both verbal and non-verbal, which occur in a social context. This article explains about Communication with their topics – Meaning, Definition, Principles, and Elements. Another word for communication could be “Interaction”. The exchange of information or passing of information, ideas, or thoughts from one person to the other or from one end to the other is communication. According to McFarland communication is, “A process of meaningful interaction among human beings. More specifically, it is the process by which meanings are perceived and understandings are reached among human beings.” So, what is the question and topic are going to discuss.

    What does Means of Communication? Definition, Principles, and Elements.

    We are living in a world which is networked with them. With the advent of fast technology, the world has become a global village. The information sharing among various groups in society at national and international levels has become very smooth, effective, and efficient. With the click of the small button on the computer, you can easily get any information according to your needs and choice.

    You cannot just think of a world or situation where there is no exchange of ideas, feelings, emotions, reactions, propositions, facts, and figures. From time immemorial, they have been the most important activities of human lives. The integration of the world economy has been making it possible with a strong and efficient channel of communication.

    The nature of communication has gone a significant change during the last dealers. Now the economic power lies in the hands of the countries having a very sound information technology network. It is important from understanding it in terms of a process, system, interactional base, and structuring. There are various objectives of communication in business organizations.

    Meaning and Definition of Communication:

    There are various definitions and meaning interpreted by different scholars. T.S. Matthews says that Communication is something so difficult that we can never put it in simple words. But we do need a definition to understand the concept. In his book Communication in Business, Peter Little defines communication as the process by which information is transmitted between individuals and/ or organizations so that an understandable response results. W.H. Newman and C.F.

    Summer Jr. defines communication as,

    “Communication is an exchange of facts, ideas, opinions, or emotions by two or more persons.”

    Obviously, “information” is the keyword in the first definition. But this definition does not indicate the objects about which information is to transmit. This is precisely what provides in the second definition. They transmit information not only about tangible facts and determinable ideas and opinions but also about emotions.

    When a communicator passes on or transmits some information, he may also, either intentionally or unconsciously, be communicating his attitude or the frame of his mind. And sometimes the latter may be more relevant to the reality that is communicating.

    The following definition offered by William Scott in his book “Organisation Theory” should appear comprehensive and especially satisfying to the students of “business communication” since it touches all aspects of the communication process:

    “Administrative communication is a process which involves the transmission and accurate replication of ideas ensured by feedback to elicit actions which will accomplish organizational goals.”

    Important points give by their definition:

    This definition emphasizes four important points;

    • The process of communication involves the communication of ideas.
    • Ideas should accurately replicate (reproduce) in the receiver’s mind, i.e., the receiver should get the same ideas as were transmitted. If the process of communication is perfect, there will be no dilution, exaggeration, or distortion of the ideas.
    • The transmitter assures the accurate replication of the ideas by feedback, i.e., by the receiver’s response which is communicated back to the transmitter. Here it suggests that communication is a two-way process including the transmission of feedback.
    • The purpose of all communication is to elicit action.

    It is quite a comprehensive definition and covers almost all aspects of communication. But two comments can make on it:

    • The concept of ideas should adequately enlarge to include emotions also.
    • Even in administrative communication, the purpose may not always be to elicit action. Seeking information or persuading others to a certain point of view can be equally important objectives of communication.

    What does Means of Communication Definition Principles and Elements
    What does Means of Communication? Definition, Principles, and Elements! Image credit from #Pixabay.

    Principles of effective communication:

    The following Principles of communication below are;

    Clarity:

    The idea or message to communicate should spell out. It should word in such a way that the receiver understands the same thing which the sender wants to convey. There should be no ambiguity in the message. A message should be clear, free from distortion and noise. A vague message is not only a barrier to creating effective communication but also causes a delay in the communication process and this is one of the most important principles of effective communication.

    It should be kept in mind that the words do not speak themselves but the speaker gives them the meaning. A clear message will evoke the same response from the other party. It is also essential that the receiver is conversant with the language, inherent assumptions, and the mechanics of communication.

    Brevity:

    They should be brief i.e. just necessary and sufficient. Repetition and over-explanation are likely to destroy the actual meaning and importance of the message. Moreover, the reader may feel disturbed by receiving a long message.

    Simplicity:

    The message should give using simple and familiar words. Vague and technical words should avoid. Simple words are easy to understand and help the receiver to respond quickly.

    Timeliness:

    It is meant to serve a specific purpose. This principle states that communication should be done at a proper time so that it helps in implementing plans. Any delay in communication may not serve any purpose rather decisions become of historical importance only. If they make in time, they become effective. If it makes untimely then it may become useless.

    Compass:

    The communication net should cover the whole organization. The concerned people must know what exactly they need and when they need it. And effective communication will serve such.

    Integrity:

    They should consider the level of people, principles & objectives of an organization to create a network or chain. Such a network will provide a better field of internal and external communications.

    Strategic use of Informal Organization:

    The most effective communication results when managers use the informal organization as complementary to formal communication, e.g. arranging sports, cultural function & dinner for the employees can be informal organization.

    Feedback:

    To provide a message to the receiver is not a complete communication. The principle of feedback is very important to make communication effective. There should be feedback information from the recipient to know whether he has understood the message in the same sense in which the sender has meant it. The response from a receiver is essential. Therefore feedback requires communication to be effective.

    The Alternative:

    Effective listening is important in communication, otherwise, they will be ineffective and useless.

    Language control:

    The sender should be careful in selecting proper words and forming sentences, words and structured sentences are the keys to making effective communications.

    Elements of Communication:

    The communication process involves elements like sender, receiver, encoding, decoding, channel/ media, voice, and feedback.

    The different elements of communication are as under:

    Sender:

    He is the person who sends his ideas to another person. The person who intends to convey the message to pass information and ideas to others knows as the sender or communicator. For example, if a manager wants to inform his subordinates about the introduction of a new product, he is the sender.

    The sender also knows as the encoder decides on the message to be sent, the best/most effective way that it can be sent. All of this is done bearing the receiver in mind. In a word, it is his/her job to conceptualize. The sender may want to ask him/herself questions like: What words will I use? Do I need signs or pictures?

    Message:

    The idea, feeling, suggestion, guidelines, orders, or any content which intends to communicate is the message. This is the subject matter of the communications. This may be an opinion, attitude, feelings, views, orders, or suggestions. For example, the message is the introduction of a new product.

    Encoding:

    It is the process of converting the idea, thinking or any other component of the message into symbols, words, actions, diagrams, etc. Since the subject matter of communicating is theoretical and intangible, its further passing requires the use of certain symbols such as words, actions or pictures, etc. Conversion of subject matter into these symbols is the process of encoding. For example, the message connect in words and actions.

    Media:

    It is the medium, passage, or route through which an encoded message passes by the sender to the receiver. There can be various forms of media-face-to-face communication, letters, radio, television, e-mail, etc. The medium is the immediate form that a message takes. For example, a message may communicate in the form of a letter, in the form of an email, or face to face in the form of a speech.

    Decoding:

    It means translating the encoded message into language understandable by the receiver. The person who receives the message or symbol from the communicator tries to convert the same in such a way so that he may extract its meaning to his complete understanding.

    Receiver:

    If, he is the person to whom the message has been sent. The receiver or the decoder is responsible for extracting/decoding meaning from the message. The receiver is also responsible for providing feedback to the sender. In a word, it is his/her job to INTERPRET. For example, subordinates are receivers.

    Feedback:

    Feedback is the process of ensuring that the receiver has received the message and understood in the same sense as the sender meant it. It is the response by the receiver. It marks the completion of the communication process. This is important as it determines whether or not the decoder grasped the intended meaning and whether the communication was successful.

    Noise:

    It is a hindrance to the process of communication. Noise can take place at any step in the entire process. It reduces the accuracy of communication, e.g. 1) Disturbance in the telephone lines, 2) An inattentive receiver, and 3) Improper Decoding of Message, etc.

    This is any factor that inhibits the conveyance of a message. That is, anything that gets in the way of the message being accurately received, interpreted, and responded to. Noise may be internal or external. A student worrying about an incomplete assignment may not be attentive in class (internal noise) or the sounds of heavy rain on a galvanized roof may inhibit the reading of a storybook to second graders (external noise).